One Step ahead to curb black money by covering cash/bearer cheque transactions in purchase/sale of immovable property u/s 269SS & 269T
The existing provisions contained in section 269SS of the Income-tax Act provide that no person shall take from any person any loan or deposit if the amount of such loan or deposit is Rs.20,000/- or more, except through account payee cheque or account payee demand draft or through online transfer through a bank account.
However, certain exceptions have been provided in the section.
Similarly, the existing provision contained in the section 269T of the Income-tax Act provide that any loan or deposit shall not be repaid if the amount of loan or deposit is Rs.20,000/- or more except through account payee cheque or account payee demand draft or through online transfer through a bank account.
In order to curb generation of black money by way of dealing in cash w.r.t immovable property transactions it is proposed to amend section 269SS, of the Income-tax Act so as to provide that no person shall accept from any loan or deposit or any sum of money, whether as advance or otherwise, in relation to transfer amount of such loan or deposit or such specified sum is Rs.20,000/- or more, except otherwise than by an account payee cheque or account payee demand draft or by electronic clearing system through a bank account.
It is also proposed to amend section 269T of the Income-tax Act so as to provide that no person shall repay any loan or deposit made with it or any specified advance received by it if the amount or aggregate amount of loans or deposits or specified advances is Rs.20,000/- or more , except otherwise than by an account payee cheque or account payee demand draft or by electronic clearing system through a bank account.
The specified amount shall mean any sum of money in the nature of an advance, by whatever name called, in relation to transfer of an immovable property whether or not the transfer takes place.
Weight-age of “whether or not the transfer takes place.”
Cash transaction shall attract section 269SS & T even when no immovable property is transferred.
So what does it mean?
Let say, buyer given Rs 2,00,000/- cash in advance to the seller of immovable property as a token money and thereafter transfer would not executed, whatsoever the reason, and advance given by buyer forfeited. Now, this transaction is also covered u/s 269 SS & T even when no transfer of immovable property is executed.
In last year budget, Advance forfeited with respect to immovable property covered as “income under the head of other source”. Now, the government to curb black money also covered such transactions under section 269 SS & 269T.
Consequence of covering cash/ bearer cheque transaction in Immovable property u/s 269SS & 269T –
In case of entering cash/bearer cheque transaction in immovable property, PENALTY shall be imposed under section 271D and 271E.
Quantum of Penalty– Sum equal to the amount of the cash involved in transaction of immovable property.
Analysis of this amendment
There was a amendment w.e.f. AY 2014-15, immoveable property received by an individual or HUF for inadequate consideration to attract the taxability provisions under section 56(2)(vii), if the difference between the stamp duty value and actual consideration exceeds Rs 50,000/-
Now the issue is what shall be the date taken into consideration for assessing stamp duty value of concern property. Whether it is date of agreement or date of registration?
Of course it was the date of registration.
However, the government gives relaxation to an assessee allowing date of agreement for assessing stamp duty value instead of date of registration which will reduce the tax liability to some extent since usually date of agreement will be earlier to the date of registration and the stamp duty/ circle rates generally have an increasing trend. Hence, stamp duty value on date of agreement is lower than the stamp duty value on date of registration.
But to avail this relaxation, government impose one condition to restrict the misuse of such clause–
I.e. at least a part of the consideration has been paid by any mode other than cash on or before the date of agreement.
But still there was scope left for misusing the aforesaid relaxation, drawing bearer cheque from back date.
Now, on consequent to amendment u/s 269SS & T, assessee cannot misuse the above relaxation since the drawing bearer cheque will be the non-compliance of section 269SS & T and attracts penalty u/s 271 D and 271E.
These amendments will take effect from 1st day of June, 2015.
The latest Judgments related to above topic:-
Cash loan of above Rs. 20,000 taken by builder to meet immediate requirement of business won’t attract penalty under Income Tax Act. [High Court of Gujarat – CIT vs. Shreenathji Corporation]