The cash limits and the penalties that follow: loans and deposits, repayment, the two-lakh receipt rule, and reasonable cause under s.273B. 24 entries, strongest first, with what each one decided in a sentence. Read down the list, then open the entry that fits your facts. The Cash Transaction Limits hub cross-lists everything that touches this area, including entries filed under another subject.
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? Yes, but on a different footing. The Supreme Court confirmed that under section 269ST, with the penalty in section 271DA, action is to be taken on the recipient - and said in the same breath that there is also an onus on the person paying to disclose the source of such large cash. It then built the machinery by which such a payment reaches the department: a civil court before which a suit claims payment of Rs 2,00,000 or more in cash must intimate the jurisdictional Income-tax Department, and a Sub-Registrar before whom a document reciting cash consideration of that amount is presented for registration must do the same.
The financier insisted on cash. Can they penalise me under 271E for repaying the loan in cash? Not where reasonable cause is shown. Section 269T is mandatory, but bona fide belief coupled with the genuineness of the transaction is reasonable cause under s.273B, and once that is shown no penalty under s.271E is attracted.
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? No. The Delhi High Court held that s.269ST merely regulates the mode of a transaction and imposes a fiscal penalty; it does not render the underlying agreement void or unenforceable, and the plea that the plaint was barred by law failed. The Court also recorded that the penalty under s.271DA falls on the recipient of the cash, not the payer, so on the pleaded facts the defendant, not the plaintiff, was the party exposed.
The Assessing Officer rejected my books because of a section 40A(3) cash disallowance and an ad hoc disallowance, then raised my gross profit rate. If those two go, can the gross profit addition survive? No. The Allahabad High Court held that where the only findings casting doubt on the books were a section 40A(3) disallowance and an ad hoc consignment-sale disallowance, and both fell away, there was nothing left on which to reject the books. Once the books stand accepted there is no intrinsic evidence to enhance the gross profit rate, and the officer must leave it alone, because gross profit is the result of book entries and not an original entry. The officer's jurisdiction is to examine the correctness and completeness of the accounts, not to step into the assessee's shoes and infer more profit. The Revenue's appeal was dismissed.
The liability was created by a journal entry and no money moved. Does 269SS still apply? No. Passing a journal entry does not involve the acceptance of any loan or deposit of money, so s.269SS is not engaged. The Court also held that limitation for a s.271D penalty runs under s.275(1)(c), not s.275(1)(a)(ii).
My principal insisted I pay in cash because my bank is a cooperative bank and cheques take days to clear. The payments are genuine and identified. Will section 40A(3) still disallow them? No, on these facts. The Gujarat High Court reversed the Tribunal and held that the rigours of section 40A(3) must be lifted where the payments to Tata Teleservices Limited were genuine, the payee identified, and the assessee was compelled to pay cash because the company refused cheques or drafts drawn on the assessee's cooperative bank and undertook to deposit the cash in its own bank account. The paramount object of the section is to curb black money, and business expediency is not excluded. Rule 6DD is not exhaustive and is to be read liberally. The disallowance of the cash payments to that company was deleted.
We refunded share application money in cash. Is that a repayment of a deposit under s.269T? No. The Madras High Court held that money received as advance towards allotment of shares, with no time frame for return and no interest, is neither a deposit nor a loan but share capital advance, and that ss.269SS and 269T apply only to deposits or loans — when it is neither, those sections have no application at all. Penalty under s.271E is not automatic and a bona fide belief that advances against allotment of shares are not loans or deposits is itself a reasonable cause under s.273B.
I collect cash from my scooter buyers and pass it to my principal dealer the same day. Can the officer both disallow those cash payments under section 40A(3) and add the same cash as unexplained credits under section 68? No to both, on these facts. The Rajasthan High Court held that rule 6DD(j) must be liberally construed, that the circumstances listed in the Board's circular of 31 May 1977 are illustrative and not exhaustive, and that ordinarily where the genuineness of the transaction and the payment and the identity of the receiver are established the requirement of the rule is satisfied. The Rs 40,13,000 disallowance under section 40A(3) was set aside as a hyper-technical view. On the credits, where the Tribunal itself found that the assessee received money from customers against delivery of vehicles, the cash deposits become self-explanatory and section 68 is not attracted, so the addition of Rs 6,98,000 could not be sustained.
Money moves both ways between me and my company on a current account. Is that a loan under 269SS? No. Deposits into and withdrawals from a running current account between a director and the company are not a loan or advance, so ss.269SS and 269T do not reach them and penalty on that footing cannot stand.
My promoter paid a third party for me by account payee cheque and the amount was put through my books by journal entry. Is that a loan taken in cash? No. The Delhi High Court declined to entertain the Revenue's appeal and upheld the deletion of penalty of Rs 4.85 crore under section 271D. The Tribunal had found that the transaction was by account payee cheque, that no payment was made in cash by the assessee or on its behalf, that no loan was accepted in cash, and that the amount paid on the assessee's behalf by its promoter was passed through the books by a journal entry crediting the promoter's account. Those are findings of fact, and on them section 269SS was not attracted. The order gave rise to no question of law, much less a substantial question of law.
The officer rejected my books and estimated my income by applying a gross profit rate, and then also disallowed my cash purchases under section 40A(3). Can he do both? No. The Allahabad High Court held that where the books are rejected and income is computed by applying a gross profit rate on the sales shown, no deduction is allowed to the assessee on account of purchases, so there is nothing to disallow under section 40A(3). Applying the gross profit rate takes care of everything, and there is no need for the officer to scrutinise the amount spent on purchases or to look at section 40A(3) and rule 6DD(j) at all. The disallowance of Rs 91,926 was rightly deleted by the Tribunal. Having agreed on that primary ground, the Court declined to go into the Tribunal's alternative finding on rule 6DD(j) and returned that question unanswered.
I received the sale price of my land in cash across the table at the sub-registrar's office. Is that a 'specified sum' under s.269SS? The Hyderabad Bench held it is not. On its consistent view, cash received for the transfer of immovable property at the time of registration of the sale deed, where the receipt is recorded in the registered deed itself, does not fall within the mischief of s.269SS and does not attract s.271D. The Tribunal also set the penalty aside on the separate ground that no satisfaction had been recorded by the Assessing Officer in the assessment order.
When does the s.275(1)(c) clock start for a s.271D penalty — the AO's satisfaction in the assessment order, or the Joint Commissioner's first notice? From the Assessing Officer's satisfaction. The Tribunal held that the imposition of a s.271D penalty is not a one-stroke process but a series of steps, that the recording of satisfaction by the Assessing Officer is a pre-requisite to the proceeding, and that the date of that satisfaction is the date on which action for imposition of penalty is initiated. Counting from an assessment order dated 30 December 2022, the two limbs of s.275(1)(c) expired on 31 March 2023 and 30 June 2023, the later being 30 June 2023, so the penalty order of 30 August 2023 was barred.
The assessment order said s.269ST and s.271DA. The AO has now passed a s.154 order changing it to s.269SS and s.271D. Can he do that? No. The Tribunal held that mentioning s.269ST together with its own penalty section s.271DA is not a typographical error — it could only have been one if s.269ST had been typed alongside s.271D — so the original assessment order reflected a conscious application of mind. Substituting s.269SS and s.271D for them under s.154 was a change of opinion between two possible legal views, not the correction of a mistake apparent from the record, and the rectification order was quashed.
The Addl. CIT says we split one customer's bill into two so each stayed under Rs 2,00,000. Is that a s.269ST violation? On these facts the Tribunal deleted the s.271DA penalty, holding that where a customer bought several genuinely different items and separate invoices were raised for them, the breach was at most technical or venial and Hindustan Steel applied. But read the order for what it does not say: it never identifies which of the three limbs of s.269ST the Department invoked, and it does not deal with the 'in a day' limb, which aggregates everything received from one person in one day irrespective of how many bills were raised.
I received sale consideration for my property in cash. Is that a 269SS breach attracting 271D? On this decision, no. Section 269SS prohibits receipt of a sum by way of loan or deposit; sale consideration on a completed transfer of immovable property is neither, and since s.271D is entirely derivative of a s.269SS contravention, the penalty had no statutory foundation.
My client is charged under s.271DA. Can I rely on s.273B reasonable cause? No — s.271DA is not one of the sections listed in s.273B. The defence to a s.271DA penalty is the proviso to s.271DA(1) itself, which excuses the contravention where the person proves that there were good and sufficient reasons for it. In this case a hospital that took cash above Rs 2,00,000 from foreign patients who had no banking or card facilities in India succeeded under that proviso, the Tribunal noting that the transactions were genuine, none was outside the books, and the contravention was a very small fraction of turnover.
The group squares off inter-company balances by journal entry. The Department says every entry is a s.269SS or s.269T violation. What survives? The Tribunal dismissed the Revenue's appeals and confirmed the deletion of penalties under ss.271D and 271E. Its route was not that journal entries fall outside the sections — on the jurisdictional High Court's decision they are hit — but that the reasons for using them were commercial and therefore reasonable cause under s.273B. The reasons accepted were raising funds, assignment of receivables, squaring up transactions, operational efficiency and MIS, consolidation of family member debts, correction of errors, and loans taken in cash, and there was no finding that the transactions involved unaccounted money or were not genuine.
My client's husband gave her the money to buy a plot registered in her name, partly in cash. Is that a s.269SS violation? The Jaipur Bench deleted the s.271D penalty. It held that registering property in a wife's name is guided by family and societal factors and by the Government's own incentive of reduced stamp duty for female purchasers, that pooling family funds in that situation calls for a flexible approach to the reasonableness of the explanation, and that where the whole transaction is documented in the registered sale deed and the cash portion came from the husband's known sources, the assessee had shown reasonable cause and did not deserve to be penalised.
The penalty under s.271D came more than six months after it was initiated. Is it automatically time-barred? No. Section 275(1)(c) gives the Department the later of two periods, and where the proceedings in the course of which the penalty was initiated were completed in a financial year that ends after the six-month period, the financial-year limb governs. Here the penalty was initiated in April 2016, six months would have run out at the end of October 2016, but the relevant financial year was 2016-17, so a penalty order passed on 29 November 2016 was in time. The Tribunal also dismissed the reasonable-cause plea on the facts.
I took a cash loan from my father-in-law. Can they levy 271D on a genuine family transaction? No, on these facts. The Tribunal deleted the penalty, holding that near relatives are not 'other persons' within the mischief of s.269SS in a genuine family transaction, and that in any event unforeseen business circumstances requiring cash from a relative amounted to reasonable cause under s.273B.
My client's turnover is Rs 6 crore and almost everything moves through the bank. Is he outside tax audit, and what counts as 'cash' for the 5 per cent test? The Rs 1 crore threshold in s.44AB(a) is replaced by Rs 10 crore only where BOTH tests are met — cash receipts do not exceed 5 per cent of all amounts received, and cash payments do not exceed 5 per cent of all payments made. For that purpose the statute itself deems a payment or receipt by a cheque or bank draft which is not account payee to be a payment or receipt in cash.
My turnover crossed Rs. 50 crore. Must I offer UPI and RuPay, and what does it cost me if I don't? Yes, from 1 January 2020. A business whose turnover, sales or gross receipts exceeded Rs. 50 crore in the preceding previous year must provide three facilities under s.269SU: RuPay debit card, BHIM-UPI and UPI QR code. Section 271DB charges Rs. 5,000 for each day of default, and after the grace period the count runs from 1 February 2020.
We take loan repayments in cash instalments. Do the instalments add up against the two lakh limit? Not for NBFCs and HFCs. The Board has clarified that each instalment of loan repayment is a single transaction, so instalments received against one loan are not aggregated when testing the two lakh rupee ceiling in s.269ST.
Nothing here is written from memory. Every entry was found through a search, and the page for it links to where it was found, so you can check it rather than take our word for it. What has not happened yet is the part that matters most: nobody has read the certified copy of each judgment and signed off the summary against it. Until that is done, each page says Not yet CA-verified, and it means exactly what it says. Read the source before you rely on an entry in a reply to an Assessing Officer or in an appeal.