The person who breaches the provisions of section 269T of the Income Tax Act is liable to pay the penalty under section 271E of the Income Tax Act.

The basic understanding of section 269T states that the person cannot repay any loans / deposits / specified advances in cash if the amount of payment is INR 20,000 or more. While repaying such loans / deposits / specified advances, if the person doesn’t satisfy the restriction imposed under section 269T, then such a person would be liable to pay the penalty under section 271E.

The present article meticulously explains the provisions of section 271E of the Income Tax Act. It also covers the explanation of connecting provisions of section 269T along with the amount of penalty payable under section 271E.

Explanation of Provisions of section 271E of the Income Tax Act 

Provisions of section 271E states as under –

  • The penalty provisions are applicable only in case the person repays loans / deposit / specified advances referred to in section 269T.
  • The penalty under section 271E gets attracted when the person repays the above referred amount in the manner other than the mode specified under section 269T.
  • The penalty under section 271E can be levied only by the Joint Commissioner.
  • In case of default, the defaulter would be liable to pay the penalty equal to the loans / deposits / specified advances so repaid.

Explanation of Provisions of section 269T of the Income Tax Act

The provisions of section 269T restrict the person from repaying the loans / deposits / specified advances in the following cases –

  • The amount of loans / deposit / specified advances, along with interest, is INR 20,000 or more.
  • The total amount of loans / deposits, along with interest, held by the person in his own name or jointly with any other person is INR 20,000 or more.
  • The total amount of specified advances received by the person in his own name or jointly with any other person is INR 20,000 or more.

In case the transaction is covered within any of the above mentioned situations, then, the repayment of the loans / deposits / specified advances is to be done in any of the following mode –

  • An account payee cheque; or
  • An account payee draft (drawn in the name of the person who has made the loans / deposits / paid the specified advances); or
  • By means of electronic clearing system through a bank account; or
  • By means of such other prescribed electronic mode.

Exceptions to the Provisions of section 269T of the Income Tax Act

The above restriction imposed under provisions of section 269T is not applicable in case of repayment of loans / deposits / specified advances taken or accepted from any of the following categories of person –

  • The Government; or
  • Any banking company or post office savings or co-operative bank; or
  • Any corporation; or
  • Any Government Company; or
  • Notified institutions; association / body / class of institutions; associations / bodies.

Penalty under section 271E of the Income Tax Act, 1961

The penalty under section 271E is payable in case the person contravenes provisions of section 269T of the Income Tax Act. In such a case, the defaulter is liable to pay the penalty amounting to the sum equal to the loans / deposits / specified advances so repaid.

It is important to mention here that in case the defaulter proves the reasonable cause for the failure so committed, then, as per provisions of section 273B, no penalty can be imposed under section 271E.

Read Also:-

S. No. Title
1 Section 272BB Penalty for failure to comply section 203A provisions
2 Section 272B Penalty for failure to comply with provisions of PAN
3 Section 272AA Penalty for failure in complying with provisions of section 133B
4 Section 272A Penalty for failure to answer questions or furnish information / returns/ statements or allow inspections etc
5 Section 271J Penalty on professionals for furnishing incorrect information in reports / certificates
6 Section 271I Penalty for failure in furnishing Form 15CA & Form 15CB
7 Section 271H Penalty for late filing/non-filing of TDS or TCS return
8 Penalty for failure in furnishing report or furnishing inaccurate report under section 286 – Section 271GB
9 Section 271GA Penalty for failure in furnishing the information / document in Form 49D as required under section 285A
10 Section 271G Penalty for failure to furnish information / document as per provisions of section 92D
11 Section 271FB Penalty for default in furnishing return of fringe benefits
12 Section 271FAB Penalty for failure to furnish statement / information / document by an eligible investment fund
13 Penalty for providing inaccurate statement of financial transaction or reportable account- Section 271FAA
14 Section 271FA Penalty for failure in furnishing statement of financial transactions or reportable account
15 Section 271E Penalty for contravening provisions of section 269T
16 Section 271DB | Penalty for contravening provisions of section 269SU
17 Section 271DA Penalty for contravening provisions of section 269ST
18 Section 271CA Penalty for failure to collect tax at source (TCS)
19 Section 271D Penalty for contravening provisions of section 269SS
20 Section 271C Penalty for failure / non-deduction / non-payment of TDS
21 TDS Rate Chart for AY 2020-21 and AY 2021-22
22 Section 271BA Penalty for failure to furnish section 92E report
23 Section 271B Penalty for failure to get accounts audited
24 Section 271AAC Penalty in respect of certain specified income
25 Section 271AA Penalty for failure to maintain Transfer Pricing documents
26 Section 271A Penalty for failure to keep / maintain or retain books of accounts, documents
27 Section 270A(1) Penalty for under-reporting & misreporting of income
28 Section 269SU Acceptance of payment through electronic modes
29 Section 234F Late fees for default in filing of income tax return
30 Section 234E Late Fee for default in filing of TDS / TCS returns
31 Section 158BFA(2) – Penalty on undisclosed income for block period
32 Section 140A(3) Penalty for non-payment of self-assessment tax

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