Case Details: Correspondence, RBANMS Educational Institution v. B. Gunashekar - [2025] 173 taxmann.com 586 (SC)
Judiciary and Counsel Details
- J.B. Pardiwala & R. Mahadevan, JJ.
Facts of the Case
The appellant, R.B.A.N.M.S. Educational Institution, was established in 1873 as a public charitable trust. The respondents filed a suit against the appellant, seeking a permanent injunction restraining the appellant from creating any third-party interest over the suit schedule property.
The respondents’ claim rests entirely on an agreement to sell, purportedly executed by certain individuals who, notably, are not parties to the suit. Aggrieved by the same, the appellant preferred a Civil Revision Petition before the High Court.
The High Court dismissed the revision petition. Aggrieved by the same, the appellant preferred the instant appeal before the Supreme Court.
Supreme Court Held
The Supreme Court held that the respondents’ claim suffers from multiple fatal defects that go to the root of the case. First, there is no privity between the respondents and the appellant. According to Section 7 of the Transfer of Property Act, 1882, only the owner, or any person authorised by him, can transfer the property. An agreement to sell does not confer any right on the proposed purchaser under the agreement.
Therefore, as a natural corollary, any right, until the sale deed is executed, will vest only with the owner, or in other words, the vendor, to take necessary action to protect his interest in the property. Further, in the present case, the respondents claimed to have paid the entire consideration of Rs. 75,00,000/- in cash, despite the introduction of Section 269ST to the Income Tax Act and the corresponding amendment to Section 271DA.
Accordingly, the Supreme Court held that whenever a suit is filed claiming 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, if any.
The Court further held that if 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 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.
Directions issued by the Supreme Court shall be circulated by Registrars of High Courts, Chief Secretaries of States/UTs, and Principal Chief Commissioners of Income-tax to relevant subordinate authorities for compliance.
List of Cases Referred to
- Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra Dead throught LRs. & Anr. (2004) 8 SCC 614 (para 10)
- Suraj Lamp & Industries (P) Ltd. v. State of Haryana & Another (2012) 1 SCC 656 (para 10)
- K. Basavarajappa v. Tax Recovery Commissioner, Bangalore & Others (1996) 11 SCC 632 (para 10)
- Jharkhand State Housing Board v. Didar Singh & Another (2019) 17 SCC 692 (para 10.2)
- Premji Ratansey Shah & Others v. Union of India & Others (1994) 5 SCC 547 (para 10.2)
- T. Arivandandam v. T.V. Satyapal & Another (1977) 4 SCC 467 (para 10.2)
- Soumitra Kumar Sen v. Shyamal Kumar Sen & Others (2018) 5 SCC 644 (para 11)
- Dahiben v. Arvindbhai Kalyanji Bhanusali (Gajra) dead through legal representatives (2020) 7 SCC 366 (para 14)
- Om Prakash Srivastava v. Union of India & Another (2006) 6 SCC 207 (para 15)
- Anathula Sudhakar v. P. Buchi Reddy (Dead) by LRs and others MANU/SC/7376/2008 (para 15.2.1).
The post Supreme Court Instructed Courts to Inform Income-Tax Dept. About Suits Involving Cash Payments Over ₹2 Lakh appeared first on Taxmann Blog.
