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of <h1>Sections 269T and 276E strictly construed: deposit differs from loan; cash loan repayments not automatically penalized</h1> 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 ... Taxing Statutes - repayments towards deposit made in cash instead of by cheques - commission of the offences under section 276E - HELD THAT:- Under articles 19 and 21 the cause of action in the case of money lent arises from the date of loan, whereas under article 22 the cause of action in the case of a deposit arises from the date of demand. Therefore, it is necessary to distinguish a deposit from a mere loan. The provisions of section 269T read with section 276E are penal in nature and must be strictly construed. Since the Legislature specifically used the word 'deposit' in contradistinction to the term 'loan', the provisions would only be attracted if the repayment has been made in respect of a deposit. The meaning of the word 'deposit' occurring in section 269T cannot be stretched to include loans. An assessee must know as to which of his acts would violate a penal provision of a statute, as otherwise unwittingly he may fall in the net cast by a penal provision. In case two interpretations are possible, an interpretation which takes out an assessee from the clutches of a penal provision must be preferred. 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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