“penalty for cash loan”
The decision most relied on for penalty for cash loan is Commissioner of Income Tax v. Noida Toll Bridge Co. Ltd. (262 ITR 260), cited in 121 judgments on BharatTax.
Leading authorities on penalty for cash loan
Journal entries for accepting or repaying loans and deposits, without any actual cash transaction, do not violate the provisions of Section 269SS or Section 269T of the Income Tax Act. Consequently, such transactions do not attract penalties under Section 271D or Section 271E.
Transactions involving the receipt or repayment of loans or deposits solely through journal entries, without actual cash movement, contravene Sections 269SS and 269T. However, penalties under Sections 271D or 271E for such contraventions are not imposable if the assessee demonstrates a reasonable cause under Section 273B, particularly when no cash has passed between parties.
Money received by a company as share application money from directors or shareholders, especially when no interest is charged and held in a current account, does not constitute a 'loan or deposit' under Section 269SS. Therefore, no penalty can be levied under Section 271D for such transactions.
The Supreme Court upholds the constitutional validity of Section 269SS of the Income Tax Act, 1961, which prohibits certain cash loans and deposits. This ruling is foundational for penalties under Section 271D and considering exemptions under Section 273B.
Funds transferred whimsically between sister concerns under common family ownership and management, with centralized accounts, where there is no evidence of a formal loan or deposit repayable on demand or for a fixed period, do not constitute 'loans or deposits' under Sections 269SS and 269T of the Income Tax Act.
Penalties levied under Section 271D for contravention of Section 269SS may be cancelled. This applies particularly when transactions, such as salary or rent adjustments made through journal entries, do not involve actual cash receipts or payments.
Acceptance of cash by a husband from his wife for a property deal that didn't materialize is not considered a loan or advance under Section 269SS, thus exempting the transaction from penalty under Section 271D.
The case discusses mens rea issues in relation to penalties under Section 271D for violations of Section 269SS.
