Section 269SS of Income Tax Act, 1961-2020

Section 269SS of Income Tax Act, 1961-2020

Mode of taking or accepting certain loans, deposits, and specified sum.

Summary

Any person should take/accept

• Loan/deposit
• Advance in relation to immovable property
• any specified sum

from another person

ONLY by A/c Payee Cheque / DD / online transfer

if the amount is ₹ 20,000 or more

Exception:

This section not applicable if loan/advance/deposit is taken FROM or BY

• Government
• Banks, Co-op Bank, Post Office
• Govt. Company
• A person having only agriculture income
• Corp. established by Central, State, Provincial Act
• Any other person as notified by CBDT

Note: 

On the date of taking or accepting such loan or deposit or advance in relation to immovable property taken or accepted earlier by such person and unpaid on such date shall also be considered for ₹ 20,000 limit

Penalty u/s 271D:

If the assessee fails to follow sec. 269SS, then penalty shall be levied @100% of such loan/deposit/advance & it will be imposed by Joint Commissioner. Read Section 271D here

Examples:

Sr. No.	Transaction	Violation of 269SS?	Penalty Amount u/s 271D
1	Neha accepted ₹ 12,000 as a loan and ₹ 13, 000 as deposit from Sneha on 16-01-2020 by way of bearer cheque	Yes	₹ 25,000
2	Neha accepted loan from Sneha as follows On 26-07-2019 ₹ 12,000 by Cash On 10-12-2019 ₹ 15,000 by Bearer Cheque	Yes	₹ 27,000
3	Neha accepted loan from Sneha as follows On 26-07-2019 ₹ 15,000 by A/c Payee Cheque On 10-12-2019 ₹ 15,000 by Cash	Yes	₹ 15,000
4	Neha accepted loan from Sneha as follows On 26-07-2019 ₹ 15,000 by Cash On 10-12-2019 ₹ 15,000 by A/c Payee Cheque	NO	NIL
	Reason behind not applicability of 269SS here is that person should not accept loan/deposit ₹ 20,000 or more by cash. Neha accepted first ₹ 15,000 as Cash, at that time it was less than ₹ 20,000 & second time, she accepted ₹ 15,000 by a/c payee cheque. At this time total deposit was exceeding ₹ 20,000 but when it exceeded ₹ 20,000 at that time she accepted by way of other than cash.

Related Sections

• Section 68
• Section 69
• Section 69A
• Section 69B
• Section 69C
• Section 69D
• Section 269ST
• Section  269T
• Section 271D

Related Articles

Detailed Discussion on Cash Receipts & Payments u/s 269SS | 269ST | 269T under Income Tax Act, 196 by CA Khushboo Arora

Contents of Article:

• Section 269SS and Section 269T of the Income Tax Act, 1961
• Recent Amendment is Finance (No. 2) Act, 2019
• Analysis of Section 269SS in link with 194-IA | 271D | 271E
• Exemptions from Section 269SS and 269T 
• Relevant Case Laws taking divergent views
• The limitation period for imposing the penalty under sections 271D and 271E of the Act
• Whether reopening of assessment under section 147 of the Act could be made for violation of provisions of Section 269SS of the Act?
• Payments or receipts through journal entries
• Loan or deposit – Sine Qua Non for Section 269SS and 269T
• Transactions between partner and his firm
• Section 269ST – Mode of undertaking transactions
• CBDT Circular No. 27/2017 dated 03.11.2017– 
• Applicability of Section 269ST to agricultural income received from sale of agricultural produce
• Circular No. 22/2017 dated 03.07.2017–Repayment of loan by NBFCs and Housing Finance Companies
• Applicability of Section 269ST to cash gifts taxable under section 56(2)(x)
• Applicability of Section 269ST to the share application money received by companies
• Applicability of Section 269ST on capital contribution from a partner in cash or drawings by partner
• Applicability of Section 269ST to transactions between sister concerns
• Some Examples to understand the implication of section 269ST
• Other Restrictions or Disincentives under the Income Tax Act for dealing in cash  
• Conclusion

Bare Act Language

CHAPTER XX-B

REQUIREMENT AS TO MODE OF ACCEPTANCE, PAYMENT OR REPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION OF TAX

Mode of taking or accepting certain loans, deposits and specified sum.

269SS. No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or 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 ¹¹[or through such other electronic mode as may be prescribed], if,—

 (a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or

 (b) 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; or

 (c) 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 twenty thousand rupees or more:

Provided that the provisions of this section 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,—

 (a) the Government;

 (b) any banking company, post office savings bank or co-operative bank;

 (c) any corporation established by a Central, State or Provincial Act;

 (d) any Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013);

 (e) 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:

Provided further that 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 both having agricultural income and neither of them has any income chargeable to tax under this Act.

Explanation.—For the purposes of this section,—

 (i) "banking company" means a company to which the provisions of the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act;

(ii) "co-operative bank" shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ;

(iii) "loan or deposit" means loan or deposit of money;

(iv) "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.

source: https://www.incometaxindia.gov.in/pages/acts/income-tax-act.aspx