Sections 269T and 276E strictly construed: deposit differs from loan; cash loan repayments not automatically penalized HC held that sections 269T and 276E are penal provisions to be strictly construed and that the term 'deposit' in section 269T is distinct from a mere ...
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Sections 269T and 276E strictly construed: deposit differs from loan; cash loan repayments not automatically penalized
HC held that sections 269T and 276E are penal provisions to be strictly construed and that the term "deposit" in section 269T is distinct from a mere loan. Repayments of loans in cash do not automatically attract the penal provisions applicable to deposits; the cause of action for loans arises at the date of loan while for deposits it arises on demand. Where two interpretations exist, the one removing an assessee from penal liability is preferred, so liability cannot be extended by stretching "deposit" to cover loans.
Issues involved: Interpretation of sections 269T and 276E of the Income-tax Act, 1961 regarding repayment of deposits u/s 269T and distinction between deposits and loans.
Summary: The case involved a revision petition against the order of the Additional Sessions Judge dated January 24, 1997, which set aside the order of the Additional Chief Metropolitan Magistrate dated July 28, 1995. The petitioners were accused of contravening section 269T of the Income-tax Act, 1961 by making cash repayments instead of by cheques, leading to an offence u/s 276E of the Act. The trial court acquitted the petitioners, ruling it was a repayment of loans, not deposits. The Additional Sessions Judge reversed this, considering it as repayment towards deposits as per section 269T.
Upon review, the High Court analyzed section 269T, emphasizing the distinction between deposits and loans. It noted that the term "deposit" in section 269T excludes loans, and the provisions must be strictly construed. The court highlighted that the complainant's own notice referred to the transactions as loans, not deposits, indicating the repayment nature. Therefore, invoking section 269T for deposit repayment was unjustified, and the petitioners' prosecution was unwarranted.
In conclusion, the High Court set aside the Additional Sessions Judge's order and restored the Additional Chief Metropolitan Magistrate's decision from July 28, 1995.
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