Can cash transaction for rs.5 lakhs be made legally?

This query is : Resolved 

Click to Talk
05 September 2012

Some broker/agent manipulated documents and filled up 4 nos. blank & signed Money Receipts and claimed to have paid in total Rs.20 Lkahs in cash in 4 installments of Rs.5 Lakhgs each to the land owner. He is now demanding possession & registration of a flat from the land owner. The case is fixed for hearing before the Consumer Forum on 06.09.2012.

Is not cash transaction of more than Rs.50,000/- at a time barred by law? If yes, by which law or rule and under which section? Is it I.T.Act.?

Would the Ld.Experts kindly give their valuable guidance?
Thanks in advance.

sanjeev murthy desai (Expert)
05 September 2012

In my view, he cannot demand possession and registration before the consumer forum. He can seek only compensation for damages it is clearly civil case as well as criminal case.

K.K.Ganguly (Querist)
Click to Talk
06 September 2012

Right, but can any body pay Rs.5 Lakhs at a time in cash for any commercial transaction like buying/booking a flat as per I.T.Act or any other Act? Is it not a rule to make transactions through cheque only if the payment is for more than Rs.50,000/-at a time?

Shonee Kapoor (Expert)
06 September 2012

There is no bar, as long as there is a revenue reciept.


Shonee Kapoor
Handphone: +91-8010850498


prabhakar singh (Expert)
06 September 2012


22[Mode of taking or accepting certain loans and deposits.
23269SS. No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,—
(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or
(b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid ; or
(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b),
is 24[twenty] thousand rupees or more :
Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by,—
(a) Government ;
(b) any banking company, post office savings bank or co-operative bank ;
(c) any corporation established by a Central, State or Provincial Act ;
(d) any Government company25 as defined in section 617 of the Companies Act, 1956 (1 of 1956);
(e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify26 in this behalf in the Official Gazette :
27[Provided further that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chargeable to tax under this Act.]
Explanation.—For the purposes of this section,—
28[(i) “banking company” means a company to which the Banking Regulation Act, 1949 (10 of 1949), applies and includes any bank or banking institution referred to in section 51 of that Act;]
(ii) “co-operative bank” shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ;
(iii) “loan or deposit” means loan or deposit of money.]

K.K.Ganguly (Querist)
Click to Talk
08 September 2012

Thank you very much. Much obliged.

V R SHROFF (Expert)
08 September 2012

Most of Property deal involve cash payment over Rs. 5 Lakhs . It is legal and binding

prabhakar singh (Expert)
08 September 2012

All that we practice in life is not legal if law declares it illegal.All such transactions
go safe sailing because of no dispute but when once in dispute only law shall prevail and not the custom we practice in life.

Here section 269ss of INCOME TAX ACT bars such cash transactions unless they are made between persons having only agricultural income which is non taxable or payment is to government or banks or gazetted institutions.

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