12 December 2007
A was in coma for 8 days.During these 8 days his neighbour spent for his operation,Medicines,Hospital Charges,Surgicals,ambulance,doctors' fees etc amounting to Rs. 200000/-.
After coming out of coma,A returned the amount to his neighbour in cash.Has A violated the Provisions of Section 269SS and 269T?
12 December 2007
As per section 269SS any amount given in cash which exceeds 20000 in aggregate attracts the provisions of above section. The section no where contains any proviso or explanation which gives any sort of exemption or relaxation in the circumstances that you have mentioned.However the matter is under discussion in CBDT.
You this question is also very important and technical like your previous questions. Before, I give my opinion on your this query, please permit me to say that, your response to CA. Ankur Agarwal is not appreciable. I think you can understand my point.
As regards your query:- 01. Section 269SS:- It is being explaines that "Loan or deposit" means "Loan or deposits of money. In this case you have not accepted any money. What you have excepted is a liabaility of reimbursement of expenses. I am of the view that, your case does not fall under the ambit of section 269SS.
02. Section 269T:- As what you have accepted is not "Loan or deposit", by making the reimbursement you are not making any repayment of "Loan or deposits".Accordingly, I am of the view that your case is also out of the purview of section 269T.
I would also like to know your personal view on this query.
12 December 2007
After putting the question to Mr.Ankur I also felt that it was not in good taste.I apologise to Mr.Ankur for putting a question which was exclamatory and not intended derogatory.I am also extremely thankful to Mr.Omprakash Agarwalla to point it out to me.I apologise to you Sir for these remarks.
My own explanation to my query is that Income Tax Act is not a self contained code like IPC.IPC also contains provisions like 'mental state' when a crime is committed then why the Income Tax Act should not have place for extraordinary situations like this one.Mr.Agarwalla has pointed out the finer aspects very clearly.Thanks Mr.Agarwlla
12 December 2007
No penalty for violation of section 269SS or 269T is levied if reasonable cause is there. On the facts of the case I am of the opinion that there is reasonable cause , even if there is failure to comply with section 269SS or 269T.
Please also note:
Section 273B
Penalty not imposed in certain cases
Scope of the expression ‘reasonable cause’ - The words “reasonable cause” in section 273B must necessarily have a relation to the failure on the part of the assessee to comply with the requirement of the law which he had failed to comply with. In case of delay in compliance, the cause shown must be for the whole of the period of the delay and not merely for a part thereof. If the cause shown is such as to explain the delay as a whole and constitutes a good reason for the non-compliance, no penalty would be leviable. However, in cases where the cause shown is such as to explain a part of the delay, or the cause shown is only to mitigate the gravity of the non-compliance, such a cause cannot be extrapolated and treated as being a good cause for the whole of the period of the delay in its entirety. All or nothing, the proposition canvassed by the petitioner would be detrimental to assessees themselves if the choice placed before the Commissioner in all cases were to be that he should set aside all penalties the moment he finds that there is a cause, though not fully satisfactory, but which may be accepted in part which may justify a grant of a partial relief. If the commissioner were to be compelled to grant relief in whole even where the cause shown is not such as to explain in full the delay or the gravity of the non-compliance, the Commissioner would be compelled to reject and deny all relief. A construction which would preserve the exercise of the power in favour of the assessee in circumstances which warrant it is to be preferred to a construction which would result in the likelihood of denial of relief - Kalakrithi v. ITO [2002] 253 ITR 754 (Mad.).
Reasonable cause as applied to human action, is that which would constrain a person of average intelligence and ordinary prudence. The expression ‘reasonable’ is not susceptible of a clear and precise definition; for an attempt to give a specific meaning to the word ‘reasonable’ is trying to count what is not number and measure what is not space. It can be described as rational according to the dictates of reason and is not excessive or immoderate. The word ‘reasonable’ has in law the prima facie meaning of reasonable with regard to those circumstances of which the actor, called on to act reasonably, knows or ought to know. Reasonable cause can be reasonably said to be a cause which prevents a man of ordinary prudence and average intelligence, acting under normal circumstances, without negligence or inaction or want of bona fides - Azadi Bachao Andolan v. Union of India [2001] 252 ITR 471 (Delhi).
13 December 2007
I Thank all the experts for contributing.I further have a sequel to my original query which is as follows: A is a major studying for his higher education, his parents spend on his fooding,tuition fees,classes,conveyance,clothing,entertainment and miscellaneous Rs. 25000 per year for 3 years in cash.After getting a job, A repays his parents Rs. 75000/- in cash.Has A violated 269SS and 269T.My question is technical,hypothetical may be imaginary but can turn REAL some day in practice.Please think !
14 December 2007
I will again like to go on the fact that, whether the sum spent by father was loan or deposit? The amount was spent by father is not loan or deposit, unless there is contract between father & son. In this case, even the son is not under any obligation to repay the sum. This was expenditure made by a father, a neighbour, a relative, a friend or even a stranger due to natural love and affection or due to humanity factor, does not fall under the definition of "Loan or deposit". Being transactions are not in nature of "Loans or deposits" these are out of the ambit of section 269SS & 269T. However, in your sited case, if son come in to a contract with father and take the amount from father as Loan, both the section will be applicable.
One more thing I would like to distinguish is that acceptance of a liability is some thing different than acceptance of loan or deposit of money.
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