Hon'ble Delhi High court in the case of Dinesh Jain has held that
Penalty u/s. 271E is leviable if a person repays any loan, otherwise, than
in accordance with provisions of section 269T. As per section 269T no
person shall repay the loan otherwise, than by an account payee cheque
or account payee bank draft drawn in the name of the person who has
made the loan. Now in this case admittedly the assessee has transferred
the loan by way of journal entry to his wife. Therefore, the question is
whether there is violation of section 269T so as to penalise the assessee
as required u/s. 271E? When the assessee has transferred the loan from
himself to his wife by way of journal entry, it is only the substitution of
one debtor by another debtor. So far as creditors i.e. MGF
Developments Ltd. is concerned, it has not received any amount and
since the creditors has not received any amount, it cannot be said that
there is a repayment of loan. Section 269 would come into play only
when there is actual repayment of loan. Merely because loan is assigned
by the assessee to his wife by way of journal entry, it cannot be said that
there is a repayment of loan, otherwise, than by account payee cheque or
account payee bank draft, so as to penalize the assessee u/s. 271E
copy of the judgement enclosed
in accordance with provisions of section 269T. As per section 269T no
person shall repay the loan otherwise, than by an account payee cheque
or account payee bank draft drawn in the name of the person who has
made the loan. Now in this case admittedly the assessee has transferred
the loan by way of journal entry to his wife. Therefore, the question is
whether there is violation of section 269T so as to penalise the assessee
as required u/s. 271E? When the assessee has transferred the loan from
himself to his wife by way of journal entry, it is only the substitution of
one debtor by another debtor. So far as creditors i.e. MGF
Developments Ltd. is concerned, it has not received any amount and
since the creditors has not received any amount, it cannot be said that
there is a repayment of loan. Section 269 would come into play only
when there is actual repayment of loan. Merely because loan is assigned
by the assessee to his wife by way of journal entry, it cannot be said that
there is a repayment of loan, otherwise, than by account payee cheque or
account payee bank draft, so as to penalize the assessee u/s. 271E
copy of the judgement enclosed
Regards
Prarthana Jalan
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