Section 271DA — Penalty for Failure to Comply with the Provisions of Section 269ST (Cash Receipts of Rs. 2 Lakh or More)
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live. Penalty equal to the amount of the receipt where a person receives a sum of Rs. 2,00,000 or more in contravention of section 269ST (in cash, in aggregate from a person in a day / in respect of a single transaction / in respect of transactions relating to one event or occasion). Imposed by the Joint Commissioner; the proviso allows non-levy if good and sufficient reasons for the contravention are proved.
Finance Act, 2026: No amendment by the Finance Act, 2026.
Mechanism: Receipt of Rs. 2,00,000 or more in cash in violation of section 269ST → penalty equal to the amount received → no penalty if the person proves there were good and sufficient reasons for the contravention.
Litigation profile: Still developing (section 269ST is from 2017). Early authority addresses the "good and sufficient reasons" proviso, the receiver-side incidence of the penalty, and the scope of the daily-aggregate and single-event limbs.
A. COMMENTARY
A cap on cash receipts, enforced on the receiver
Section 269ST prohibits receiving Rs. 2,00,000 or more in cash — in aggregate from one person in a day, or for a single transaction, or for transactions relating to one event/occasion. Section 271DA enforces it with a penalty equal to the amount received, levied on the recipient (not the payer). It is part of the post-2016 drive against the cash economy and is wider than sections 269SS/269T because it is not confined to loans/deposits.
The "good and sufficient reasons" proviso
The proviso to sub-section (1) shelters a contravention where the person proves there were "good and sufficient reasons" for it. This is a slightly different formulation from the "reasonable cause" of section 273B (section 271DA is not listed in section 273B because it carries its own proviso), but the enquiry is similar: bona fides, exigency, and absence of any tax-evasion motive.
Interplay with sections 269SS/269T and aggregation
A single transaction can raise both section 269SS (a cash loan) and section 269ST (a cash receipt). The provisions operate in their own fields; double penalty on the identical sum should be resisted. The aggregation limbs — per person per day, per transaction, per event — require careful factual analysis, especially for instalment or event-based receipts.
B. STATUTORY TEXT (verbatim)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025; Finance Act, 2026 changes are noted above.
Penalty for failure to comply with provisions of section 269ST.
271DA. (1) 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:
Provided that no penalty shall be imposable if such person proves that there were good and sufficient
reasons for the contravention.
(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner:
Provided that any penalty under sub-section (1), on or after the 1st day of April, 2025, shall be
imposed by the Assessing Officer.
C. AUTHORITIES
Direct authority is limited and largely at the Tribunal level; the candour rule applies. Propositions reflect the statutory proviso and the cognate cash-penalty learning.
1. The "good and sufficient reasons" proviso
Principle — bona fide, exigency-driven contravention
Proposition Where the recipient proves good and sufficient reasons for receiving cash — genuine business/personal exigency, a one-off bona fide receipt, absence of any evasion motive — the proviso to section 271DA(1) bars the penalty.
Use The principal defence; closely tracks the reasonable-cause jurisprudence.
Hindustan Steel Ltd v. State of Orissa (1972) 83 ITR 26 (SC)
Holding A penalty for a technical or bona fide breach ought not to be imposed; the discretion is to be exercised judicially.
Use Applied to the section 271DA proviso to resist mechanical levy.
2. Incidence and overlap
Principle — penalty falls on the receiver; resist double levy
Proposition Section 271DA penalises the recipient of the cash; where the same sum is also penalised as a cash loan under section 271D, duplication on the identical amount should be resisted, each provision operating in its own field.
Use Identifies the correct person and guards against stacked penalties.
Prepared for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced from the official Act; case-law holdings are the author’s summaries for professional use.
CHAPTER XXI — PENALTIES IMPOSABLE
Section 271DA — Penalty for Failure to Comply with the Provisions of Section 269ST (Cash Receipts of Rs. 2 Lakh or More)
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live. Penalty equal to the amount of the receipt where a person receives a sum of Rs. 2,00,000 or more in contravention of section 269ST (in cash, in aggregate from a person in a day / in respect of a single transaction / in respect of transactions relating to one event or occasion). Imposed by the Joint Commissioner; the proviso allows non-levy if good and sufficient reasons for the contravention are proved.
Finance Act, 2026: No amendment by the Finance Act, 2026.
Mechanism: Receipt of Rs. 2,00,000 or more in cash in violation of section 269ST → penalty equal to the amount received → no penalty if the person proves there were good and sufficient reasons for the contravention.
Litigation profile: Still developing (section 269ST is from 2017). Early authority addresses the "good and sufficient reasons" proviso, the receiver-side incidence of the penalty, and the scope of the daily-aggregate and single-event limbs.
A. COMMENTARY
A cap on cash receipts, enforced on the receiver
Section 269ST prohibits receiving Rs. 2,00,000 or more in cash — in aggregate from one person in a day, or for a single transaction, or for transactions relating to one event/occasion. Section 271DA enforces it with a penalty equal to the amount received, levied on the recipient (not the payer). It is part of the post-2016 drive against the cash economy and is wider than sections 269SS/269T because it is not confined to loans/deposits.
The "good and sufficient reasons" proviso
The proviso to sub-section (1) shelters a contravention where the person proves there were "good and sufficient reasons" for it. This is a slightly different formulation from the "reasonable cause" of section 273B (section 271DA is not listed in section 273B because it carries its own proviso), but the enquiry is similar: bona fides, exigency, and absence of any tax-evasion motive.
Interplay with sections 269SS/269T and aggregation
A single transaction can raise both section 269SS (a cash loan) and section 269ST (a cash receipt). The provisions operate in their own fields; double penalty on the identical sum should be resisted. The aggregation limbs — per person per day, per transaction, per event — require careful factual analysis, especially for instalment or event-based receipts.
B. STATUTORY TEXT (verbatim)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025; Finance Act, 2026 changes are noted above.
Penalty for failure to comply with provisions of section 269ST.
271DA. (1) 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:
Provided that no penalty shall be imposable if such person proves that there were good and sufficient
reasons for the contravention.
(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner:
Provided that any penalty under sub-section (1), on or after the 1st day of April, 2025, shall be
imposed by the Assessing Officer.
C. AUTHORITIES
Direct authority is limited and largely at the Tribunal level; the candour rule applies. Propositions reflect the statutory proviso and the cognate cash-penalty learning.
1. The "good and sufficient reasons" proviso
Principle — bona fide, exigency-driven contravention
Proposition Where the recipient proves good and sufficient reasons for receiving cash — genuine business/personal exigency, a one-off bona fide receipt, absence of any evasion motive — the proviso to section 271DA(1) bars the penalty.
Use The principal defence; closely tracks the reasonable-cause jurisprudence.
Hindustan Steel Ltd v. State of Orissa (1972) 83 ITR 26 (SC)
Holding A penalty for a technical or bona fide breach ought not to be imposed; the discretion is to be exercised judicially.
Use Applied to the section 271DA proviso to resist mechanical levy.
2. Incidence and overlap
Principle — penalty falls on the receiver; resist double levy
Proposition Section 271DA penalises the recipient of the cash; where the same sum is also penalised as a cash loan under section 271D, duplication on the identical amount should be resisted, each provision operating in its own field.
Use Identifies the correct person and guards against stacked penalties.
Prepared for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced from the official Act; case-law holdings are the author’s summaries for professional use.