SC Mandates Reporting of ₹2 Lakh+ Cash Transactions in Court Cases to Tax Department

 Supreme Court directs mandatory reporting of high-value cash dealings to curb tax evasion and promote transparency

In a significant move to enhance financial transparency and curb large-scale cash dealings, the Supreme Court has ruled that any court case involving cash transactions of ₹2 lakh or more must be reported to the jurisdictional income tax department. The order also mandates sub-registrars to inform tax authorities when such transactions are reflected in property documents.

The verdict was delivered by a bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan. The ruling aims to ensure stricter compliance with Section 269ST of the Income Tax Act and deter undisclosed cash dealings in immovable property transactions.

Key Highlights of the Supreme Court Judgment:

• Mandatory Reporting by Courts: If a court is handling a suit where a cash payment of ₹2 lakh or above is mentioned, it is now obligated to inform the concerned income tax authority.
• Role of Sub-Registrars: In property transactions where cash is shown as consideration, the sub-registrar must report the transaction to the local income tax office.
• Income Tax Department’s Role: Upon receiving such reports, the department is required to examine the legality of the transaction under Section 269ST.

Understanding Section 269ST

Section 269ST of the Income Tax Act prohibits any person from receiving an amount of ₹2 lakh or more in cash:

• In a single transaction,
• From a single person in a day, or
• In respect of a single event or occasion.

The section is designed to discourage high-value cash dealings and promote traceable, digital transactions.

Court’s Action Plan Against Non-Compliance

The apex court further directed that failure by any registration authority to report such transactions should be escalated to the Chief Secretary of the respective state or Union Territory. Disciplinary action must be initiated against the erring officials.

To ensure uniform enforcement, the Supreme Court ordered its judgment to be communicated to:

• The Registrar General of all High Courts,
• Chief Secretaries of all States and Union Territories,
• The Principal Chief Commissioner of Income Tax.

Case Background

The ruling stems from a property dispute in Bengaluru involving a charitable trust and two private individuals. The trust, which had occupied the property since 1929 for educational and sports activities, contested a 2018 sale agreement that allegedly included a ₹75 lakh cash advance—raising questions of legality under the Income Tax Act.

Impact on Real Estate and Legal Landscape

Legal experts believe the decision will significantly impact property transactions and legal proceedings involving cash. It reinforces the government’s push toward digital payments and aims to curb tax evasion through unaccounted cash dealings.