Section 269T explains the provisions relating to the mode of repayment of certain loans and deposits whereas Section 269SS deal with acceptance of Loans & Deposits and section 271E deals with penalty for failure to comply with the provisions. The provision says that no branch of a Co-operative bank, a Banking Company or any Company or Co-operative society or any firm or person can repay any loan or deposit made with it which is more than twenty thousand rupees otherwise than by an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account drawn in the name of the person who has made the loan or deposit. The amount of loan or deposit shall be together with interest is twenty thousand rupees or more. In case Loan or Deposit repaid other than banking route penalty of a sum equal to the amount of loan or deposit repaid under sec 271E. Reporting of such transaction is done by Chartered Accountant for all the business & profession those accounts are audited by him under section 44AB (TAX AUDIT REPORT) every year in form 3CD, for other assesses those accounts are not audited by Chartered Accountant transaction related to loan & Deposit repayment will be checked by Income Tax Officer during scrutiny of Income tax return for assessment year.
“Loan or deposit” means any loan or deposit of money which is repayable after notice or repayable after a period and, in the case of a person other than a company, includes loan or deposit of any nature.
However 269T shall not apply to repayment of any loans or deposits taken or accepted from:
(i) Government;
(ii) any banking company, post office savings bank or co-operative bank;
(iii) any corporation established by a Central, State or Provincial Act;
(iv) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956);
(v) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette.
If a person fails to comply with the above provisions that is provisions of 269T then he shall be liable to pay by way of penalty, a sum equal to the amount of loan or deposit repaid under sec 271E. This penalty shall be imposed by the Joint Commissioner.
Penalty for failure to comply with the provisions of section 269T as per Section 271E
Repaying any deposit or (with effect from June 1, 2003) loan or deposit referred to in section 269T otherwise with the provisions of sections 269T penalty equals to Amount of loan or deposit so repaid.
Ways to Avoid Penalty for section 269SS & 269T
- Never take cash more than Rs 19999/- related to any transaction and if done any cash transaction in bank for amount more than Rs 19,999 then always ready with explanation why such transaction was done.
- Avoid cash deposit for more than Rs 19999/- in bank account and if you are depositing amount more than Rs 19999/- then you must be ready with list of people from whom such cash was received .i.e one must be ready with the source of cash.
- Always do payment through account transfer or cheque payment for transactions.
- Never hesitate to say “NO” to other person for cash transactions.
Reference: Section 271E & 269T of Income tax act, 1961
Penalty for failure to comply with the provisions of section 269T under sec 271E:
(1) If a person repays any loan or deposit referred to in section 269T otherwise than in accordance with the provisions of that section, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so repaid.
(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.
Mode of repayment of certain loans or deposits under sec 269T:
No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall repay any loan or deposit made with it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan or deposit if—
(a) the amount of the loan or deposit together with the interest, if any, payable thereon, or
(b) the aggregate amount of the loans or deposits held by such person with the branch of the banking company or co-operative bank or, as the case may be, the other company or co-operative society or the firm, or other person either in his own name or jointly with any other person on the date of such repayment together with the interest, if any, payable on such loans or deposits, is twenty thousand rupees or more;
Provided that where the repayment is by a branch of a banking company or co-operative bank, such repayment may also be made by crediting the amount of such loan or deposit to the savings bank account or the current account (if any) with such branch of the person to whom such loan or deposit has to be repaid :
[Provided further that nothing contained in this section shall apply to repayment of any loan or deposit taken or accepted from—
(i) Government;
(ii) any banking company, post office savings bank or co-operative bank;
(iii) any corporation established by a Central, State or Provincial Act;
(iv) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956);
(v) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette.]
Explanation.—for the purposes of this section,—
(i) “Banking company” shall have the meaning assigned to it in clause (i) of the Explanation to section 269SS;
(ii) “Co-operative bank” shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949);
(iii) “Loan or deposit” means any loan or deposit of money which is repayable after notice or repayable after a period and, in the case of a person other than a company, includes loan or deposit of any nature.
A sum of Rs.10,000
Reference: Section 272BBB, 206CA of Income tax act, 1961
Penalty for failure to comply with the provisions of section 206CA under sec 272BBB
(1) If a person fails to comply [before the 1st day of October, 2004] with the provisions of section 206CA, he shall, on an order passed by the Assessing Officer, pay, by way of penalty, a sum of ten thousand rupees.
(2) No order under sub-section (1) shall be passed unless the person, on whom the penalty is proposed to be imposed, is given an opportunity of being heard in the matter.
206CA: Tax Collection Account Number:
(1) Every person collecting tax in accordance with the provisions of section 206C, shall, within such time as may be prescribed, apply to the Assessing Officer for the allotment of a tax collection account number.
(2) Where a tax collection account number has been allotted to a person, such person shall quote such number—
(a) in all challans for the payment of any sum in accordance with the provisions of sub-section (3) of section 206C;
(b) in all certificates furnished under sub-section (5) of section 206C;
(c) in all the returns delivered in accordance with the provisions of sub-section (5A) or sub-section (5B) of section 206C to any income-tax authority; and
(d) in all other documents pertaining to such transactions as may be prescribed in the interest of revenue:
Provided that the provisions of this section shall not apply on or after the 1st day of October, 2004.