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Purchased immovable property with cash

srinivasa rao (19 Points)

29 November 2019

I have purchased immovable property on 1-7-2015 with cash what are the consequences

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17 Replies

rama krishnan (12234 Points)
Replied 29 November 2019

There's no consequences unless you are able to explain the source for the same

CA ABHAY GUPTA (Practice) (3230 Points)
Replied 29 November 2019

An additional bar was put on cash transactions in excess of Rs 20,000 in Section 269SS of the Income Tax Act, 1961 (the IT Act) vide Finance Act, 2015, with effect from 1 June 2015. Prior to that date, transactions in loans and deposits in excess of Rs 20,000 in cash were barred. From 1 June 2015, transactions in immovable properties for cash in excess of Rs 20,000 were also barred.
It is significant to note that agricultural land is as much hit as any other immovable property but the proviso to Section 269SS makes a volte face by saying if both the purchaser and seller are having only agricultural income and no other income taxable under the IT law they would be spared from the compliance of the whole Section. Be that as it may, others flouting this Section would be punishable with a penalty equal to the amount of cash transaction even if the excess over Rs 20,000 is just Rs 100. Section 271D makes it mandatory on the joint commissioner of income tax to slap this penalty without any leeway or exemptions

RAMAKRISHNAN R (INCOME TAX OFFICER) (1736 Points)
Replied 29 November 2019

However 269ss applicable only in the hands of seller

CA ABHAY GUPTA (Practice) (3230 Points)
Replied 29 November 2019

What about 269T.. there is same provision in the section

RAMAKRISHNAN R (INCOME TAX OFFICER) (1736 Points)
Replied 29 November 2019

269T also applicable in the hands of seller only. When seller repays the advance amount received in respect of a sale, 269T will be applicable but not in the hands of purchaser of property

RAMAKRISHNAN R (INCOME TAX OFFICER) (1736 Points)
Replied 29 November 2019

269T also applicable in the hands of seller only. When seller repays the advance amount received in respect of a sale, 269T will be applicable but not in the hands of purchaser of property

CA ABHAY GUPTA (Practice) (3230 Points)
Replied 29 November 2019

@ Rama Krishnan thanks for making me clear both section, i was in bit confusion.

RAMAKRISHNAN R (INCOME TAX OFFICER) (1736 Points)
Replied 29 November 2019

Pleasure is mine you are always welcome

Kapadia Pravin (17249 Points)
Replied 29 November 2019

In order to curb the generation of black money by way of dealings in cash in immovable property transactions, Section 269SS of the Income-Tax Act effected some changes for the realty sector in 2015.

As per the tax law formulated by the Central Board of Direct Taxes (CBDT), which is effective from June 1, 2015, any transaction in real estate including agriculture land shall be required to be made through account payee cheque or RTGS or electronic funds transfer if the amount is Rs 20,000 or above.

If the cash transaction beyond the limit is done, then a penalty of an amount equal to under 271 D of Income Tax Act will be imposed on a seller who accepts cash or refund of advance is made in cash by the seller of the property.

The AO of I-T Department to soon start sending notices. The notices will be sent to both the seller and the purchaser. (source - ET paper)

The seller will be asked to pay the penalty of an equal amount if he has accepted cash above Rs 20,000.

“We will also ask the source of money with the purchaser,”
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please refer Explanation (iv) of section 269SS.

sabyasachi mukherjee (26037 Points)
Replied 30 November 2019

@ srinivas

I hope you hv filed ITR for the previous years.
But one question remains unanswered is your source of income is cash.Generally nowadays you are unable to purchase any house in cash unless and until it's a standalone independent one.Now it is pertinent how can u purchase worth several lakhs in cash.There is one section 269 SS WHICH prohibits a taxpayer in accepting deposits in cash in excess of Rs.20000 except any loan or specified sum taken or accepted by the following entities:
the govt.
any banking company
any corporation established by a central ,state or provincial act.
any government company
AFTER the demonetization scheme I.e. in the year 2017-18.
an assesse has to give details of cash transactions.
Moreover,

Pritom Baruah (Accounts Assistant) (104 Points)
Replied 30 November 2019

Why this is not stopping in land registrar office. Common People are not aware of the law, at least qualified registrar can save them from IT penalties.

Kapadia Pravin (17249 Points)
Replied 01 December 2019

@ Abhay
Yes sir, 269SS applies

@ Rama Krishnan
Please re-visit the section and convey your view

RAMAKRISHNAN R (INCOME TAX OFFICER) (1736 Points)
Replied 01 December 2019

As I said in my earlier posts, there's definitely violations of section 269ss in the query posted by Mr. Srinivas. Again as I said, there's no implications of section 269ss with regards to purchaser. Nowhere in the act, it is prohibited that the amount in excess of 20k shouldn't be paid in respect of property transactions (except in case of purchasing property for business purposes wherein the cash payment towards property purchase will be reduced from the cost of the asset and the depreciation will be disallowed proportionately as per second proviso to section 43(1).) . In the aforesaid scenario, the seller would be stuck by the provisions of section 269ss and there won't be any impact in the hands of purchaser for payment of consideration in cash unless the purchaser able to explain the sources for the same. Correct me if I'm wrong

Kapadia Pravin (17249 Points)
Replied 01 December 2019

@ Ramakrishnan

It is true that 269SS won't apply to Purchaser but same time it is to be cautioned that 269SS will hit seller and seller would never allow the deal to pass through.

Impact will also be on you to prove the source of money.

The seller will be asked to pay the penalty of an equal amount as he has already accepted cash above Rs 20,000 and hence seller is running a very risk.

Under the 271D r.w.s 269SS provisions, chances of getting notice and slapping of penalty of equal amount 100% ( as high as agreement value ) are imminent .

This is a trouble spot and inviting quarrel between buyer /seller.

The penalty is absolute and no waiver available.