CIT vs. Mahagun Technologies Pvt. Ltd (ITAT Delhi)

S. 271D: Section 269SS does not apply to non-monetary book entry transactions of loans and advances

Section 269SS indicates that it applies to a transaction where a deposit or a loan is accepted by an assessee, otherwise than by an account payee cheque or an account payee draft. The ambit of the Section is clearly restricted to transaction involving acceptance of money and not intended to affect cases where a debit or a liability arises on account of book entries. The object of the Section is to prevent transactions in currency. This is also clearly explicit from clause (iii) of the explanation to Section 269SS of the Act which defines loan or deposit to mean “loan or deposit of money”. The liability recorded in the books of accounts by way of journal entries, i.e. crediting the account of a party to whom monies are payable or debiting the account of a party from whom monies are receivable in the books of accounts, is clearly outside the ambit of the provision of Section 269SS of the Act, because passing such entries does not involve acceptance of any loan or deposit of money (CIT Vs Noida Toll Bridge Co. Ltd 262 ITR 260 & CIT Vs Worldwide Township Projects Ltd (2014) 106 DTR (Del) 139 followed)