TMI Blog1996 (11) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 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 taken or accepted from, or any loan or deposit taken or accepted by,--- (a) 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 section 617 of the Companies Act, 1956 (1 of 1956); (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 where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit 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 sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e asked for reference under section 256 of the Act. Mr. Gadodia then submitted that in any transaction when two persons are involved both should be treated alike. To stress his point, he gave instances of giving and taking of bribe between an individual and a public servant, payment of salami/pagri by a tenant to the landlord and receiving of the same by the landlord. It was submitted that in both these cases the giver and taker of bribe or the salami/pagri was punishable under law. Thus, according to Mr. Gadodia, in the present case, when the person giving the loan has been let off the borrower could not be held to be guilty. According to him, there was no rational or intelligible differentia in treating the lender and the borrower differently. Where the borrower has been held to be guilty and liable to penalty irrespective of the fact if the loans are genuine or not, Mr. Gadodia said that if that is the object in inserting section 269SS to curb the menace of black money then both lender or the borrower should have been treated alike and liable to penalty. In support of his submission, Mr. Gadodia referred to a single judge decision of the Madras High Court in the case of Kumari A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n taken before him, viz., that section 269SS was violative of article 14 was not taken in the case of Ponnuswamy Nadar Sons' [1992] 196 ITR 431 (Mad). Thus, he held that the ruling rendered in Ponnuswamy Nadar Sons' case [1992] 196 ITR 431 (Mad), would not be a bar for consideration of the contention then put forward before him. With utmost respect to the learned single judge, a subsequent Bench of the same High Court could not have taken a different view on the mere ground that a particular point had not been urged before the earlier Bench to take a different view. If the subsequent Bench differed from the view taken by the earlier Bench, the matter could have been referred to a larger Bench. We need not, however, dilate on this aspect of the matter any further. We draw strength from the Bench decision of the Madras High Court in Ponnuswamy Nadar Sons' case [1992] 196 ITR 431, holding section 269SS to be constitutional. A Division Bench of the Gujarat High Court in Sukhdev Rathi v. Union of India [1995] 211 ITR 157, differed from the view of the Madras High Court in Kumari A. B. Shanthi's case [1992] 197 ITR 330 and referred to the Bench decision of the same High Court in Ponnus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any loan or deposit taken or accepted by, the following, namely :--- (a) Government; (b) any banking company, post office savings bank or any co-operative bank; (c) any corporation established by a Central, State or Provincial Act; (d) any Government company a defined in section 617 of the Companies Act, 1956; (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. 32.4 For the purposes of the provision, the expression 'banking company' shall have the meaning assigned to it in clause (a) of the Explanation to section 40A(8) of the Income-tax Act and the expression 'co-operative bank' shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949. The expression 'loan or deposit' for the purposes of this provision, would mean loan or deposit of money. 32.5 Fears have been expressed in certain quarters that the provision will adversely affect the rural sector and farmers who bring produce to mandies for sale. The prohibition contained in section 269SS is confined to loans and deposits only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer may treat the loan or deposit in the books of the assessee as his income from undisclosed sources unless the assessee is able to show sufficient proof about the genuineness of the loan or deposit. We should, however, be not understood as saying that if the deposit or loan is shown to have been received by means of an account payee cheque or an account payee bank draft the Assessing Officer would invariably hold the genuineness of the deposit or loan. The provision of section 269SS of the Act takes into account only one aspect of the matter. We find the provision is quite rational and it achieves the object of curbing circulation of black money. The provision is not discriminatory or arbitrary. The challenge to its constitutional validity must, therefore, be repelled. We are in respectful agreement with the views expressed by the Madras High Court in the case of K.R.M.V. Ponnuswamy Nadar Sons (Firm) v. Union of India [1992] 196 ITR 431 and the Gujarat High Court in the case of Sukhdev Rathi v. Union of India [1995] 211 ITR 157. Accordingly, this writ application fails and is dismissed. We, however, leave the parties to bear their own costs. - - TaxTMI - TMIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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