Section 269ST of the Income Tax Act
Income-tax Act, 2025: s.186
Section 269ST of the Income-tax Act, 1961 corresponds to section 186 (Mode of undertaking transactions) of the Income-tax Act, 2025.
Read section 186 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 269ST is CIT v. Khoday Eswarsa & Sons 1972 CTR (SC) 295 (83 ITR 369), cited in 94 of the 204 judgments on BharatTax that turn on this section.
Leading authorities on Section 269ST
Penalty under section 271(1)(c) cannot be levied solely on the basis of findings in the assessment proceedings. The Assessing Officer must discharge the burden of proving concealment or inaccurate particulars with additional material.
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.
Retracted confessions or admissions made under oath are binding on the assessee unless it is proven that the statement was involuntary, made under coercion, or duress. Income Tax officers are not police officers, making such admissions valid evidence.
The satisfaction of the Assessing Officer is not a prerequisite for the initiation of penalty proceedings. Penalty proceedings initiated by the Joint Commissioner of Income Tax are valid. The date of the show cause notice by the penalty imposing authority is relevant for computing limitation for imposing penalty under Section 271DA.
Retraction of a statement recorded under oath during a search is not accepted unless supported by strong and contemporaneous evidence, especially when corroborative documents and seized materials support the additions.
Belated and unsupported retractions of statements made during a search or seizure are meaningless and will not be considered by the Assessing Officer. Such retractions must be substantiated with evidence.
Amendments introduced with a retrospective effect, like the Explanation to section 92B, are applied prospectively if courts have held them to have a prospective effect. This principle is applied by analogy to amendments in section 115BBE.
Fixing a percentage of disallowance for bogus purchases must have a rational and non-arbitrary basis. Selective reliance on parts of a statement made under Section 132(4) while rejecting other parts is impermissible.
Transactions settled by journal entry, without actual cash movement, do not violate Section 269SS or Section 269T, and consequently, penalties under Section 271D or Section 271E are not leviable.
