Supreme Court Mandates Reporting Of Cash Transactions Above ₹2 Lakh In Courts, Property Deals To Curb Tax Evasion

In a significant ruling aimed at curbing black money and penalising tax evasion, the Supreme Court (SC) on Thursday directed that if a legal suit involves claims of cash payments of ₹2 lakh or more, the concerned court must inform the local Income Tax Department.

The apex court also ruled that if a property registration document shows a cash payment of ₹2 lakh or more, the sub-registrar must notify the tax authority.

“This SC judgment means anyone who has accepted such a cash payment will now think twice before filing a case in court,” said Supreme Court lawyer Aditya Sharma, adding that even if the court accepts the claim, the individual may still have to pay an equal amount as penalty to the tax authorities.

The court expressed concern over the unsatisfactory implementation of provisions of the Finance Act, 2017, which capped cash transactions at ₹2 lakh and banned high-value cash dealings.

The SC directed that whenever a suit is filed claiming that ₹2 lakh or more was paid in cash for any transaction, the court must intimate the jurisdictional Income Tax Department to verify potential tax violations. Similarly, if a sum of ₹2 lakh or more is stated to be paid in cash for the purchase of immovable property in a document presented for registration, the sub-registrar must inform the jurisdictional Income Tax Authority.

The bench comprising Justices J.B. Pardiwala and R. Mahadevan further stated that any failure by the registering authority to report such transactions must be brought to the attention of the Chief Secretary of the respective State or Union Territory for disciplinary action against the erring officer.

The ruling was delivered while hearing a property dispute involving Bengaluru-based RBANMS Educational Institution and the Income Tax Department.