https://www.taxtmi.com/caselaws?id=21649 The HC held that section 269SS of the Income-tax Act, 1961, read with section 276DD, is unconstitutional as it violates article 14. In a loan transaction, both lender and borrower are integral participants; however, the statute imposed a penal obligation only on the borrower to accept loans of Rs. 10,000 or more by account payee cheque or draft, leaving the lender outside its ambit. This differential treatment lacked intelligible differentia and rational nexus with the object of the provision, rendering the classification arbitrary and hostile. Consequently, section 269SS, insofar as it singularly targeted borrowers with stringent punishment under section 276DD, was declared ultra vires, and the prosecution was quashed. en-us Tue, 21 Apr 1992 00:00:00 +0530 Tue, 09 Dec 2025 19:54:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=21649 The HC held that section 269SS of the Income-tax Act, 1961, read with section 276DD, is unconstitutional as it violates article 14. In a loan transaction, both lender and borrower are integral participants; however, the statute imposed a penal obligation only on the borrower to accept loans of Rs. 10,000 or more by account payee cheque or draft, leaving the lender outside its ambit. This differential treatment lacked intelligible differentia and rational nexus with the object of the provision, rendering the classification arbitrary and hostile. Consequently, section 269SS, insofar as it singularly targeted borrowers with stringent punishment under section 276DD, was declared ultra vires, and the prosecution was quashed. Case-Laws Income Tax Tue, 21 Apr 1992 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=21649