Case Digest on Section 269ST of Income Tax Act

Section 269ST was introduced in the Income Tax Act, 1961 by the budget 2017. Under this section, no person can receive payment above ₹2 Lakhs in a single day. The main aim of this section is to curb black money laundering transactions. Sec 269ST of the Income Tax Act complements Section 269SS and 269T, which were introduced for the same purpose. Since these sections have a common goal, ensuring compliance with each can be confusing. The introduction of 269ST makes reducing cash transactions to launder black money more effective. Under Section 269SS and 269T, any repayment or acceptance of a transaction above the amount of ₹19,999 in cash was subject to penalty. Provisions Under Section 269ST Under this section, parties are prohibited to receive payments of or above ₹2 Lakhs in cash under the following provisions Penalty It said that Section 269ST has been inserted in the Income Tax Act, 1961 with effect from April 01, 2017 – which restricts acceptance of cash of Rs 2 lakh or more by any person. The restriction on cash receipt of Rs 2 lakh or more is not applicable to any receipt by the Government, Banking company, Post Office Savings Bank or Co-operative Bank. Finance Minister Arun Jaitley, while presenting the Union Budget 2017-18, proposed a ban on cash transactions of over Rs 3 lakh with effect from April 01. While passing the Bill, the Lok Sabha amended the provision and restricted the limit to 2 Lakh rupees. M/s. Janatha Fish Meal & Oil Products vs PCIT - 2022 TAXSCAN (ITAT) 1558 The Income Tax Appellate Tribunal (ITAT), Bangalore bench, while quashing a revisional proceeding, has held that the provisions of section 269ST of the Income Tax Act, 1961 are applicable to the person who receives the sum in cash.A bench of Shri N.V. Vasudevan, Vice President and MsPadmavathy S (Accountant Member) has held that “with regard to whether the provisions of Section 269ST of the Act is applicable in the payments made to the extent of Rs. 4.5 crores in cash, learned A.R. submitted that provisions of Section 269ST of the Act are applicable only to the receiver of the amount and not the payer. In the given case it is submitted that the assessee has paid money for the purpose of investment which is not disputed and therefore the provisions of Section 269ST of the Act is not applicable. Further, the learned A.R. drew our attention to para 5.8 of the assessment order wherein the AO has taken note of the fact that the impugned amount of Rs.4.5crores is already disclosed as undisclosed income and assessed the same accordingly in AY 2017-18. Therefore, it is submitted that there is no error in the order of assessment of the AO warranting revision under Section 263 of the Act.” Balaji Auto Enterprises Mysore Pvt.Ltd.vs The Asst. Commissioner of Income tax- 2022 TAXSCAN (ITAT) 1775 The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has deleted a penalty under section 271DA of the Income Tax Act, 1961 by holding that the cash receipt of less than two lakh rupees from different persons on different dates would not attract section 269ST of the Act. After hearing both sides, a bench of Shri Beena Pillai, Judicial Member and Shri Laxmi Prasad Sahu, Accountant Member observed that “perusing entire materials on record and after examining the orders of the lower authorities, we observe from the order of the AO that the assessee has received cash more than 2.00/- from the four parties on different dates. As per the opinion of the AO the assessee has violated the provision of section 269ST, therefore, he imposed the penalty u/s 271DA of the Act. On going through the copy of the ledger, it has been observed that the assessee has not received cash more thanRs.2.00/- in a day from one party.” Mujtaba Hussain Ahmed vs ACIT -2023 TAXSCAN (ITAT) 909 The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) has recently held that no addition could be made under Section 69 of the Income Tax Act 1961, on cash received on sale of ancestral agricultural land. The tribunal observed that once the assessee has disclosed the source of the cash on account of the sale of agricultural land, then it is the bounden duty of the lower authorities to examine the purchaser and ask the purchaser to disclose the source of the cash. So, the AO violated the provisions of section 269SS/269ST against the seller and purchaser. By considering the above facts tribunal of Laliet Kumar, Judicial Member deleted the addition made by the Assessing Officer along with the confirmation made by the CIT(A). Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates