Section 271D and 271E: The 100% Cash Penalty Guide
At a Glance
| Parameter | Section 271D | Section 271E |
|---|---|---|
| Trigger provision | Section 269SS violation | Section 269T violation |
| What is prohibited | Accepting loan/deposit/specified sum in cash ≥ ₹20,000 | Repaying loan/deposit/specified advance in cash ≥ ₹20,000 |
| Penalty amount | 100% of the amount received in cash | 100% of the amount repaid in cash |
| Who levies the penalty | Joint Commissioner of Income Tax | Joint Commissioner of Income Tax |
| Limitation period | No specific period — but must be within reasonable time | Same |
| Reasonable cause defence | Available — Section 273B | Same |
| AO must record satisfaction before initiating? | Yes — Supreme Court, CIT vs. Jai Laxmi Rice Mills | Same |
| Cash from close relatives | Generally protected — reasonable cause | Same |
| Section 269ST — separate provision | Cash receipt ≥ ₹2 lakh in aggregate from one person in one day | Penalty under Section 271DA |
| JCIT jurisdiction — mandatory | Yes — AO cannot levy penalty; only JCIT can | Same |
What These Provisions Actually Prohibit
Sections 269SS and 269T are the pillars of India’s anti-cash-transaction framework in income tax law. Both provisions were enacted to prevent unaccounted money from circulating through the financial system under the guise of loans, deposits, and advances.
Section 269SS prohibits acceptance of any loan, deposit, or specified sum of ₹20,000 or more in cash. The payment must be received through an account-payee cheque, draft, NEFT, RTGS, UPI, or any other prescribed electronic mode. The “specified sum” includes advance payments made in connection with the transfer of immovable property.
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