Government has taken a bold step to curb black money by inserting a new section 269st by Finance Act 2017. The section came in to force from 1st April 2017. As it is going to impact everyday transactions, the in-depth analysis of it becomes necessary. It is also important to note that this sections provides for penalty on payee.
The provisions is as below -
The provisions is as below -
|(a)||in aggregate from a person in a day; or|
|(b)||in respect of a single transaction; or|
|(c)||in respect of transactions relating to one event or occasion from a person, otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account:|
|(i)||any receipt by—|
|(b)||any banking company, post office savings bank or co-operative bank;|
|(ii)||transactions of the nature referred to in section 269SS;|
|(iii)||such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify.|
|(a)||"banking company" shall have the same meaning as assigned to it in clause (i) of the Explanation to section 269SS;|
|(b)||"co-operative bank" shall have the same meaning as assigned to it in clause (ii) of the Explanation to section 269SS.|
|1.||Receipt of Rs. 2 Lakhs or more from a person in a day in the aggregate.|
As the bare reading gives us idea that the reason for receipt may be anything except as provided under section 269ss. Hence receipt of any nature like, gifts, donations, sales proceeds and so on are covered. This sub-clause will get attracted if a person receives Rs. 2 lakhs or more in a single day from same person. Here "in a day" and "a person" are most crucial words. The sum 2 lakhs or more is cumulative of all the receipts from a person in a single day, even though the receipts are for more than one transaction.
|2.||Receipt of Rs. 2 Lakhs or more in respect of a single transaction.|
If we check the second clause, the clause gets attracted if a person receives Rs. 2 lakhs or more in respect of a single transaction. It must be noted that the receipts may be on different dates but if they all relate to a single transaction then this clause is attracted. a close reading will also give idea that the clause talks about a single transaction and not about a single person. For example if a Mr A sales his land to three co-buyers Mr. B Mr. C and Mr. D for Rs. 3 lakhs and received Rs. 1 lakh each from Mr. B Mr. C and Mr. D, even in this case section gets attracted.
|3.||Receipt of Rs. 2 Lakhs or more in relation to one event or occasion from a person.|
The third operative clause gets attracted, if a person receives a sum of Rs. 2 lakhs or more from a person in respect of a single event or occasion. The term one even or occasion is although not explained and may lead to litigation at times. But an example will explain it. If Mr. X gives contract of catering to Mr. Y for marriage of his daughter. Mr. Y is also owner of the place where the marriage is planned. In this case even though two separate contracts are entered for catering and for renting of Hall or lawns, if the receipts by Mr. Y exceeds Rs. 2 Lakhs or more from Mr. X, then the clause is attracted.
In the nutshell it can be safely concluded that newly inserted section 269ST seeks to restrict wide amplitude of transactions in cash. It places restriction on cash received by a person amounting to Rs. 2 Lakhs or more. The restriction is on the payee and not on the payer, so it is the payee who will invite penalty u/s 271D for any violation of section 269ST. The section includes within its sweep all cash receipts of whatever nature such as cash sales, cash gifts, donations made in cash, compensation, encashment of securities/instruments etc. A penalty equal to the amount of such receipt shall be imposed u/s 271D. It has also been provided that penalty shall not be imposable if such person proves that there were good and sufficient reasons for the contravention. What will constitute good and sufficient reasons for contravention have not been defined. Perhaps this needs some clarification or suitable amendment in section 271D so as to bring out clearly what all reasons are covered under the expression good and sufficient reasons. It also remains to be seen how the information regarding cash receipts in contravention of section 269ST shall come into the knowledge of the department.