Law:

Section:

Section 269SS of the Income-tax Act, 1961, read with article 14 of the Constitution of India - Deposits - Mode of taking/accepting - Under section 269SS only borrower is under obligation of not taking loan except by way of account payee cheque or account payee draft, if loan is for more than prescribed limit, but no such obligation is cast on lender who is also an integral part of loan transaction - Whether leaving lender out of purview of section 269SS and placing borrower alone within ambit of same would amount to classification which is not rational one as it is not based on any intelligible differentia which distinguishes those that are grouped together from others, viz, lenders - Held, yes - Whether, furthermore, it does not have any rational relation to object sought to be achieved by this provision - Held, yes - Whether, in view of aforesaid, section 269SS clearly infringes article 14 of Constitution and hence is ultra vires - Held, yes FACTS A potential party granted a loan of Rs. 4,65,000 to the accused as per the entry made in their ledger folio. The Department filed a complaint against the accused alleging that as the loan received by the accused exceeded the prescribed limit of section 269SS and as it was taken otherwise than by an account payee cheque or bank draft, the accused had violated section 269SS and, therefore, she was liable to be punished under section 276DD. On petition to quash the complaint : HELD The transaction of loan is a single transaction. It is the giving of money by the lender and as well as the taking of money by the borrower. These two ingredients are to be necessarily present in a transaction of loan. In the absence of one ingredient, there cannot be any transaction of loan. While so, only the taker of a loan, viz., the borrower, is put under obligation by not taking the loan except by way of an account payee cheque or an account payee draft, if the loan was for Rs. 10,000 or more. No such obligation was cast on the lender who is an integral part of a loan transaction. This differentia looks all the more hostile, harsh and discriminatory when the normal circumstance that the borrower would be at the mercy of the lender is…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492