Courts, Sub-Registrars must report if they come across cash transactions over Rs. 2 Lakhs to Income Tax Department: Supreme Court
The Correspondence, RBANMS Educational Institution vs. B. Gunashekar & Another, Civil Appeal No. 5200 of 2025
Facts:
1. The case stemmed from a civil suit filed by B. Gunashekar and another against RBANMS Educational Institution, a 148-year-old charitable trust, seeking a permanent injunction.
2. The plaintiffs alleged that they had entered into an agreement to purchase a property for Rs. 9 crore and had paid an advance of Rs. 75 lakh in cash.
3. The appellant argued that a mere agreement to sell did not confer any enforceable right, particularly against third parties.
Hon SC’s Findings on Cash Transactions:
The Supreme Court took serious note of the plaintiffs’ claim of having made a ₹75 lakh payment in cash, especially since such transactions are restricted under Section 269ST of the Income Tax Act.
Directions of the Hon SC:
1. Whenever a suit is filed with a claim that Rs. 2,00,000 or more has been paid by cash towards any transaction, the courts must intimate the same to the jurisdictional Income Tax Department.
2. Whenever any such information is received, the jurisdictional Income Tax authority shall take appropriate steps in accordance with law.
3. Whenever a cash payment of Rs. 2,00,000 or above is claimed in a document presented for registration, the jurisdictional Sub-Registrar shall inform the Income Tax Department.
4. If an Income Tax Authority discovers a cash transaction above the threshold during assessment or search, and the registering authority failed to report it, such failure must be brought to the notice of the Chief Secretary of the State/UT for disciplinary action against the concerned official.
The copy of the order is as under:
