Supreme court: Courts Must Notify Income Tax Dept. Of Rs. 2 Lakh And Above Cash Transaction Claims In Suits

However, when the Bill was passed, the permissible limit was capped under Rupees Two Lakhs, instead of the proposed Rupees Three Lakhs. When a suit is filed claiming Rs. 75,00,000/- paid by cash, not only does is create a suspicion on the transaction, but also displays, a violation of law. Though the amendment has come into effect from 01.04.2017, we find from the present litigation that the same has not brought the desired change. When there is a law in place, the same has to be enforced. Most times, such transactions go unnoticed or not brought to the knowledge of the income tax authorities. It is settled position that ignorance in fact is excusable but not the ignorance in law. Therefore, we deem it necessary to issue the following directions:

(A) Whenever, a suit is filed with a claim that Rs. 2,00,000/- and above is paid by cash towards any transaction, the courts must intimate the same to the jurisdictional Income Tax Department to verify the transaction and the violation of Section 269ST of the Income Tax Act, if any,

(B) Whenever, any such information is received either from the court or otherwise, the Jurisdictional Income Tax authority shall take appropriate steps by following the due process in law,

(C) Whenever, a sum of Rs. 2,00,000/- and above is claimed to be paid by cash towards consideration for conveyance of any immovable property in a document presented for registration, the jurisdictional Sub-Registrar shall intimate the same to the jurisdictional Income Tax Authority who shall follow the due process in law before taking any action,

(D) Whenever, it comes to the knowledge of any Income Tax Authority that a sum of Rs. 2,00,000/- or above has been paid by way of consideration in any transaction relating to any immovable property from any other source or during the course of search or assessment proceedings, the failure of the registering authority shall be brought to the knowledge of the Chief Secretary of the State/UT for initiating appropriate disciplinary action against such officer who failed to intimate the transactions.

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 5200 of 2025 

Decided On: 16.04.2025

The Correspondence, RBANMS Educational Institution Vs. B. Gunashekar and Ors.

Hon'ble Judges/Coram:

J.B. Pardiwala and R. Mahadevan, JJ.

Author: R. Mahadevan, J.

 Citation: 2025 INSC 490, MANU/SC/0492/2025

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Supreme Court Reinforces Property Law Principles: Agreement to Sell Cannot Create Rights Against Third Parties

 The Supreme Court of India's recent judgment in The Correspondence, RBANMS Educational Institution v. B. Gunashekar & Ors. (Civil Appeal No. 5200 of 2025) has significantly strengthened property law jurisprudence while providing crucial protection to charitable institutions from frivolous litigation. The two-judge bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan delivered this important ruling on April 16, 2025, addressing fundamental questions about the enforceability of agreements to sell against third parties.

Background: A 148-Year-Old Institution Under Siege

The case involved R.B.A.N.M.S. Educational Institution, a charitable trust established in 1873 to serve marginalized communities in Bangalore. The institution has been in continuous possession of the disputed property since 1905, when it was initially leased the "Sappers Practice Ground," which was formally conveyed to them by the Municipal Commissioner in 1929.

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