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2006 (4) TMI 356 - AT - Income TaxPenalty levied u/s 271D - contravention of section 269SS - whether the assessee has accepted any deposit or loan in cash - HELD THAT:- It is well-settled that when a bank accepts a deposit from its constituents, it is acting in its own right and not as an agent. The money deposited with a bank belongs to it and it can deploy the money in whatever manner it wants. Any profit or loss on such deployment belongs to the bank and not to the customer. The bank is not required to render any accounts to the customers in this regard. The customer is entitled only to the balance standing to the credit of his account. The fundamental principle of banking law is that the relationship between the bank and its customer is like a debtor and creditor. The bank may act as the agent of the customer under a special contract. In the case on hand no such special contract is shown to exist. It follows that the bank has accepted the deposits in question as a banker and not as the agent of the assessee. If this be so, the conclusion is that the assessee has not accepted any deposit or loan in cash in contravention of section 269SS. The explanation furnished by the assessee is based on the evidences produced before the assessing authority viz., cash book, ledger, bank passbook and before the Additional Commissioner in the form of Certificates issued by the respective banks. Therefore, the explanation cannot be rejected as an afterthought. The purpose of section 269SS is to track the movement of cash and restrict the loan operations only through the banking channels. In the instant case, this purpose is substantially complied with for, the banks, on the basis of their records, are in a position to certify the movement of funds and the transactions have been carried through the bank. Hence, even for this reason, no penalty is leviable. In the result the appeal by the assessee is allowed.
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