Restrictions on Cash Transactions of Rs. 2 Lacs or More under Income Tax

MODE OF UNDERTAKING TRANSACTIONS.

269ST. No person shall receive an amount of two lakh rupees or more—

 (a) in aggregate from a person in a day; or

 (b) in respect of a single transaction; or

 (c) in respect of transactions relating to one event or occasion from a person,

otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed]:

Provided that the provisions of this section shall not apply to—

(i) any receipt by—

(a) Government;

(b) any banking company, post office savings bank or co-operative bank;

(ii) transactions of the nature referred to in section 269SS;

(iii) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify.

Explanation.—For the purposes of this section,—

(a) “banking company” shall have the same meaning as assigned to it in clause (i) of the Explanation to section 269SS;

(b)”co-operative bank” shall have the same meaning as assigned to it in clause (ii) of the explanation to section 269SS.

The Central Board of Direct Taxes has prescribed other electronic modes to provide for the followings as an acceptable electronic mode of payments–

(a) Credit Card;

(b) Debit Card;

(c) Net Banking;

(d) IMPS (Immediate Payment Service);

(e) UPI (Unified Payment Interface);

(f) RTGS (Real Time Gross Settlement);

(g) NEFT (National Electronic Funds Transfer), and

(h) BHIM (Bharat Interface for Money)Aadhar Pay”͖

For this purpose, a new Rule 6ABBA with the heading ‘Other electronic modes’ is introduced the Income Tax Rules, 1962. This rule has been given a retrospective effect and will come into in force from 01- 09-2019 even though the notification was issued on 29-01-2020.

KEY POINTS IN SEC 269ST

1. Restriction is only on the person receiving money and not on the person paying money:

• The restriction u/s 269ST is only on receipt of money and not on payment of money.
• Therefore, penalty u/s 271DA on violation of these provisions shall be leviable only on the person receiving money and not on the person paying the money.

2. Restriction is applicable on all the entities:

• The restriction U/s. 269ST is applicable on all the entities (except those which have been exempted specifically as per the proviso).
• In the section the word “Person” has been used for both payer and the receiver.
• As per section 2(31), the word person is defined in inclusive manner to include individuals, HUFs, companies, firms, AOPs, BOIs, local authorities and other artificial juridical persons

3. Applicable to receipts whether for business purpose, personal purpose or any other purpose:

• The restriction is applicable irrespective of purpose of accepting amount i.e., whether business purpose or personal purpose or as a trustee, custodian etc.
• However, these provisions are not applicable to the transactions of receiving money for loan, deposit or for transfer of immovable property because there are already separate provisions restricting receipt of money in cash etc. for these purposes. The limit for accepting money for those purposes in cash etc. is 20,000/- only.

4. Character of Receipt Irrelevant

• The character of receipt is irrelevant i.e. exempt income / taxable income etc

5. Applicable to receipts whether with or without consideration:

• The restriction is applicable irrespective of the fact that whether the receipt is with or without consideration. In case of receipt of money without consideration in contravention of Section 269ST, there will be dual impact, one charge of tax u/s. 56 (in specific cases) as well as levy of penalty u/s. 271DA.
• Gift in cash (Even though gift received from relative, according to provision of section 56(2)(vii) of the I.T.Act,1961, is exempted but if the amount of Gift of Rs 2 Lakhs or more is received from relative in cash w.e.f 01.04.2017 assessee has to bear penalty u/s 271DA for contravention of this section 269ST.

6. PAN not relevant

• It is irrelevant whether the person receiving the cash has a PAN (Permanent Account Number) or not.

7. Search & Seizure

• It is not necessary that the restriction of Receipt of Rs 2 Lakhs or more is to be based on the entries in books of account alone.
• An entry or record found during search under section 132 or survey under section 133A may also show that the recipient has received more than the specified sum in non permissible mode.

We can divide the section into 5 parts to understand it in a better way:

A. NO PERSON SHALL RECEIVE AN AMOUNT OF TWO LAKH RUPEES OR MORE IN AGGREGATE FROM A PERSON IN A DAY

The first clause of the section has restricted to any person for  not  to receive an amount of Rs. 2 Lakh or more from a person in a day otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account. Here purpose of the payment is irrelevant. The main focus is ‘from a person’ and ‘in a day’. 

Now a question arises what is a meaning of a day. A legal day commences at 12 o’ clock midnight and continues until the same hour the following night. (PrabhuDayalSesmavs State of Rajasthan, AIR 1986 SC 1948)

The restriction is applicable even if the different receipts are in relation to distinct transactions entered into on same day or different days. This section will be violated if following four pre-requisites are fulfilled:

i) There is single payer

ii) There is a single receiver.

iii) The payment is in single day.

iv) The amount received by the person in cash is Rs. 2 Lakhs or above.

The payment may be towards two separate invoices of different dates and each invoice below Rs. 2 Lacs, but the person cannot receive Rs. 2,00,000 or more in cash from a person in aggregate in a single day. We shall understand this with the help of following examples:

Example 1: ABC & Co. issued invoice of Rs. 1,60,000 to Mr. Bhushan on 15/04/2021 and another invoice of Rs. 1,25,000 on 16/04/2021. Can ABC & Co receive the payment of Rs.2,85,000 in cash/ bearer cheque on 17/04/2021?

No, as the aggregate of both the invoices exceeds Rs. 2,00,000; ABC & Co. cannot receive the whole amount in cash/ bearer cheque. Only amount upto Rs. 1,99,999 can be received in cash/ bearer cheque mode in a  single day.

Example 2 Suppose in above example, Rs 1,80,000 is received in cash from Mr. Bhushan and balance Rs. 1,05,000 is received from Mrs. Bhushan (Mr. Bhushan’ wife) on 17/04/2021. Is there any violation of law?

There is no violation of law in this case. ABC & Co. can receive the amount in cash from 2 different persons as the first limb restricts receiving cash of Rs. 2 lakh or more from ‘a person’ in a day.

Example: ABC& Co. issued following invoices and received following payments:

Customer	X	Y	Z
Bill No. 001	2,50,000	1,50,000	1,10,000
Bill No. 002	–	30,000	65,000
Bill No. 003	–	–	45,000
Total	2,50,000	1,80,000	2,20,000
Total cash receipts in a single day	2,50,000	1,80,000	2,20,000
Whether sec 269ST violated	Yes	No	Yes
Penalty Amount	2,50,000	Nil	2,20,000

B. IN RESPECT OF A SINGLE TRANSACTION

No person shall receive an amount of two lacs rupees or more in respect of a single transaction otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account . It is to be noted that only the transaction is to be seen. Recipient is single person but payer could be single or multiple persons and payment could be in a single day or spread over many days.

This part of the section restricts receipt of Rs. 2,00,000 or more in respect of a single transaction otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account. Here the major focus is on ‘single transaction’. The number of installments or parts in which payment is made is irrelevant. Further, here word ‘a person’ is not used. Therefore, the recipient cannot receive Rs.2,00,000 or more in cash in a single transaction even if different persons are making payment. However, if the each of invoice amounts are below Rs. 2 Lakh, this provision may not be contravened. The pre-requisites for section to be violated are:

i) Single Receiver

ii) The cash payment relating to a particular transaction is Rs. 2,00,000 or more.

If the parties try to split their payments, such that one transaction is given effect to over multiple days like making payments of Rs. 10,000 on different dates in respect of a single transaction, then obviously it will not fall under first clause as aggregate is out of question being payments received on different dates but is covered by second clause. It is to be noted that if a single transaction is Rs.2,00,000/-or more, then the payment can be received in cash only  upto the amount of Rs.1,99,999/-.It can be received in one instalment or by splitting the amount of Rs.1,99,999/-in instalments of Rs.10,000/-or more.

Example 3. M/s Lotus Chemicals issued invoice of Rs. 7,50,000 to their customer on 19/12/2021. The customer intends to make payment in cash in 10 weekly installments of Rs. 75,000 each. Whether M/s Lotus Chemicals can accept the above proposal?

Ans. M/s Lotus Chemicals cannot accept the above proposal as the cash receipts (though on different dates) are towards a single transaction and exceeds Rs. 2 Lakh. It is further to be noted that M/s Lotus Chemicals can receive two instalments of Rs.75,000/-in cash and  Rs.49,999/- in cash and balance amount in non-cash mode.

Example 4. Mr. Gupta bought car of Rs. 3,50,000 on 15/03/2021. The car seller receives Rs. 1,80,000 from Mr. Gupta and Rs. 1,70,000 from his son. Whether Sec 269ST has been violated?

Ans. The car seller has violated the section as the total cash receipt relating to a particular transaction (sale of car in this case) exceeds Rs. 2,00,000. It is immaterial that the none of the payer has paid Rs. 2 Lakh or above. The recipient can receive upto Rs.1,99,999 in cash and balance through account payee cheque/ draft or ECS. 

Example 5: M/s ABC & Co. sold a machinery for Rs. 6,00,000 to 3 different persons X, Y and Z

Particular	X	Y	Z
Sale Amount	6,00,000	6,00,000	6,00,000
Cash Receipt on 13/10/2021	2,50,000	1,90,000	–
Cash Receipt on 20/10/2021	–	1,90,000	1,50,000
Receipt by account payee cheque	3,00,000	2,20,000	2,00,000
Receipt by RTGS	50,000	–	2,50,000
Total cash Receipts	2,50,000	3,80,000	1,50,000
Whether Sec 269ST violated	Yes	Yes	No
Penalty u/s 271DA on M/s ABC & Co.	2,50,000	3,80,000	Nil

CLARIFICATIONS IN RESPECT OF SECTION 269ST OF THE INCOME-TAX  ACT,1961 – CIRCULAR NO. 22/2017 DATED 03.07.2017

• With a view to promote digital economy and create a disincentive against cash economy, a new section 269ST has been inserted in the Income-tax Act, 1961(the Act) vide Finance Act, 2017. The said section inter-alia prohibits receipt of an amount of two lakh rupees or more by a person, in the circumstances specified therein, through modes other than by way of an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account. Penal provisions have also been introduced by way of a new section 271DA, which provides that if a person receives any amount in contravention to the provisions of section 269ST, it shall be liable to pay penalty of a sum equal to the amount of such receipt.
• Subsequently, representations have been received from non-banking financial companies (NBFCs) and housing finance companies (HFCs) as to whether the provisions of section 269ST of the Act shall apply to one instalment of loan repayment or the whole amount of such repayment.

In this context, it is clarified that in respect of receipt in the nature of repayment of loan by NBFCs or HFCs, the receipt of one instalment of loan repayment in respect of a loan shall constitute a ‘single transaction’ as specified in clause (b) of section 269ST of the Act and all the instalments paid for a loan shall not be aggregated for the purposes of determining applicability of the provisions section 269ST.It has been clarified that for loan repayment to NBFC/HFC, each installment of repayment shall constitute as a single transaction and all the installments paid for loan shall not be aggregated for the purpose of Sec 269ST. In other words, repayment of loan to NBFC/HFC can be in cash if each installment is less than Rs. 2,00,000. However, other transactions related to NBFC/ HFC will still be covered by this section like cash receipt of down payment at time of sale/ financing of any goods or receipt from sale of repossessed goods etc.

C. IN RESPECT OF TRANSACTIONS RELATING TO ONE EVENT OR OCCASION FROM A PERSON

This clause attempts to target transactions scattered over different days but relating to a single event or occasion. Here major focus is ‘one event or occasion’ and ‘a person’. Pre-requisites for attraction of this section shall be:

i) Single Receiver

ii) Single Payer

iii) Cash payment relating to single event/ occasion is Rs. 2 Lakhs or more.

From the above it is interesting to note that in clause (c) of Section 269ST of Income Tax Act the words “from a person” have been used. Due to this now the language has become that “No person shall receive an amount of Two lakh rupees or more in respect of transactions relating to one event or occasion from a person”. In cases where there are more than one transaction and they are related with one event or occasion.

The entity will fall in clause (c) and in such a situation, separate limit will become available for different persons in a joint transaction.

This clause seeks to cover all receipts from a person in relation to transactions relating to one event or occasion such as reimbursement, marriage, birthday, anniversary, functions by religious bodies like satsangs, dharamsamelans, exhibitions or the like. This may include payments made in respect of catering, decoration, tents, pandal, sound, rent of resort etc. To illustrate, marriage is an event and there may be several functions relating to it like ring ceremony, haldi ceremony, bangle ceremony, shagun, wedding party, reception etc. All these functions are related to a single event. Therefore, the limit of Rs. 2 Lakh will be for the entire marriage and not for each function.

For example, if for a marriage there are 3 different bills of Rs. 1 lakhs each (total Rs. 3 lakhs), and all the three bills are in the name of three different persons say one bill (garden on rent for marriage reception,) of Rs. 1 lakhs is in the name of the person who is being married, second bill (given tent house services)  is in the name of father of that person for Rs. 1 lakhs and the third bill (for decoration) is in the name of the mother of that person for Rs. 1 lakhs. Then in such a situation entire Rs. 3 lakhs can be paid in cash etc. mode i.e., Rs. 1 lakh by the person being married, Rs. 1 lakhs by the father and Rs. 1 lakhs by the mother. Even if all the bills are in the joint names of three persons then also the payment can be made in the above manner.

The definition of the words ‘event’ or ‘occasion’ has not been given in section 269ST. Further, no clarification has been given by the CBDT through any circular etc. Similarly, no direct judicial decisions are presently available on the scope of the above words. Therefore, lot of confusion has got created regarding the meaning and scope of the above two words. Further the mysterious words which have created hue and cry that is word occasion/event, to bring within the fold of the law receipt of 2 lakh rupees or more in respect of transactions relating to one event or occasion from a person, have been subject matter of unending professional and academic debate . The law lexicon at page 1842 has clarified the world event as “the consequence of anything, the issue, conclusion and that in which an action, operation, or series of operations, terminates” and word occasion has been defined at page 3562 as “something that produces an effect or brings about an event”. When two definitions of word occasion and event are analysed and compared hand-in-hand in conjunction, it will be glaring that occasion gives rise to event and various occasions can also be included in any event.

Example 6 Mr. Puneet receives following gifts on his marriage:

S.No.	Particulars	Whether Sec 269ST Violated	Reasons
1	Receives shagun of Rs.1,000 each in cash from 220 persons	No	None of the person gifted Rs.2 Lakh or more in cash.
2	Receives shagun of Rs.1,11,000from his uncle on the marriage day and Rs.1,51,000 on the day of reception.	Yes	As the total cash receipt from a person relating to occasion‘marriage’exceedRs.2 Lakh
3	His uncle gifted Rs. 1,70,000 to him and Rs. 81,000 to his mother in cash	No	No person has received Rs.2 Lakh or more in cash.

In case of 2^nd and 3^rd limb of sec 269ST the word ’transaction’ has been used

(a) in respect of a single transaction; or

 (b) in respect of transactions relating to one event or occasion from a person

However, for the purposes of section 2(xxiv) of the Gift-tax Act, 1958, it has been held that the term ‘transaction’ refers to a bilateral transaction but not to a unilateral transaction. [Dr. A. R. Shukla v. CGT [1969] 74 ITR 167 (Guj.); CGT v. Jer Mavis Lubim off [1978] 114 ITR 90 (Bom.), CGT v. Ebrahim Haji UsufBotawala [1980] 122 ITR 62 (Bom.)]. Hence, a gift may not be covered under 2^nd and 3^rd limb of sec 269ST of the Act.

Following the above judgments, gift is a unilateral act and not a transaction. Therefore, in the above table, in case 2, where shagun of Rs.1,11,000 is received from his uncle on the marriage day and Rs.1,51,000 on the day of reception, there may not be violation of sec 269ST. However, the first limb i.e.  in aggregate from a person in a day shall continue to apply in case of gifts.

Example 7 M/s Tania Event Managers arranged a marriage function in February 2020.

Date	Particulars	Case 1	Case-2	Case-3	Case-4
22/02/2021	Invoice for ‘Ring Ceremony’	1,80,000	70,000	1,80,000	1,80,000
23/02/2021	Invoice for  catering on ‘Marriage Day’	1,90,000	60,000	1,90,000	1,90,000
23/02/2021	Invoice for decoration on ‘Marriage Day’	45,000	45,000	45,000	45,000
	Total of Invoices	4,15,000	1,75,000	4,15,000	4,15,000
01/03/2021	Received cash from Bride’s father	1,75,000	1,75,000	1,75,000	1,75,000
03/03/2021	Received cash from Bride’s father	60,000	–	–	25,000
04/03/2021	Received cash from Bride’s brother	–	–	65,000	–
05/03/2021	Received payment by credit card/ account payee cheque	1,80,000	–	1,75,000	2,15,000
	Total cash payments	2,35,000	1,75,000	2,40,000	2,00,000
	From Bride’s father	2,35,000	1,75,000	1,75,000	2,00,000
	From Bride’s brother	–	–	65,000	–
	Violation of sec 269ST	Yes	No	No	Yes
	Penalty u/s 271DA	2,35,000	Nil	Nil	2,00,000

SUMMARY OF SEC 269ST

CLAUSES	Conditions	Irrespective of
i) in aggregate from a person in a day	Number of persons- 1 Number of Days-1	Number of transactions
ii) in respect of a single transaction	Number of transactions- 1	Number of persons Number of days
iii) in respect of transactions relating to one event or occasion from a person	Number of persons-1 Number of event/occasion- 1	Number of days Number of transactions

E. EXEMPTIONS

The above provisions are not applicable in the following cases :-

(1) Receipt by Government;

(2) Receipt by any banking company, post office savings bank or co-operative bank

(3) Transactions of the nature referred to in section 269SS i.e. acceptance of loans/ deposits/ specified advance.

(4) Persons/receipts notified by government:-

• Receipts (cash withdrawals) by any person from bank, cooperative bank or post office savings bank
• Receipt by business correspondent on behalf of banking company or cooperative bank as per RBI guidelines.
• Receipt by white label ATM operator from retail outlet sources on behalf of banking company or cooperative bank.
• Receipt from an agent by an issuer of prepaid payment instruments.
• Receipt by company/ institution issuing credit cards against bills raised in respect of one or more credit cards.
• Receipt exempt u/s 10(17A) i.e. any award from state/central government

E. Penalty u/s 271DA

Penalty for failure to comply with provisions of section 269ST

(1) If a person receives any sum in contravention of the provisions of section 269ST, he shall be liable to pay, by way of penalty, a sum equal to the amount of such receipt: Provided that no penalty shall be imposable if such person proves that there were good and sufficient reasons for the contravention.

(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.

If any person violates sec 269ST, then penalty shall be levied @ 100% of such receipt.

Example: If any person issues invoice for Rs. 5,00,000 and receives Rs. 3,00,000 in cash and Rs. 2,00,000 by cheque. Then penalty of Rs. 3,00,000 shall be levied.

Section 271DA has been inserted w.e.f. 1.4.2017 to provide for penalty for failure to comply with provisions of section 269ST. Essentially, the section provides as follows –

(a) If a person receives any sum in contravention of the provisions of section 269ST, he shall be liable to pay, by way of penalty, a sum equal to the amount of such receipt.

(b) Any such penalty shall be imposed by the Joint Commissioner.

(c) The penalty shall not be imposable if such person proves that there were “good and sufficient” reasons for the contravention.

Section 271DA states that if a person receives any “sum” as against section 269ST using the expression “any amount”. At the same time, subsequently, in section 271DA it is provided that the penalty shall be equal to “the amount” of the receipt. This suggests that the term “sum” and “amount” have been used interchangeably

It is to be noted that the penalty shall not be imposable if such person proves that there were “good and sufficient” reasons for the contravention The words “good and sufficient reasons” only mean “appropriate” or “suitable” or “satisfactory” or “fit” and “enough” or “adequate” reasons for cancelling the registration.  To illustrate, if the payer’s cheque has been returned unpaid due to insufficient funds, the recipient may not be inclined to again take a cheque from him and may not want to even wait for a wire transfer or draft from the payer. In such circumstances, if he accepts cash in lieu of his debt, it may be possible to argue that there were good and sufficient reasons for receiving cash.

Time limit for commencement of penalty proceeding It appears that there is no express time limit for initiation of penalty proceedings. Now, Courts have held that where there is no period of limitation, the power must be exercised in reasonable time.

 Hence, a view may be taken that depending on the facts, the penalty proceedings under section 271DA should commence within a reasonable period after the contravention of section 269ST.

Appeal against an order passed under section 271DA

Section 246A(1)(q) provides as follows: “(1) Any assessee or any deductor or any collector aggrieved by any of the following orders (whether made before or after the appointed day) may appeal to the Commissioner (Appeals) against …..

 (q) …. an order imposing a penalty under Chapter XXI.:

Order U/S 271DA is an order under Chapter XXI. However, unless the recipient is an assessee, he cannot file an appeal against the penalty order u/s 246A of the Act.. To illustrate, suppose an agriculturist who is not liable to tax, receives the specified amount in respect of transactions other than those which are exempt. In such a case, can the agriculturist be regarded as an assessee within the meaning of section 246A?

According to one view, section 246A does not apply on account of the following reasons :

(a) Section 246A applies to penalty order on a person in his capacity of assessee. Here, the person penalized does not receive the penalty order in his capacity as an assessee. Hence, the order is not appealable.

(b) If the term “assessee” was to cover any tax payer then, there was no need to add the terms “tax deductor” or “tax collector” in section 246A. Even, a tax deductor or tax collector could be an assessee; but it was necessary to make a special reference to them only because the expression “assessee” did not cover defaults in other capacities such as “tax deductor” or “tax collector”.

(c) If there is no appeal against order by CIT(A), by parity of reasoning, there ought not be an appeal against the penalty order by the AO

There is no express prohibition against an appeal against an order under section 271DA. Applying the aforesaid principles of interpretation of `an appeal provision’, section 246A(1) has to be liberally construed and even if there is any doubt, it should be resolved in favor of the person on whom penalty is imposed. Accordingly, an appeal against the penalty order under section 271DA should be allowed

Q 1.Whether Sec 269ST applies to receipt of exempt income?

Ans. Yes, Sec 269ST applies to all types of receipts whether exempt or taxable except the receipts specifically notified by government. Therefore, section shall also apply to receipt of payment by farmers.

Q 2. Whether Sec 269ST applies to receipt of payment for personal purpose?

Ans. Yes, Sec 269ST applies to payments for personal purpose. There is no difference whether the receipt is for personal or business purpose or whether it is a revenue or capital receipt.

Q 3. What is the maximum amount of cash memo that can be issued?

Ans. Cash Memo can be issued up to Rs 1,99,999 (including taxes). Any cash memo above that will lead to contravention of this section. But the assessee has to follow the limits to issue cash memo under other laws.

Q 4. Can my customer deposit Rs. 2,00,000 or above in cash directly to my bank account?

Ans. No, the customer cannot deposit Rs. 2,00,000 or above in cash directly to my bank account because the section allows receipt of Rs. 2 Lakh or above only by account payee cheque/ draft or electronic clearing system through bank account. The Allahabad high Court has held in  the case of Ajai Kumar Singh KhaldelialTS-35-HC-2020(ALL) that cash deposit in the bank account of supplier is disallowed u/s 40A(3) of the Act. The court held that depositing cash directly in the bank account of the supplier / beneficiary cannot be referred to as payment made through electronic clearing system, covered as an exception under Rule 6DDI(v); Observes that the term use of electronic clearing system through bank account” as stipulated in Rule 6DDI(v) would necessarily include the transaction of funds by electronic mode through clearing system i.e. through electronic mode of transfer such as NEFT, RTGS, IMPS, etc.; Opines that, Such transaction by depositing cash directly in the bank account of the beneficiary is not routed through any clearing house nor is the money send through electronic mode and therefore such a transaction in my considered opinion cannot be covered by Rule 6DDI(v) ”; On the same footing, a customer can’t deposit Rs.2,00,000/- or more in cash in the bank account of the seller.

Q 5. Will this section apply to introduction of capital by a partner to the firm?

Ans. The cash transactions are made in respect of introduction or withdrawal of capital from partnership firm by the partners and if the amount is Rs.2 lakhs or more, whether the said transactions will be covered by the provisions of section 269ST. There are different opinions in respect of such transactions. As per one school of thought, since the partnership firm and partners are distinct persons, the provisions of section 269ST are applicable. As per another school of thought, the partners and firm are same, as partnership firm is not a legal entity from partners. Under the Indian Partnership Act, a partnership has not been given any legal status. It is not a juristic person and the independent status given to the partnership firm under the Act has to be limited only for the purposes of that Act. Such a legal position becomes clear from the landmark judgment of the Supreme Court in CIT vs. R.M. Chidambaram Pillai [1977] 106 ITR 292. In this case, Supreme Court exclusively dealt with the concept of a partnership firm and quoted with approval a paragraph from Lindley on Partnership– “In point of law, a partner may be the debtor or the creditor of his co-partners, but he cannot be either debtor or creditor of the firm of which he is himself a member, nor can he be employed by his firm, for a man cannot be his own employer.” The Supreme Court has in its various judgments pointed out that the Indian law of partnership is substantially same in this regard. In another case Dulich and Laxmi narayan v. CIT [1956] 29 ITR 535, the Apex Court quoted with approval: “In some systems of law this separate personality or a firm apart from its members has received full and formal recognition, as, for instance, in Scotland. That is, however, not the English common law conception of a firm. English lawyers do not recognise a firm as an entity distinct from the members composing it.” The partners of the firm are collectively referred as partners and the amount withdrawn or introduced contains part of their own capital. Hence, the provisions of section 269ST are not applicable.

Thus, if we follow this view point, the partners cannot be considered as separate and distinct from their firm and any money provided by them to the firm cannot be taken as an independent transaction  under the purview of Section 269ST of the Act.

Relying upon this decision, the High Court of Delhi in the case of CIT vs. Muthoot Financiers ITA No. 336, 338, 341 and 345 of 2002 dated 03.02.2015 has held that Section 269SS of the Act would not be violated when money is exchanged inter-se between the partners and the partnership firm.

Similar position applies to the receipt and payment of partner’s capital by partnership firm as held in the case of ITO vs. Universal Associates ITA No. 1349/Ahd/2010 dt. 17.06.2011as partner’s capital neither constitutes loan nor deposit.

Q 6. Will this section apply to introduction of capital by a sole proprietor?

Ans. No, this section will not apply to introduction of capital by a sole proprietor as the proprietor and his business concern are one and same person.

Q 7. Mr. Bajaj borrowed Rs. 4,00,000 in cash from Mr. Akash. Later he repaid Rs. 2,50,000 in cash. State the applicability of Sec 269SS, 269T and 269ST?

Ans. Mr. Bajaj has violated sec 269SS by accepting cash loan of Rs. 20,000 or more and penalty shall be levied u/s 271D on borrower (Mr. Bajaj). However Sec 269ST shall not be applicable even if amount exceeding Rs. 2,00,000 has been received from a person in a day as transactions covered by 269SS are out of ambit of Sec 269ST.

Regarding repayment of Rs. 2,50,000 in cash, Sec 269T has been violated by Mr. Bajaj as loan has been repaid in cash exceeding Rs. 20,000 and penalty shall be levied u/s 271E on the person who is making repayment (Mr. Bajaj).

Sec 269ST has been violated by Mr. Akash as he has accepted cash of Rs. 2,50,000 from a person in a day. Penalty u/s 271DA shall be levied on recipient (Mr. Akash).

Q 8. Will sec 269ST be applied on cash gifts, even if such cash gifts have been taxed u/s 56(2)(x)?

Ans. Yes, sec 269ST will be applied on cash gifts irrespective of the fact that whether such gifts have been taxed or not. A person cannot accept a cash gift of more than Rs. 1,99,999.

However, a person can receive different cash gifts of Rs. 1,99,999 or less from a person, provided the gifts do not form part of a single transaction and not related to single event/ occasion.

Q 9. X was hospitalized in DAC Hospital. The bill amount for treatment, testing charges, room rent and other charges was Rs. 3,50,000. What is the maximum amount hospital can receive in cash?

Ans. From the above it is interesting to note that in clause (c) of Section 269ST of Income Tax Act the words “from a person” have been used. Due to this now the language has become that “No person shall receive an amount of Two lakh rupees or more in respect of transactions relating to one event or occasion from a person”. In cases where there are more than one transaction and they are related with one event or occasion, the entity will fall in clause (c) and in such a situation, separate limit will become available for different persons in a joint transaction.

This clause seeks to cover all receipts from a person in relation to transactions relating to one event The hospital can receive up to Rs. 1,99,999 in cash and balance through modes allowed u/s 269ST. The reason being, the treatment of a patient is a single transaction and hence covered by clause (b). Even if separate invoices are issued for treatment, testing charges and other charges, then also it will be covered by clause (c) as curing/ treatment is a single event/ occasion. All the distinct transactions are related to this event.

Q 10. A person bought a car for Rs. 4,00,000 in an exchange offer. His old car was valued for Rs.2,50,000 and he gave Rs. 1,50,000 in cash? Whether sec 269ST contravened?

Ans: No, the section has not been contravened as the section applies only to cash component in the transaction. Therefore, section has to be applied net of exchange value. This is evident from the objective behind the insertion of section 269STwhich was explained by CBDT circular No. dated 15.02.2018 in para 77 as under

“77.1 In India, the quantum of domestic black money is huge which adversely affects the revenue of the Government creating a resource crunch for its various welfare programmes. Black money is generally transacted in cash and large amount of unaccounted wealth is stored and used in form of cash.

77.2 In order to achieve the mission of the Government to move towards a less cash economy to reduce generation and circulation of black money, a new section 269ST has been inserted in the Income-tax Act͙.”

It is evident that receipts in kind are not the intention of the law and cannot be regarded as receipt of amount within the meaning of section 269ST.

Q 11. One of the doubtful debtors, who was not clearing his dues suddenly camp up and offered to settle his account and pay Rs. 3,00,000 in cash. Whether money can be accepted in cash?

Ans. As per sec 269ST, cash of Rs. 3,00,000 from a person in a day cannot be accepted.

However, as per sec 271DA penalty may not be imposed if the recipient proves that there were good & sufficient reasons for the contravention. In this case, if the person has documentary proofs and evidences that the debtor was not clearing his dues and in past he was unable to recover the amount, penalty may not be imposed.

Q12.Whether the provisions of sec 269ST are applicable in the case of payment received from an agent?

Ans. To resolve this issue, we need to know whether the agent is representing recipient or representing the payer. In case, the agent is representing recipient, receipt from own agent is receipt from self. Section 269ST is not attracted. In case, the agent is representing the payer, receipt from agent of a payer is like receipt from payer. In this case provisions of section 269ST are attracted.

Now a question arises whether the provisions of sec 269ST are applicable in the case of payment received through an agent. In this connection it is to be noted that when your agent receives from a third party on your behalf, it tant amounts to receipt by you and sec 269ST is attracted and subsequent payment by agent to you is not a receipt and hence sec 269ST is not applicable.

Q13. If a person who holds a Power of Attorney (‘PoA’) of another person, pays Rs.1,50,000 in cash in his own capacity and another Rs. 1,50,000 in cash on behalf of the person who has issued the PoA, will the recipient be liable to penalty for receipt of Rs.3,00,000 in cash ?

Ans. a) Rule 6DD(k) provides that no disallowance under Section 40A(3) shall be made where the payment is made by any person to his agent who is required to make payment in cash for goods or services on behalf of such person

b) Applying the aforesaid principle, payment made in the capacity of holder of POA is different from the payment made in his own capacity. Therefore, Section 269ST does not apply as the cash paid in each circumstance does not exceed the limit of Rs. 2,00,000/-.

Q14.The provisions of Section 269ST will not apply to any receipt by Banking Company. In recent Payment Banking Licenses issued by RBI, the Banks are permitted to appoint agents who received cash from customers for deposition in Bank Accounts. Whether cash received by agents of Payment Banks will trigger Section 269ST.

Ans. It is pertinent to note that Section 269ST has specifically excluded any banking company, post office savings bank or co-operative bank from the applicability of S. 269ST.

Cash received by agents on behalf of the bank would partake the character of cash received by the bank since the agent represents his principal. It would be deemed that the payment was received by the banking company and hence section 269ST would not be applicable.

Conclusion: Sec.269ST would not apply to an agent receiving money on behalf of his principal being a banking company.

Q15.At the time of selling of immovable property, old furniture, geyser, AC, fridge etc are also sold to the buyer by way of an agreement separate from the sale deed. These assets are sold for total consideration of Rs. 2,50,000/- and cash is received. Whether 269ST would be violated?

Ans. Yes, this cash receipt would be in violation of Section 269ST and penalty under section 271DA would be levied. However, if these items are sold cumulatively with the sale deed of immovable property and no separate agreement is made for these items, then in such cases, Section 269SS would come into play and the limit of Rs. 20,000 would apply as against the limit of Rs. 2,00,000/-

Q16. Are provisions of section 269ST and 269T mutually exclusive?

Ans. The provisions of the section 269ST and 269T are mutually exclusive. Section 269T imposes obligation on the borrower and is restricted to loan and deposits while section 269ST imposes obligation on the recipient and covers all kinds of receipts whether loan, deposits or otherwise. To illustrate, let us take an example:

Case	Violation u/s 269T	Consequence
Borrower repays Rs. 50,000 in cash	Yes	Penalty under section 271E on the borrower.
Borrower repays Rs. 2,10,000 in cash	Yes	Penalty under section 271E on the borrower. Penalty under section 271DA on the recipient.

 Q17.Mr.X purchased goods from Mr. Y worth Rs. 4,00,000 on credit basis, Mr. Y has dues payable to Mr. Z. Mr. X has dues receivable from Mr. Z. On the basis of internal arrangement between the 3 persons, Mr. Y receives payment from Mr. X by set-off of inter-company balances

Section 269ST restricts receipts otherwise than through specified modes. Whether settlement of debt by book entry are also restricted?

Ans. •A similar provision regarding loans and deposits exists in section 269SS and section 269T

• Courts are divided as to whether receiving loans and repayments through journal entry attracts section 269SS or section 269T
• Unfavourable ruling – Triumph International Finance (I) Ltd. 345 ITR 270 (Bom. HC) where loan/deposit has been repaid by merely debiting account through journal entries, it must be held that assessee has contravened provisions of section 269T

Favourable rulings – –

Worldwide Township Projects Ltd. (367 ITR 433) (Del. HC) Object of section 269SS is to prevent transaction in currency, it is not intended to affect cases where a debt or a liability arises on account of book entries

– Ajitnath Hi-Tech Builders (P.) Ltd. (92 taxmann.com 228 (Bom. HC) – SLP dismissed by SC There was reasonable cause to receive loan through journal entries. Non-compliance of section 269SS would certainly be a reasonable cause under section 273B for non imposition of penalty under section 271D Vardaan Fashion (38 ITR(T) 247) (Delhi Trib.)

Objective of the provision is to discourage cash receipts. Hence, going by the intent of the provision, it may be argued that receipts through journal entries are not covered by section 269ST.

Q18. Mr. A, received cash gifts in following manner –

– Rs. 2,25,000 each from his father and brother on a single day

– Rs. 1,50,000 each from his 10 friends on occasion of his marriage

 Evaluate the applicability of section 269ST ?

Ans. Section 269ST, inter alia, states that –

“No person shall receive an amount of two lakh rupees or more

(a) in aggregate from a person in a day; or

(b) in respect of a single transaction; or

(c) in respect of transactions relating to one event or occasion from a person,

otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account:”

Gift from father and brother – Rs. 2,25,000 each

• Any sum received from relatives shall not be taxable u/s 56(2)(x)
• Section 269ST provides that no amount shall be received in excess of Rs. 2 lakhs from a person on a single day otherwise than specified mode
• Hence, cash gift from father and brother, though exempt u/s 56(2)(x), shall be liable for penalty u/s 271DA

Gift from friends – Rs. 1,50,000 each

• Any sum received on occasion of marriage shall not be taxable u/s 56(2)(x)
• Section 269ST provides that no amount shall be received in excess of Rs. 2 lakhs on an occasion from a person otherwise than specified mode
• Since cash gift from each friend is less than Rs. 1,50,000 though on a single occasion, should not be liable for penalty u/s 271DA

 Q 19. WHAT IS THE DIFFERENCE BETWEEN WORD ‘SUM’ AND ‘AMOUNT’?

ANS.269ST. No person shall receive an amount of two lakh rupees or more:-

 (a) in aggregate from a person in a day; or

 (b) in respect of a single transaction; or

 (c) in respect of transactions relating to one event or occasion from a person,

otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed.

271DA. (1) If a person receives any sum in contravention of the provisions of section 269ST, he shall be liable to pay, by way of penalty, a sum equal to the amount of such receipt:

From the study of above two sections, it is to be noted that the expression used in section in sec 269ST is “amount” and the word used in sec 271DA is “sum”. Now a question arises what is the difference between the word “amount” and “sum”. To resolve this issue, firstly we need to know the meaning of the words “amount” and “sum”.

MEANING OF ‘AMOUNT’

• As per Black’s Law Dictionary – Sixth Edition:

The whole effect, substance, quantity, import, result, or significance.

The sum of principal and interest.

• As per P Ramanatha Aiyar’s – Advanced Law Lexicon 3rd Edition:

“The substance, or result of a thing; the total or aggregate sum. Quantity; to come upto, resulting; equaling in effect.”

• As per oxford dictionary – https://en.oxforddictionaries.com :

“A quantity of something, especially the total of a thing or things in number, size, value, or extent.”

• As per Cambridge Dictionary http://dictionary.cambridge.org: “A collection or mass, especially of something that cannot be counted:”

MEANING OF ‘SUM’

As per Black’s Law Dictionary – Sixth Edition: “The sense in which the term is most commonly used is “money”; a quantity of money or currency ; any amount indefinitely, a sum, or a large sum. U .S. v. Van Auken, 96 U.S. 366, 368, 24 L.Ed. 852.”

As per P Ramanatha Aiyar’s – Advanced Law Lexicon 3rd Edition When used with reference to values, “sum” imports a sum of money. (See also 27 LJ Ex. 31; 7Ex. 58) A quantity or amount of money. [S.57(a)(1), T.P. Act (4 of 1882); S. 48(b), Indian Partnership Act (9 of 1932)]

As per oxford dictionary – https://en.oxforddictionaries.com : “ 1. A particular amount of money. 2. The total amount resulting from the addition of two or more numbers, amounts, or items. 3. An arithmetical problem, especially at an elementary level.

As per Cambridge Dictionary http://dictionary.cambridge.org: “an amount of money: the whole number or amount when two or more numbers or amounts have been added together:”

From the above definitions it is to be noted that the word “Sum” means “sum of money”. The word “Amount”  may includes cash and kind. However it can be logically interpreted that per the Memorandum Explaining Clauses of the Finance Bill 2017 restriction under section 269 ST is put only on receipt of money and not on anything in kind .The heading given there is “ Restriction on cash transactions ” The relevant description given is that ” Black money is generally transacted in cash and large amount of unaccounted wealth is stored and used in form of cash. In order to achieve the mission of the Government to move towards a less cash economy to reduce generation and circulation of black money, Finance Bill 2017 proposed to insert section 269ST “. Budget Speech of Finance Minister on Finance Bill 2017 also says ” It is proposed to provide that no person shall receive payment or aggregate of payments of an amount of three lakh rupees or more ( Amendment to  Finance Act 2017 reduced this limit from Rs 3 Lakh  to Rs 2 Lakh ) ………………” Further penalty U/s. 271DA what will be the levied for contravention of Section 269ST. Section 271DA starts with “If a person receives any sum in contravention of the provisions of section 269ST………………….” Therefore, logically it can be inferred from those provisions that section 269ST is in respect of money only.

SEC 269ST RELAXATION ON CASH PAYMENT OF MORE THAN RS 2 LAKHS MADE TO HOSPITALS, DISPENSARIES, NURSING HOMES, COVID CARE CENTRES OR SIMILAR OTHER MEDICAL FACILITIES PROVIDING COVID TREATMENT :

CBDT Notification Generally, Section 269ST lays down that no person shall receive an amount of Rs. 2Lakhs or more in aggregate from a person in a day; or in respect of a single transaction; or in respect of transactions relating to one event or occasion from a person, otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed. The Central Government, in exercise of powers conferred by clause (iii) of Proviso to Section 269ST of the Income-tax Act, 1961, hereby specifies Hospitals, Dispensaries, Nursing Homes, Covid Care Centres or similar other medical facilities providing Covid treatment to patients for the purpose of Section 269ST of the Income-tax Act,1961 for payment received in cash during 01.04.2021 to 31.05.2021, on obtaining the PAN or AADHAAR of the patient and the payee and the relationship between the patient and the payee by such Hospitals, Dispensaries, Nursing Homes, Covid Care Centres or similar other medical facilities.

MINISTRY OF FINANCE (Department of Revenue) (Central Board Of Direct Taxes) notification New Delhi, the 7th May, 2021 (INCOME-TAX) S.O. 1803(E).—The Central Government, in exercise of powers conferred by clause (iii) of Proviso to Section 269ST of the Income-tax Act, 1961, hereby specifies Hospitals, Dispensaries, Nursing Homes, Covid Care Centres or similar other medical facilities providing Covid treatment to patients for the purpose of Section 269ST of the Income-tax Act,1961 for payment received in cash during 01.04.2021 to 31.05.2021, on obtaining the PAN or AADHAAR of the patient and the payee and the relationship between the patient and the payee by such Hospitals, Dispensaries, Nursing Homes, Covid Care Centres or similar other medical facilities. [Notification No. 56/2021/F. No. 225/58/2021-ITA.II]PRAJNA PARAMITA, Director.

INTERPLAY OF SEC 40A(3) VS SEC  269ST

As per sec 40A(3), if any payment is made by an assessee to a person in a single day above Rs.10,000, otherwise  than by account payee cheque/ draft or ECS through bank account, then expenditure shall be disallowed i.e the expenditure shall not be allowed as deduction. For this reason, generally cash payments by debtors to any person are made up to Rs.10,000 only per day. However, this does not bind the recipient to accept only up to Rs. 10,000 per day from any customer. If a person makes a payment in contravention of sec 40A(3), then the whole of the expenditure will be disallowed. This section is applicable to the person who is making the payment of expenditure which claimed as deduction u/s 30 to 37.

It is to be noted that if a person receives the payment exceeding Rs.10,000/-incash ,then the provisions of sec 269ST will not be applicable in his case if the payment so received is less than Rs.2,00,000/-.From the study of clause (a) of sec. 269ST ,it is clear that a person cannot receive Rs. 2,00,000/- or more in a single day. It means that a person can receive Rs. 1,99,999/- in cash in a single day. But if we go through the provision of sec. 40A(3) of the Act, then we came to know that no payment of any expenditure can be made in cash for an amount exceeding Rs. 10,000/- in a single day otherwise the whole of the expenditure will be disallowed. In this connection, we see that there is no ban on the person receiving the payment upto Rs. 1,99,999/- in cash . It is the person who is making the cash payment exceeding Rs. 10,000/- of an expenditure will have to suffer. Sec 40A(3) follows only one way traffic and it affects only the payer and not the receiver upto the receipt of less than Rs.2 lacs in cash. When we see both of these sections, we come to know that Sec. 269ST is applicable to receiver and Sec. 40A(3) is applicable to the person who is making the payment of expenditure. There is a one way traffic on both the sections.

The second circumstance relates to a transaction.  It envisages that no single transaction should exceed the specified limit. Although each of such receipts on daily basis are within the prohibited limit and not covered by the first circumstance, such receipts would fall under the prohibited category as they pertain to a single transaction.  This is a very important condition which prevents circumventing the limit by splitting it over several days. In this connection, Now we came to clause (b) of Sec. 269ST which deal with only a single transaction. It is to be noted that when there is a single transaction of Rs. 2,00,000/- or more, then against this transaction only payment of Rs. 1,99,999/- can be received in cash. This payment of Rs. 1,99,999/- may be lump sum or by splitting the payment over a number of days of Rs. 10,000/- per day to avoid the disallowance u/s Sec 40A(3) of the Act. In this connection,it is important to compare these provisions with those of section 40A(3) of the Act wherein no such condition is imposed even after certain amendments in the sec 269ST.  Therefore, it is a general practice to make payments of Rs 10,000 or less on several days in relation to a single transaction so as to remain outside the purview of section 40A(3).

If we compare and study clause (a) and clause (b) of Sec.269ST, then we come to know that if any transaction is of Rs. 2,00,000/- or more, then the total payment Rs.1,99,999/- can be received in cash against such transaction, the balance payment will have to be received in non cash mode  to avoid the penal provisions of sec269ST of the Act.

Q19.Ram purchases a tractor of Rs. 5,00,000 and makes a payment of Rs. 1,99,999 in cash and balance by account payee cheque on date of purchase of the tractor. Whether the payment made by  Ram is subject to any penal action.

Ans. If the person making the payment is not taking the benefit of depreciation, then he can make the payment of Rs.1,99,999/-in cash. If the person purchasing  tractor wants to claim depreciation on the the tractor, then he can’t make cash payment exceeding Rs.10,000/- in a single day. If he makes cash payment exceeding Rs.1.0,000/-in cash in a single day, then the payment so cash paid will not be considered as a part of actual cost as per the provisions of sec43(1) of the Act. If such person wants to make cash payment by splitting over a number of days, then he can pay Rs.10,000/- for a single day  and total cash payment should not exceed Rs.1,99,999/-in total for the purchase of the tractor. It is further to be noted that balance amount of Rs.3,00,001/-must be made by non cash mode. If the total payment is made in cash Rs.1,99,999/- and balance in non cash mode of Rs.3,00,001/-,then there is no penal action for Ram.

THE ABOVE PROVISIONS OF SEC 40A(3) AND SEC 269ST ARE VERY WELL EXPLAINED IN THE FOLLOWING TABLE.

Invoice Date	Invoice Amount	Maximum Daily Cash Payment by Buyer Sec 40A(3)	Aggregate Maximum cash which can be Received  by seller against this Invoice  (sec 269ST)	Balance By Cheque/ Draft/ ECS
01/04/2021	Rs 2,90,000	Rs. 10,000	Rs. 1,99,999	Rs. 90,001
15/04/2021	Rs. 1,70,000	Rs. 10,000	Rs. 1,70,000	Nil

DISCLOSURES IN TAX AUDIT REPORT

S. No. 31(ba) – Particulars of each receipt in an amount exceeding the limit specified in section 269ST (i.e, 200000 for AY 2018-19, in aggregate from a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasion from a person, during the previous year, where such receipt is otherwise than by a cheque or bank draft or use of electronic clearing system through a bank account.

S. No. 31(bb) – Particulars of each receipt in an amount exceeding the limit specified in section 269ST (Rs.2,00,000/- for AY 2018-19), in aggregate from a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasions from a person, received by a cheque or bank draft, not being an account payee cheque or an account payee bank draft, during the previous year.

CLAUSE 31 (bb)

Particulars of each receipt made in an amount exceeding limit specified in section 269t in aggregate to a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasion to a perason otherwise than by a cheque or bank draft or use of electronic clearing system through a bank account  during the previous year

NAME OF THE PAYER	ADDRESS OF THE PAYER	PAN	AMOUNT OF RECEIPT

S. No. 31(bc) – Particulars of each payment in an amount exceeding the limit specified in section 269ST (i.e, Rs. 200000/- for AY 2018-19, in aggregate to a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasion to a person, during the previous year, where such payment is otherwise than by a cheque or bank draft or use of electronic clearing system through a bank account.

Sub clause (ba) and (bb) were for receipt of money in contravention of s. 269ST. This clause is for reporting of PAYMENT of money in contravention of s. 269ST. There is no penalty on the assessee u/s 271DA for payment, as the same is only on the receiver, yet this information is sought by the department to take appropriate action on the receiver. However, if the payment is related to expenditure, then the same will also be mentioned in clause 21(d) i.e. disallowance u/s 40A(3) or 40A(3A).

CLAUSE 31 (bc)

Particulars of each payment made in an amount exceeding limit specified in section 269t in aggregate to a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasion to a perason otherwise than by a cheque or bank draft or use of electronic clearing system through a bank account  during the previous year.

NAME, ADDRESS AND PAN (IF AVAILABLE) OF THE PAYEE	NAME OF TRANSACTION	AMOUNT OF RECEIPT	DATE OF RECEIPT

S. No. 31(bd) – Particulars of each payment in an amount exceeding the limit specified in section 269ST (Rs.2,00,000/- for AY 2018-19), in aggregate to a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasions to a person, paid by a cheque or bank draft, not being an account payee cheque or an account payee bank draft, during the previous year.

• The note under sub-clauses 31(ba), (bb), (bc) and (bd) does not specifically refer to receipt by or payment to Government. Considering the provisions of the section, particulars of the payments made to the government need not be included under sub-clauses (bc) and (bd) and a suitable note may be given to the effect that details of payments made to Government have not been included in the particulars.
• Section 269ST does not distinguish between receipt on capital account and revenue account. Once the receipt or the payment, as the case may be, exceeds the limit specified in section 269ST, the particulars of such transactions will have to be reported under these clauses
• The tax auditor will have to exercise care and caution while arriving at the particulars of receipts or payments pertaining to a single transaction or relating to a single event or occasion. The tax auditor will need to link all receipts or payments, as the case may be, otherwise than by the modes specified in this section received/made in respect of a single transaction and verify if the aggregate amount exceeds the limits specified in section 269St

INTERPLAY BETWEEN SECTIONS 269SS, 269ST & 269T
Particulars	269SS	269T	269ST
Scope of thesection	loans, deposits and specified sum	loans or deposits	Any payment
Burden of thesection is on	Person taking or accepting	Person repaying	Person receiving any payment
Monetary threshold for the Section	20,000	20,000	2,00,000
Exceptions	This section does not apply to : (i) Government; (ii) any banking company, post office savings bank or cooperative bank; (iii) any corporation established by a Central, State or Provincial Act; (iv) any Government company (v) such other notified institutions	This section does not apply to : (i) Government; (ii) any banking company, post office savings bank or cooperative bank; (iii) Any corporation established by a Central, State or Provincial Act; (iv) any Government company (v) such other notified institutions	This section does not apply to: (i) any receipt by— (a) Government; (b) any banking company, post office savings bank or cooperative bank; (ii) transactions of the nature referred to in section 269SS; (iii) such other notified institutions
Penalty	271D	271E	271DA
Quantum of Penalty	Sum equal to the amount of the loan or deposit or specified sum so taken or accepted	Sum equal to the amount of the loan or deposit or specified advance so repaid.	Sum equal to the amount of such receipt

Republished with amendments

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