Section 269SS bars taking a loan, deposit or property advance of Rs 20,000 or more in cash; s.269T bars repaying one of Rs 20,000 or more in cash; s.269ST bars receiving Rs 2,00,000 or more in cash in aggregate from a person in a day, in a single transaction, or for one event or occasion. Each penalty equals 100% of the amount, imposed by the Joint Commissioner.
Section 269SS is about taking money in. No person shall take or accept a loan, deposit or "specified sum" otherwise than by account payee cheque, account payee bank draft, electronic clearing system through a bank account or another prescribed electronic mode, where the amount, or the aggregate outstanding from that person, is Rs 20,000 or more. "Specified sum" is defined widely as any sum receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place — so a cash token advance on a plot is caught even if the deal collapses. Government, banking companies, post office savings banks, co-operative banks, government corporations and companies are outside it, as are transactions where both parties have only agricultural income and no taxable income.
Section 269T is the mirror image, about paying money out. Repayment of a loan, deposit or specified advance must be by account payee cheque or account payee bank draft (a bank may instead credit the sum to the depositor's savings or current account), where the amount together with interest, or the aggregate held by that person alone or jointly, is Rs 20,000 or more. Both the s.269SS and the s.269T figures have stood at Rs 20,000 for many years, but neither is a constant of the Act: check the section as it stood for the year before applying Rs 20,000 to an assessment from the 1980s or 1990s, and note that the "specified sum" and "specified advance" limbs reaching immovable-property advances were only inserted by the Finance Act 2015 with effect from 1 June 2015.
Section 269ST is the general one, inserted by the Finance Act 2017 with effect from 1 April 2017, and it applies to everyone receiving money, not only lenders. No person shall receive Rs 2,00,000 or more otherwise than by account payee cheque, account payee bank draft or electronic clearing system, (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. Government, banks, receipts already covered by s.269SS, and notified persons are excepted. The three limbs are independent — splitting a Rs 5 lakh wedding payment across five days still fails limb (c).
The penalties are unforgiving. Section 271D imposes "a sum equal to the amount of the loan or deposit so taken or accepted"; s.271E imposes a sum equal to the amount repaid; s.271DA imposes "a sum equal to the amount of such receipt". All three are imposed by the Joint Commissioner, not the Assessing Officer.
Reasonable cause is the defence, and it is not uniform. Section 273B lists s.271D and s.271E, so no penalty is imposable if the person proves there was reasonable cause for the failure. Section 271DA is not in that list; it has its own escape, that the person proves there were good and sufficient reasons for the contravention — which commentators regard as a harder standard.
On what reasonable cause means for s.269SS, the Tribunal position summarised in the professional literature is that showing the loan was genuine is not enough. The assessee must additionally show bona fide reasons for being unable to take the money by account payee cheque or draft. Urgency, a bank holiday, a remote location and a documented emergency are the sort of facts that carry weight; the mere fact that the lender is a director or a relative does not.
These penalties are 100% of the principal, not of the tax, and they are levied even where the transaction is fully disclosed and the income fully taxed. A single Rs 3 lakh cash receipt on a property sale can produce a Rs 3 lakh penalty on the seller under s.271DA and nothing at all on the buyer. Because s.271DA sits outside s.273B, the s.269ST defence is narrower than the s.269SS one.
You took a cash loan and now face penalty equal to the whole amount. Is there any relief?
The assessment in which the s.271E satisfaction was recorded has been set aside. Can the penalty stand?
Must penalty be imposed just because the law permits it?
The section 269ST penalty falls on the person who receives the cash. If I am the buyer paying cash for property, am I exposed at all?
My agents keep the difference between the price they charge customers and the net price they pay me — do I have to deduct TDS on money that never passed through my hands?
My s.220(6) application against a penalty demand was rejected only because I filed no evidence of financial hardship. Is that a good enough reason?
We paid Rs 1.5 crore in cash under an agreement. The other side says s.269ST makes the agreement void and our recovery suit is not maintainable. Is it?
Our audit report was late because the statutory auditor was late. Can the officer still levy the s.271B penalty?
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