Need help for ltcg planning

Guidence Value of the property registrered with Sub-registrar of Revenue authority at the time of sale deed or actual sale consideration whichever is higher will be the deemed consideration of of house property in this case. Whether your freind receive cash or cheque is immaterial.

Regarding cash of Rs.35 lakhs, he may purchase another house property by paying cash and balance with cheque payment. 

you need to compute actual capital gain and apply exemption section U/S 54  or Section 54EC (investment in Bonds within 6 months from the date of sale or transfer) accordingly. 

As above

receiving cash is nowhere related to your accounts or incometax and such amount can not be used anywhere or deposited, if done so it would be deemed additional income and tax implications will be applicable.