TaxTMI 
TaxTMI 
TaxTMI 
2000 (6) TMI 158
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....h and seizure action on the premises of the assessee from 21-8-1995 to 22-8-1995. Various incriminating documents and records were seized by the department during the course of search and, accordingly, the Assessing Officer passed the assessment order on 24-8-1996 for the Block period 1-4-1985 to 21-8-1995 under section 158BC read with section 143(3) of the Act. While scrutinising the seized documents in the course of assessment proceedings for the Block period, the Assessing Officer observed that the assessee had repaid loans/deposits in excess of Rs. 20,000 by otherwise than account-payee cheques/demand draft. According to the Assessing Officer, the assessee had contravened the provisions of section 269T read with 271E. He accordingly ini....
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....orders of the Assessing Officer. He submitted that both in loans and deposits, there is an act of borrowing. For example, in case of companies when the company borrows money by way of deposits, there is borrowing only and, in that sense, in the present case also, the assessee had not borrowed money, but the persons who had advanced money to the assessee were depositing the same with the assessee. He, therefore, submitted that the provisions of section 271E are clearly attracted and the CIT(A) is not justified in deleting the impugned penalties. 5. Shri K.A. Sathe, the learned counsel for the assessee, strongly supported the orders of the learned CIT(A). He submitted that during the course of search in the premises of the assessee certain d....
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....o secure an article, service etc.", while it defines 'loan' as "anything lent, especially money at interest; the act of lending; the condition of being lent; an arrangement for lending." Thus, there is a marked distinction between a loan and a deposit. This distinction between the two expressions has been brought out in a Commentary by Chaturvedi & Pithisaria on page 5735 (Vol. V, 4th Edn.) in following words: "'Deposit' and 'Loan'--these two are not identical in meaning--It is true that both in the case of a loan and in the case of a deposit there is a relationship of a debtor and a creditor between the party giving money and the party receiving money. But in the case of a deposit, the delivery of money is usually at the instance of the g....
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....all loans are not deposits or vice versa The dividing line between a loan or deposit is undoubtedly thin : the two, however, are not synonymous Pennwalt India Ltd v. Registrar of Companies [1987] 62 Comp. Cas. 112 (Bom.); also see, Durga Prasad Mandelia v. Registrar of Companies [1987] 61 Comp. Cas. 479 (Bom.)." 7. The Hon'ble Delhi High Court in the case of Baidya Nath Plastic Industries (P.) Ltd, has distinguished the expression "deposit" in contra-distinction to the term "loan". The Hon'ble High Court further held that when two interpretations are possible, the interpretation which took the assessee out of the clutches of the penal provisions must be preferred. We have perused the statement of the assessee recorded under section 132(4) ....
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....the individual depositors. In response to this general appeal, a person who wants to deposit his money by way of investment does so to earn income by way of interest. Thus, the initiative in depositing money comes usually from the depositor. This is not the case with the assessee, because he has made specific borrowings from different persons and these constitute loans in his hands. The Revenue's approach has also been always that the assessee had borrowed loans. This would be evident from the fact that in the concluding portion of the penalty order the Assessing Officer himself states as under: "Considering the above discussion, I am of the confirmed opinion that the assessee has contravened the provisions of section 269T by repaying the ....