Promotion of a digital economy is an integral part of the current Government’s strategy to clean the system and weed out corruption and black money.
(Extract of Budget speech during introduction of Finance Bill 2017)
In 2017, in order to achieve the mission of the Government to move towards a less cash economy to reduce generation and circulation of black money, new section 269ST was inserted in the Act. It provides that no person shall receive an amount of 3 lakhs rupees or more,— (a) in aggregate from a person in a day; (b) in respect of a single transaction; or (c) in respect of transactions relating to one event or occasion from a person, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account (When the Bill was passed, the permissible limit was capped under Rupees 2 Lakhs, instead of the proposed Rupees Three Lakhs). New penalty section 271DA was also introduced in the Act to provide for levy of penalty on a person who receives a sum in contravention of the provisions and penalty is a sum equal to the amount of such receipt.
Recently, while deciding a property dispute; Hon’ble Supreme Court discussed the above provisions of the income tax preventing cash transactions above certain limits and observed that Most times, such transactions go unnoticed or not brought to the knowledge of the income tax authorities.
Accordingly, Hon’ble SC issued directions to intimate about cash transactions above 2 lakhs rupees to income tax department and same are summarised below:
1. In case of suit claim, courts must intimate
2. In case of consideration for conveyance of any immovable property in a document presented for registration, the jurisdictional Sub-Registrar shall intimate
3. Whenever, it comes to the knowledge of any Income Tax Authority that there is failure of the registering authority, it shall be brought to the knowledge of the Chief Secretary of the State/UT
Case law reference – Correspondence, RBANMS Educational Institution v. B. Gunashekar [2025] 173 taxmann.com 586 (SC) [16-04-2025]
