1. The document discusses new provisions introduced in Sections 269ST and 271J of the Income Tax Act regarding restrictions on cash transactions over Rs. 2 lacs and penalties for accountants/professionals providing incorrect information. 2. Section 269ST prohibits the receipt of cash over Rs. 2 lacs and imposes penalties equal to the amount received, while Section 271J allows authorities to impose a Rs. 10,000 penalty on accountants/professionals for each incorrect report or certificate filed. 3. Exceptions to Section 269ST include receipts by government entities and banks, while reasonable cause can exempt penalties under Section 271J.

1. Points to be covered :-
1. Introduction of section 269ST.
2. Some special Questions arises relating to section 269ST.
3. FAQS relating to section 269ST.
4. Introduction of section 271J.
5. Some special Questions arises relating to section 271J.
6. FAQS relating to section 271J.
Section
269ST &
271J
Limitation
of Cash
Transaction
Provisions in
relation to

2. In the final draftof the finance bill’2017, the Governmentis proposing to ban all
transactions incashabove Rs. 2 lacs from 01.04.2017.
According to amendment in Finance Bill’2017, any person who enters into a
transaction above Rs. 2 lacs in cash, will be liable to a penalty of an amount
equivalent to the amount of transaction.
Section 269ST reads as under:
No person shall receive an amount of two lacs rupees or more—
Otherwisethan by;
(a) in aggregatefrom 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,
• an account payee cheque or1.
• an account payee bank draft or2.
• use of electronic clearing system through a bank account3.

3. Provided that the provisions of this section shall not apply to—
Therefore, in light of the abovethe Governmenthas ban all types of transactions
in cash above Rs. 2 lacs.
Receipts fromsameperson are permitted;
1.
•any receiptby—
(a) Government;
(b) any banking company, postoffice savingsbank or co-operative bank;
2.
•transactions of the nature referred to in section269SS;
3.
•such other persons or class of persons or receipts, which the Central
Governmentmay, by notification in the OfficialGazette, specify.
1.
2.
3.
• If the same is below the
specified limit and
• On different days
• If the same is not in relation to
a single transaction and/or
same event/occasion.

4. Section 269STwould not be applicable in following cases:
Therefore, if Govt. or a banking company receives any sumin contravention of
this section, they would not be liable to any penalty.
Another interesting point tonote is that receipt of money from a banking
company is not exempted. Therefore evencashwithdrawal incontraventionof
the above limits canbe hit by the provisions of the proposedsection269ST.
1.
• any receipt by—
(a) Government;
(b) any banking company, post office savings bank or co-operative bank;
2.
• transactions of the nature referred to in section 269SS;
3.
• such other persons or class of persons or receipts, which the Central
Government may, by notification in the Official Gazette, specify.

5. Some of the modes of receipt which arenot allowed are;
 cash,
 bearer cheque,
 crossed cheque,
 self cheque,
 adjustment or transfer entry in the books of account.
However, going by the literal interpretation of the section any receipt of money
other than by;
 account payee cheque or
 account payee draft
is not allowed.
“Whether this would cover transfers by e-payment wallets like PAYTMetc which
are very common these days will haveto be clarified soon”.
The Govt. proposes to introduce a new section prescribing penalty for violating
the provisions of section 269ST.

6. As per this section:
“What are good and sufficient reasons willbe decided on a case to case basis by
the jointcommissioner as the joint commissioner has the power to levy such
penalty”.
Some of the other relevant points to be considered are:
 Itis irrelevant that the person receiving the cash has a PANor not and
whether such person is assessed to income tax or not.
 SOURCEOF INCOMEof the recipient is irrelevant and nature of receipt of
such person is also irrelevant.
 This section would also apply to TRANSACTIONS BETWEENRELATED
PERSONS.
 The provisions would also apply to transactions between persons WHO ARE
OTHERWISEEXEMPTFROMTAX.
• If a person receives any sum in contravention
of the provisions of section 269ST, he shall be
liable to pay, by way of penalty, a sum equal
to the amount of such receipt.
1.
• The penalty will be not be levied if such
person proves that there were good and
sufficient reasons for the contravention.2.

7.  Restriction would apply on ALL PERSONS/ENTITIES EXCEPTTHOSEWHICH
ARE SPECIFICALLYEXEMPTED LIKEBANKS ETC.
Therefore, section 269STwill be applicable on receipt of money by all persons
such as individuals, HUFs, firms, companies, trusts, charitableInstitutions, AOPs/
BOIs etc.
 The restrictionis onreceipt of cashand not on payment of cash above Rs.
2 lacs:
Any person who receives aboveRs. 2 lacs in cash will be liable to penalty
equivalent to the amount received.
There is no restriction on payment of cash. However, it is to be noted that
there is an existing provision for restricting cash payments aboveRs.
20,000/- for business purposes. Thisprovision hasalso been amended and
now cash paymentsabove Rs. 10,000/- shallnot be allowed as expense in
the income tax return.
 Receiving cashabove Rs. 2 lacs in a day from a personis not allowed:
Receipt of more than Rs. 2 lacs froma single person in a day is not allowed
even though the amount has been paid in multiple transactions during the
day which are below Rs. 2 lacs.
 Receipt above Rs. 2 lacs in respect of ;
a single event or
an occasion
from a person
The most common example of occasionis Marriage,
therefore a person cannot receive more than Rs. 2 lacs in cash for such
occasion froma person.

8. Also important to note that this limit on an occasionis not limitedto per
day basis therefore receipts even on various days in respect of a single
event or occasion aggregating above Rs. 2 lacs is prohibited.
If the receipts are fromdifferent persons, the same wouldnot be covered
by the thirdcircumstance, evenif the same relates toasingle event or
occasion.
 Nature of receipt does not matter
Another importantpoint to be noted in respectof the section 269STis that
the natureof receipt does not matter.
Therefore, even if a person receives a sumwhich is not chargeable to tax still
he would be hit by the provisions of this section and would be liable to
penalty.
Receipts can be anything such as proceedsof sales of goods, incomeof
whatsoever nature – taxableor not, gifts, capital receipts, loans, advances,
government grants, subsidies, encashment of bonds/securities, encashment
of instrumentslikeNational SavingsCertificates, proceedsof Life Insurance
Policies, scholarships, sale of shares, transactionsbetween related parties
and so on.
The nature of receipt is very wide and it would be interesting to see if the
governmentexempts any circumstances in the future.
 Applicable toreceipts irrespective of the fact that they are withor
without consideration.
Section 269STis applicable to receipts irrespective of the fact that they are
with or withoutconsideration.
In case of receipts without consideration,therecan be dual impact of
penalty under this section and under section 56 of the IncomeTax Act’
1961 in some specific cases.

9. Section271Jreadas under;
Withoutprejudice to the provisions of this Act, where the Assessing Officer or the
Commissioner (Appeals), in the course of any proceedingsunder thisAct, finds
that
 an accountant or
 a merchant banker or
 a registered valuer
has furnished incorrect information in any reportor certificate furnished under
any provision of this Act or the rules made thereunder, the Assessing Officer or
the Commissioner (Appeals) may directthat such accountantor merchant
banker or registered valuer, asthe case may be, shall pay, by way of penalty, a
sum of ten thousand rupees for each such reportor certificate.

10. Exemption
As per amendment to section 273B OF INCOMETAXACT1961 that if the person
proves that there was reasonablecause for the failure referred to in the said section,
then penalty shall not be imposable in respectof the section 271J.

11. The thrust of the Governmentin recent past is on voluntary compliance.
Certification of various reports and certificates by a qualified professionalhas
been provided in the Act to ensurethat the information furnished by an assessee
under the provisions of the Act is correct.
Various provisions exist under the Act topenalise the defaulting assessee in
case of furnishing incorrect information. However, thereexist nopenal
provisionfor levy of penalty for furnishing incorrect informationby the person
who is responsible for certifying the same.
But today, In order to ensurethat the person furnishing reportor certificate
undertakes due diligence before making such certification, there is a new section
271Jso as to providethat if an accountant or a merchant banker or a registered
valuer, furnishes incorrectinformation in a reportor certificate under any
provisions of the Act or the rules made thereunder, the Assessing Officer or the
Commissioner (Appeals) may direct him to pay a sum of tenthousand rupees for
each suchreport or certificate by way of penalty.