Page 22 - Banking Finance August 2024

LEGAL UPDATE

Legal

Crypto dealings not illegal: ferent laws such as the Income-Tax Tribunal orders PAN mis-
Act, 1961, which prescribes a defined
Orissa HC mode of undertaking the transaction use probe as homemaker

A recent Orissa High Court order ob- or GST laws wherein the consideration gets Rs. 1.3 crore tax notice
served that dealings in crypto currency towards supply of goods/services can A Mumbai-based homemaker and se-
are not illegal. be paid by a mode other than money nior citizen had to litigate up to the

The HC said crypto currency is not too," said Ashish Karundia, Founder, Income tax Appellate Tribunal (ITAT)
Ashish Karundia & Co. level over alleged misuse of her PAN
money within the meaning of Price
Chits and Money Circulation Schemes The Case after a tax officer held that she had
(Banning) Act 1978 and investment by The matter involves two persons who sold immovable property of Rs 1.3
the general public in crypto cannot targeted individuals and encouraged crore in 2010-11 and treated this as
partake the nature of deposit within them to invest in the Netherland based her income.
the meaning of Odisha Protection of crypto currency STA (Solar Techno Alli- Illiterate and a cancer patient, the
Interests of Depositors Act; the HC ance) Token. The investors were asked woman failed to respond to I-T notices.
said there was no evidence to show the to recruit more investors on payment At a recent hearing before the ITAT,
petitioners had convinced the public to of interest or bonus. her counsel submitted that her PAN
invest money on promise of high re- was misused in the property registra-
The Supreme Court in 2020 set aside tion.
turns; or that any person was de-
an April 6, 2018 circular of the Reserve
frauded or his investment misappropri- The tribunal noted that the I-T officer
Bank of India prohibiting banks and
ated by the petitioners. had not conducted an independent in-
entities regulated by it from providing
"It is clear the petitioners were deal- services in relation to virtual curren- quiry, such as seeking details from the
registrar of the property and the
ing with crypto currency which... is not cies. buyer. It ordered the I-T department
illegal," the order said. "The amounts
A new taxation framework was intro- to seek complete information from the
invested are kept secure in a Trust
duced in the Finance Act 2022 to pro- registrar and provide the woman with
Wallet of the investor without any
vide for taxation and withholding of tax a fair hearing.
scope of interference or manipulation
for virtual digital assets covering This was not an isolated incident. Cases
by any other person."
crypto currencies. Investors have to have been reported across India of
"The ruling affirms that dealing in pay 30 per cent tax on income from misuse of PAN-be it Usha Soni in Betul,
crypto currency is not illegal. Be that select cryptocurrencies without de- MP, to whom an I-T notice of Rs 7.5
as it may, it would be interesting to see ducting the loss incurred on other as- crore was issued a decade after her
the implications of the same under dif- sets. death, or Nand Lal, a small shopkeeper

20 | 2024 | AUGUST | BANKING FINANCE