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(Section 269SS) - Mode of taking or accepting certain Loans, Deposits and Specified Sum

No person shall take or accept from any other person (herein referred to as the depositor),—

  1. any loan or

  2. deposit or

  3. any specified sum,

otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, if,—

  1. the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum is Rs. 20,000 more; or

  2. on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid is Rs. 20,000 or more; or

  3. the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b) is Rs. 20,000 or more,

Where assessee-company, engaged in setting up of cement plant, raised unsecured loan from Managing Director in cash in excess of Rs. 20,000, mere fact that said amount was utilised for payment of constructional activities directly would not alter character of deposits.

  1. For the purposes of section 269SS,—

    1. "loan or deposit" means loan or deposit of money;

    2. "specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.

  2. The words "any specified sum" have been inserted by the Finance Act, 2015, w.e.f. 1.6.2015.

 

Section 269SS Not to apply in the following Cases [Provisos 1 and 2 to section 269SS]

1. The provisions of section 269SS shall not apply to any loan or deposit or specified sum taken or accepted from, or any loan or deposit or specified sum taken or accepted by,—

  1. the Government;
  2. any banking company, post office savings bank or co-operative bank;
  3. any corporation established by a Central, State or Provincial Act;
  4. any Government company as defined in section 2(45) of the Companies Act, 2013;
  5. 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:

As per section 2(45) of the Companies Act, 2013:

“Government company” means any company in which not less than fifty one per cent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company.

2. Further the provisions of this section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are—

  1. both having agricultural income, and

  2. neither of them has any income chargeable to tax under this Act.

Consequence of contravention of the provisions of section 269SS [Section 271D]:

If a person takes or accepts any loan or deposit or specified sum in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty under section 271D, a sum equal to the amount of the loan or deposit or specified sum so taken or accepted unless he can prove that there was reasonable cause for doing so. Any penalty imposable in the above case shall be imposed by the Joint Commissioner.

 
 
 
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