Supreme Court of India
Credit: PTI Photo
New Delhi: The Supreme Court on Wednesday asked the subordinate authorities and courts to notify the Income Tax department if any suit claimed to have made a cash transaction of Rs 2 lakh, in order to verify the transactions and check violation of Section 269ST of the Income Tax Act, 1961.
A bench of Justices J B Pardiwala and R Mahadevan said that whenever a sum of Rs 2 lakh and above is claimed to be paid by cash towards consideration for conveyance of any immovable property in a document presented for registration, the sub-registrar should inform the income tax authority, who would follow the due process in law before taking any action.
Under Section 269ST of the Income Tax Act, it is prohibited for any person to receive an amount of Rs 2 lakh or more in cash, from a person in a day, either for a single transaction or for multiple transactions related to one event or occasion. If a person receives the amount in cash of Rs 2 lakh or more, he is liable to pay a penalty equal to the amount received in cash.
“Whenever it comes to the knowledge of any income tax authority that a sum of Rs 2 lakh and above has been paid by way of consideration in any transaction relating to any immovable property from any other source or during the course of search or assessment proceedings, the failure of the registering authority shall be brought to the knowledge of the chief secretary of the state," the court said.
The court said the chief secretary can then initiate disciplinary action against such an officer who failed to intimate the transaction.
The court also noted that most times, such transactions go unnoticed or not brought to the knowledge of the income tax authorities. It is a settled position that ignorance in fact is excusable but not the ignorance in law, the court said.
Considering a property dispute involving Bengaluru-based RBANMS Educational Institution, the court was informed the institute had been leased a property known as 'Sappers Practice Ground'. In 1929, the property was formally conveyed to RBANMS Educational Institution and since then it was in continuous possession of the place.
B Gunashekar and others filed a suit for permanent injunction for restraining the Institution from creating any third-party interest over the property.
The suit was filed based on an alleged 2018 agreement to sell, which was executed by Gunashekar and Ramesh S Reddy with Maheshwari Ranganathan and others in respect of the property for a sale consideration of Rs 90 lakh, for which, the parties claimed to have paid Rs 75 lakh in cash as an advance payment. The top court rejected the suit filed by Gunashekar and others and allowed the plea filed by RBANMS Educational Institution.
"Though the amendment has come into effect from April 1, 2017, we find from the present litigation that the same has not brought the desired change. When there is a law in place, the same has to be enforced," the bench said.