🚫 Supreme Court Cracks Down on Cash Transactions Above ₹2 Lakhs
Landmark Judgment in RBANMS Educational Institution vs. B. Gunashekar & Another – Civil Appeal No. 5200 of 2025
The Hon’ble Supreme Court, in a recent judgment dated 16th April 2025, has delivered a significant verdict impacting real estate and financial transactions involving cash payments of ₹2,00,000 or more. This judgment is not just a cautionary tale but sets a precedent in enforcing Section 269ST and Section 271DA of the Income-tax Act, 1961.
🏛️ Case Overview
Case Title: RBANMS Educational Institution vs. B. Gunashekar & Another
Citation: Civil Appeal No. 5200 of 2025 (Arising from SLP (C) No. 13679 of 2022)
Date of Judgment: 16th April 2025
Bench: Hon’ble Justice R. Mahadevan and Justice J.B. Pardiwala
In this case, the plaintiffs had filed a civil suit claiming that they had paid an advance consideration of ₹75,00,000 in cash under an agreement to sell a property. However, the property in question was not in the name of the vendor but belonged to the appellant trust (RBANMS), which had been in possession of the property since 1905.
⚖️ What Did the Supreme Court Say?
The Court made a series of crucial legal observations that have far-reaching implications:
🔹 No Right Through Unregistered Sale Agreement
The Court reiterated that an agreement to sell does not confer any title or interest in immovable property unless it is registered under the Transfer of Property Act, 1882 and Registration Act, 1908.
🔹 Section 269ST and Penalty under Section 271DA
The Court took serious note of the fact that the entire payment of ₹75 lakhs was made in cash, violating Section 269ST of the Income-tax Act, which prohibits cash receipts exceeding ₹2,00,000.
Further, it observed that such violations attract penalty under Section 271DA, which is equal to the amount received in contravention.
Quote from Para 18.1 of the Judgment:
“It is pertinent to recall that Section 269ST of the Income Tax Act, was introduced to curb black money by digitalising the transactions above Rs. 2,00,000/- and contemplating equal amount of penalty under Section 271DA of the Act.”
🔍 Important Directions Issued by the Supreme Court
In a proactive move, the Hon’ble Court issued binding directions for the enforcement of these provisions:
1️⃣ Intimation by Courts
If any plaint or suit mentions cash transactions exceeding ₹2 Lakhs, courts must inform the Jurisdictional Income Tax Officer (ITO) to verify violations of Section 269ST.
2️⃣ Action by Income Tax Department
Upon such intimation, the ITO must examine and initiate proceedings against the recipient of the cash if found violative of the law.
3️⃣ Sub-Registrar’s Obligation
If a property document shows a cash transaction ≥ ₹2 lakhs, the Sub-Registrar must immediately notify the ITO.
4️⃣ Disciplinary Action
If any Income Tax Officer discovers a violation that the Sub-Registrar failed to report, it must be brought to the Chief Secretary of the State/UT for necessary disciplinary action.
📘 Legal Provisions Involved
| Provision | Summary |
|---|---|
| Section 269ST | Prohibits receipt of ₹2,00,000 or more in cash in a single transaction or series of transactions |
| Section 271DA | Imposes penalty equal to the amount received in cash, in contravention of Section 269ST |
| Section 54 TPA, 1882 | Sale of immovable property can only be effected through a registered instrument |
| Section 17 Registration Act, 1908 | Mandates compulsory registration for sale of immovable properties |
📉 Impact on Real Estate and Business Community
This judgment is expected to bring about a paradigm shift in how transactions, especially those related to real estate, are executed. It reinforces the move towards digital economy and curbs the parallel cash economy.
- 🛑 Agreements to sell without registration and cash transactions will no longer find judicial sympathy.
- 💰 Both the payer and recipient of cash can come under the radar.
- 🧾 Courts, registrars, and tax officials now have a duty to report violations.
✅ Practical Tips to Avoid Violation
- Avoid any cash transaction exceeding ₹2,00,000 in sale, gift, advance, or loan.
- Always route high-value transactions through NEFT, RTGS, or Cheque.
- Keep proper documentation and disclosure in your Income Tax Returns.
- Don’t assume unregistered agreements hold legal weight – they don’t.
📌 Final Thoughts
This judgment is a powerful reminder of the government’s intent to move towards transparency and digital compliance. Chartered Accountants, Legal Advisors, Real Estate Consultants, and Taxpayers must be cautious of these provisions and ensure proper documentation and adherence to Income-tax laws.
🖋️ Stay alert, stay compliant!
✍️ Author:
CA B.S. Sridhar
Practising Chartered Accountant – Chennai
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The judgement copy is provided below
