Section 269TT — Mode of Repayment of Special Bearer Bonds, 1991

CHAPTER XX-B — REQUIREMENT AS TO MODE OF ACCEPTANCE, PAYMENT OR REPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION OF TAX

Section 269TT — Mode of repayment of Special Bearer Bonds, 1991

Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise

Status: Effectively spent. Governs redemption of the Special Bearer Bonds, 1991, which have matured and been redeemed. Candour rule.

Finance Act, 2026: No amendment by the Finance Act, 2026.

Mechanism: Absolute bar (no threshold): redemption proceeds of Special Bearer Bonds, 1991 payable only by account payee cheque or draft in the payee's name. Non-obstante override. Penalty: s. 271TT.

Litigation profile: Nil reported litigation; instrument matured. Candour rule applied.

A. COMMENTARY

Genesis and context

Section 269TT was inserted by the Special Bearer Bonds (Immunities and Exemptions) Act, 1981 / the connected Finance provisions and stands alongside the Special Bearer Bonds, 1991 scheme. Special Bearer Bonds were an instrument of voluntary disclosure: they could be subscribed for in cash, carried immunity from certain enquiries into the source of the subscription money, and were transferable by mere delivery (being bearer instruments). The very feature that made them attractive — anonymity — created a risk at the redemption end: if the redemption proceeds could also be paid in cash, the scheme would have provided a perfect laundering cycle (cash in, anonymous holding, cash out). Section 269TT closes that exit.

The provision

Section 269TT is short and absolute. Notwithstanding anything in any other law for the time being in force, the amount payable on redemption of Special Bearer Bonds, 1991 must be paid only by an account payee cheque or account payee bank draft drawn in the name of the person to whom the payment is to be made. There is no monetary threshold and no proviso. The non-obstante clause overrides any contrary rule, including the negotiable-instrument character of the bond. The effect is that, at redemption, the otherwise-anonymous holder must surface and be identified in the banking record, defeating the use of the bonds as a cash-conversion device.

Penalty

Contravention of s. 269TT — payment of redemption proceeds otherwise than by account payee cheque or draft in the payee's name — attracts penalty under s. 271TT, equal to the amount of the payment so made. As with the rest of Chapter XX-B, the reasonable-cause architecture of s. 273B is available.

Spent / dormant character

The Special Bearer Bonds, 1991 were redeemable after ten years and have long since matured and been redeemed. The section is therefore effectively spent: it governs an instrument that is no longer in circulation. It is retained on the statute book — and is reproduced verbatim below — for completeness and because the bare Act continues to carry it, but it has no live field of operation today. The treatment proceeds on the candour rule.

Finance Act, 2026

The Finance Act, 2026 makes no change to section 269TT. There is, and is likely to be, no reported case law on the section given the maturity and redemption of the underlying instrument.

B. STATUTORY TEXT (verbatim)

Reproduced verbatim from the Income-tax Act, 1961 as amended up to the Finance Act, 2025.

Mode of repayment of Special Bearer Bonds, 1991.

269TT. Notwithstanding anything contained in any other law for the time being in force, the amount payable on redemption of Special Bearer Bonds, 1991, shall be paid only by an account payee cheque or account payee bank draft drawn in the name of the person to whom such payment is to be made.

C. AUTHORITIES

Candour rule. There is no reported decision of the Supreme Court, a High Court or the Tribunal on section 269TT. The provision relates to the Special Bearer Bonds, 1991, an instrument that has matured and been redeemed; the section is effectively spent. No authority is cited as section-specific precedent; the cognate material below situates the section in the Chapter XX-B scheme.

Cognate framework (in lieu of section-specific case law)

Special Bearer Bonds (Immunities and Exemptions) Act, 1981 — scheme

Effect: Permitted cash subscription with immunity as to source and free transferability by delivery. Section 269TT is the redemption-end safeguard that compels identification of the holder at pay-out, preventing the scheme's use as a cash-conversion cycle.

Asst. Director of Inspection (Investigation) v. Kum. A.B. Shanthi (2002) 255 ITR 258 (SC)

Principle: Confirms the anti-evasion object underlying the Chapter XX-B mode-of-transaction provisions and the validity of the legislative technique of compelling banking-channel identification. Cognate principle only — not a decision on s. 269TT.

Hindustan Steel Ltd. v. State of Orissa (1972) 83 ITR 26 (SC)

Principle: Penalty discretion / no penalty for technical or bona fide breach — the general principle that would inform any s. 271TT penalty, applied by analogy. Cognate principle only.