TMI Blog2006 (4) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee totalling to Rs. 14,33,000. He referred the matter to the Additional Commissioner who levied the penalty after hearing the assessee. The assessee carried the matter in appeal and CIT(A) gave partial relief to the extent of Rs. 3.3 lakhs and confirmed the balance. 3. The Ld. A.R. appearing for the assessee submitted that the son of the assessee has made cash deposits in the various bank accounts of the assessee on his own, i.e., without the knowledge of the assessee. Hence, in the absence of any contract, it cannot be said that assessee has "accepted" any loan or deposit within the meaning of section 269SS of the Act. The transaction is between two closely related persons viz. father and son. Section 269SS is applicable only w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D.R. has submitted that even though the assessee has not accepted the cash deposit, the same has been accepted by the banks in cash as the agent of the assessee. It is well-settled that the action of the agent is binding on the principal as if the principal has himself acted. The expression "any other person" appearing in section 269SS does not exclude close relatives of the assessee [Refer Karnataka Ginning Pressing Factory v. Jt. CIT [2001] 77 ITD 478 (Mum.)]. There is nothing in section 269SS to hold that a deposit or loan must carry interest or the time of repayment should be agreed upon by the parties. The assessee did not explain the transactions to the Assessing Officer. For the first time, the explanation has been offered before C( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween 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. 6. The expression "any other person" appearing in section 269SS has been interpreted by the two Benches of the Tribunal in two different ways. One view is that the said expression excludes all those persons who are closely connected with the assessee and the other view is to the opposite effect. Both views ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee can be held responsible for the actions of a person whom the department claims to be "any other person" ? The department is blowing hot and cold in this regard. Even otherwise, this is only a technical breach of law and not a contumacious conduct requiring levy of penalty of more than Rs. 11 lakhs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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