Cash Transaction

Ok. So, will these provisions be attracted if the advance of more than Rs. 20,000.00 (say Rs. 50,000.00) is accepted from a person with whom the assessee is in regular transaction and the payment is paid against same trading purpose?

In addition to the above post by me the other person is stated to be a property dealer. So he can show the same as advance received for property advance under current liabilities as so the provisions of Section 269SS & 269T would not apply to the transaction.

Originally posted by : Amir
	Dear Sir, Considering the amount in excess of Rs. 20,000 - Property Dealer has committed default as under - 1) u/s 269 SS - at the time of accepting 2) u/s 269 T - at the time of repayment Tax Auditor needs to qualify Form 3CD As a result penalty equivalent to 100% Loan/Advance shall be levied u/s 271D & 271E respectively No consequences on part of Real Estate Company.

Mr. Amir

The penalty for contravention of section 269SS has to be calculated on the loan or deposit accepted in excess of Rs.20000. Please refer the case law given below: CIT Vs Ajanta Dyeing and Printing Mills (2003) 264 ITR 505.

"Income Tax - 2008 TMI - 11596 - RAJASTHAN High Court - Commissioner of Income-Tax Versus Ajanta Dyeing Printing Mills.
"Whether Tribunal is justified in directing the Deputy Commissioner to recalculate the penalty under section 271Donly on the amount accepted during the year and that too on the amount which exceeds Rs. 20,000 in contravention of the unambiguous provisions of section 271D(1) and section 269SS of the Act of 1961 ?" - Having gone through the provisions of section 269SS with regard to the mode of taking and accepting certain loans and deposits and section 271D with regard to the penalty for failure to comply with the provisions of section 269SS, we are of the opinion that in case, any loan is there exceeding Rs. 20,000 and for that purpose any penalty is to be imposed in accordance with the provisions of section 271D for violation of section 26955, the permissible amount of Rs. 20,000 has to be adjusted. Tribunal while passing these orders has not committed any illegality"
 

Moreover,

Advance given or taken is considered loan. If we see head in Balance sheet it mentions advances and loans...

So i think its better not to show.

HI Friendz,

Pls don't take this post in an offensive manner - but I think now this discussion is just deviating from the main issue.

I would still say that penalty will be levied.

The below link is one of the excellent compilations on this issue - Now its up to the author to decide -

https://www.vipca.net/cashloans-deposits-penalty-incometax.php

Hi friends,

Section 269SS: - Mode of “taking or accepting” certain loans and deposits

            -The REAL ESTATE COMPANY is not taking or accepting loans or Deposit

Section 269T: - Mode of “repayment of certain deposits”

-The REAL ESTATE COMPANY is not repaying any Deposit

So the huge amount given and received back by the REAL ESTATE

COMPANY won’t fall under any of the above categories.

Since it is a real estate company and the money has been given to buy a land it falls under

 Sec.40(A)(3), But since there was no expenditure incurred as the money been received back,

no disallowance under Se. 40(A)(3) also.

As the money given is received back it won’t appear in balance sheet.

So nothing to worry. No need to pay any penalty.

But the property dealer is liable for penalty under Sec.271D for the contravention of Sec.269SS.

Section 269SS & 269T takes into account loan or deposit. Why can't the same be shown as advance against property purchased under current liabilities to get saved from penalty of accepting amount in cash?

Hi Aditya,

Here they have not purchased the property. The deal got cancelled. If they had purchased, it will be classified under stock in trade as it is a real estate company, the same will be disallowed under 40A(3) 

See advance is not covered under Section 269SS & 269T. Since the deal did not materialise no expenses are being claumed and hence no applicability of Section 40A(3).

Since the company is paying advance section 269SS & 269T will not be applicable to the person giving the advance.

u r correct. that's what  even we said. see the first post in page 3 (Top).

I do not disagree. Main point was from point of view of property dealer not for the builder.

Hi sir,

The property dealer got the amount as trade advance. as per the case law quoted by Amir above he should face the penalty u/s 271D

I do not deny that possibility is there.

However the same should be known to the A. O. also. So first of all the tax audit report should not be qualified as it is neither a loan nor a deposit. Though the case law is there but do not go for commiting suicide. Let the A. O. come and get hold of it. There is chance that of the same is grouped under advance from customer under current liabilities it might be skipped and there is small glimpse of hope that the property dealer may be saved of the penalty.

These Cash transactions continued for 3 years.  So at the time of repayment by property dealers will section 269T will be attracted or not my major concern is tihis