Delhi High Court has opined that violation of Income Tax Act cannot by itself render the criminal prosecution for cheque bounce against a person who has issued a cheque in lieu of the cash loan taken.
Justice Bakhru in the case titled as GUDDO DEVI @ GUDDI vs BHUPENDER KUMAR on 11.02.2020 upheld the conviction of accused in a cheque bounce case.
Accused was convicted for committing an offence under Section 138 of the NI Act. Subsequently, by an order on sentence dated 16.03.2018, the accused was sentenced to serve rigorous imprisonment for a period of six months. She was also directed to pay a sum of Rs. 7,00,000/- to the complainant within thirty days of the said order and in default of payment of such compensation, to undergo four months of simple imprisonment.
When the matter reached the High Court, Ld. Counsel for the accused argued that the payment of more than Rs. 20,000/- in cash violates the provisions of Section 269 SS of the Income Tax Act, 1961 which prohibits grant of any loan or advance over a sum of Rs. 20,000/- in cash. He submitted that since the said loan was in violation to the provisions of the Income Tax Act, 1961 the same was not an enforceable debt.
High Court however did not agree and held as under:
"The contention that the debt owed by the petitioner was rendered unenforceable by virtue of the provisions of the Income Tax Act, 1961 is also unmerited.
Section 269SS of the Income Tax Act, 1961 prohibits making of any payment in cash above a sum of ₹20,000/-. Thus, any person violating the same would attract imposition of penalties under the said Act. However, the same does not render the said debt un-enforceable or precludes the lender from recovering the same".
Read the Order here:
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