TMI Blog2023 (1) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... is only taking and acceptance is prohibited. The acceptance of loan by way of cash in excess of Rs.20,000/- may attract panel provision in terms of Section 271-D. Whether the provisions of Section 269-SS of the Income Tax Act 1961, disentitles the plaintiff from filing recovery suits was directly under consideration by the coordinate bench of this Court in the decision MOHAMMED IQBAL VERSUS MOHAMMED ZAHOOR [ 2007 (7) TMI 711 - KARNATAKA HIGH COURT] , wherein it has been held that The main object introducing the provisions of Section 269-SS of the Income Tax Act is to curb and unearth black money. But the Section does not declare the present transaction which is brought before the court illegal, wide and unenforceable. The accused has to establish the nexus between alleged taking loan of Rs.50,000/- and the issuance of signed Cheque as a security for the said transaction. Otherwise, accused cannot take the advantage of complainant admitting that he has received the Cheque as a security as referred above. The onus is on the accused to prove that he has issued signed blank Cheque as a security for the loan of Rs.50,000/-, which he claims to have repaid with interest amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.2,00,000/- on assurance of accused that he will return the same within 9 months. The accused in order to discharge the said debt has issued Cheque bearing No.130702 dated 07.12.2010 drawn on Alahabad Bank, Vijayapura. The complainant presented the said Cheque for collection on 27.01.2011 and the same was dishonoured for want of sufficient funds vide bank endorsement dated 28.01.2011. On intimating the said fact to the accused, the accused has requested to represent the Cheque after 20 days. The complainant has represented the Cheque on 28.02.2011 through his Banker State Bank of India, Treasury Bank, Vijayapura. The same was again dishonoured with endorsement of insufficient funds vide memo of Bank dated 01.03.2011. The complainant has issued Demand Notice on 14.03.2011. The wife of accused has received the notice on 16.03.2011. However, the accused has neither replied to the notice nor paid the money covered under the Cheque. The complaint is filed on 29.04.2011. 4. In response to the summons, the accused has appeared through counsel and contested the case. The complainant in order to prove his case relied on the oral evidence of PW1 and the documents as per Exs.P1 to Ex.P6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged his initial burden of proving the fact that accused has issued the Cheque in question at Ex.P1 for lawful discharge of debt. The Trial Court also has recorded its satisfaction of complainant having discharged his initial burden of proving the fact that the Cheque - Ex.P1 is issued by accused for lawful discharge of debt. 10. The Trial Court has held that:- (1) the Demand Notice is not served to accused; (2) there is material alteration in the Cheque - Ex.P1; (3) the date as to when money was given has not been stated in the complaint; (4) the debt is time barred; (5) the transaction is hit by Section 269-SS of Income Tax Act; and (6) the Cheque in question as per Ex.P1 was issued by accused as security for the loan of Rs.50,000/-. On such finding concluded that accused has successfully rebutted the presumption available in favour of complainant in terms of Sections 118 and 139 of N.I. Act, by probablizing his defence to disprove the initial presumption available in favour of complainant. 11. The Trial Court by relying on the decision of Hon'ble Supreme Court reported in 2008 (4) SCC Page No.54, Krishna Janardhan Bhat vs. Datta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alli of Vijayapura. In terms of Section 27 of the General Clauses Act, 1897, meaning of service by post is where any (Central Act) or regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression served or either of the expressions give or signed or any other expression is used, then unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time which the letter would be delivered in the ordinary course of post. Therefore, when the Demand Notice - Ex.P5 is posted to the correct address and same is received by family member of the accused and in the absence of any contrary evidence, it will have to be held that there is deemed service of notice. 14. The trial Court in Para Nos.27 to 29 has observed and held that, there is material alteration in the Cheque - Ex.P1 and in terms of Section 87 of N.I. Act is void document, which cannot be legally enforced. The said proviso is subject to those of Sections 20, 49, 86 and 125 of N.I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Act, having raised doubt about amount due to complainant in 2010 has held that the debt is time barred. The complainant has pleaded that accused has taken money from him on 07.02.2010, agreeing to pay within 9 months. The accused has issued Cheque dated 07.12.2010 in discharge of the debt availed on 07.02.2010. The complaint is filed on 29.04.2011. It is true that complainant has admitted in his cross-examination that accused has given his Cheque at the time of taking money as security. It means that accused has given post dated Cheque for discharge of the debt taken on 07.02.2010. The date mentioned in the Cheque - Ex.P1 is material to give effect for realization of money covered under the Cheque. Therefore, presentation of Cheque within a period of 6 months in terms of Section 138(a) of N.I. Act, which was reduced to 3 months as per the RBI Notification with effect from 01.04.2012 will have to be read as 'presentation of Cheque within a period of 6 months or 3 months with effect from 04.04.2012 is from the date on which it is drawn or within the period of its validity, whichever is earlier'. In the present case the Cheque - Ex.P1 is issued on 07.12.2010 i.e., prior t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxpayer would usually give the explanation that he had borrowed or received deposits from his relatives or friends and it is easy for the so-called lender also to manipulate his records later to suit the plea of taxpayer. The main object of Section 269-SS was to curb this menace. As regards the tax legislations, it is a policy matter, it is for Parliament to decide in which manner the legislation should be made. Of course, it should stand the test of constitutional validity. The Hon'ble Supreme Court having so observed negated the contention of appellants that taking a loan or receiving a deposit is a single transaction wherein a lender and barrower are involved and by the impugned section the barrower alone is sought to be penalized and the lender is allowed to go scot-free. 19. The proviso 269-SS only prescribes the mode of taking or accepting certain loans, deposits and specified sum. The said proviso would speak to the effect that no person shall take or accept from any other person (herein referred to as the depositor). Mode of taking any loan or deposit or any specified sum, otherwise than by an account-payee Cheque or account or accepting payees and draft or use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Court that the transaction involved leading to issuance of cheque in question as per Ex.P1 which is contravention of Section 269-SS of Income Tax Act has become unenforceable debt and by virtue of the same, the presumption in favour of complainant stood rebutted cannot be legally sustained. 20. Lastly, it is contended by the accused that he had taken loan of Rs.50,000/- from the complainant during 2006-2007. In order to discharge the said debt along with interest has repaid an amount of Rs.2,50,000/- by way of Alahabad Bank DD dated 30.11.2009. The accused has issued undated Cheque as a security. The complainant even after receiving money did not return the Cheque in spite of demand made by accused even after lapse of 5 to 6 months. The complainant has stated that the Cheque is not traced and engaged in marriage of his son. In support of such contention, accused relied on his own evidence as DW1 and the admission of PW1 during the course of his cross-examination. 21. The accused during the course of his evidence, has reiterated the above referred facts and claimed that complainant has misused the Cheque and filed false complaint. It is true that complainant during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence of DW1 and Ex.D1 and has wrongly accepted rebuttal evidence to disprove the presumption available in favour of the complainant in terms of Sections 118 and 139 of N.I. Act. 24. The learned counsel for the accused in support of his contention that judgment of acquittal cannot be interfered by the appellate Court, where the two views are possible and the one favouring the accused has to be accepted relied the latest decision of the Hon'ble Supreme Court in Crl.A. No.410-411/2015 - Ravi Sharma vs. State (Government of NCT of Delhi) dated 11.07.2022 , wherein it has been observed and held that:- While dealing with an appeal against acquittal by invoking Section 378 of Cr.P.C., the appellate Court has to consider whether the trial Courts view can be turned as possible one, particularly, when evidence on record has been analyzed. The reason is that an order of acquittal adds up to the presumption of innocence in favour of the accused. Thus, the appellate Court has to be relatively slow in reversing the order of the trial Court rendering acquittal. Therefore, the presumption in favour of the accused does not get weakened, but only strengthened. Such a double presumpti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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