Will money deposited in bank a/c will come under cash transaction

I am planning to sale my ancestral rural agricultural land. As far I know selling price of such land would be exempted from Income tax. If I ask buyer of my agricultural land to deposit the selling price in my bank a/c, will it come under "cash transaction"? If your answer is yes, then how am I supposed to receive payment from such sale without violating any law?
Asked 1 year ago in Income Tax from Patna, Bihar
You can ask for RTGS from the buyer
Vijay Kapoor
CA, Delhi
14 Answers
3.5 on 5.0
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If seller is depositing cash into your account then it is not violating any law.
But if this deposit is of ten lacs rupees or more in saving bank account then chances of scrutiny may arise.
Still it is not violation of any law if you showing this transaction in your income tax return.
Monil Shah
CA, Ahmedabad
4 Answers
Not rated
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Yes, it is covered under cash transaction.
You must prefer to accept the amount through Cheque/ DD/ RTGS/ NEFT(any mode other than cash).
Shiv Kumar Agarwal
CA, Delhi
197 Answers
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Yes it will be cash payment and provisions of section 269 ss will be attracted. Let him deposit the consideration in his bank account and transfer the proceeds to your bank account from his bank account.
Otherwise you have to receive payment by crossed account payee cheque or demand draft only.
Vijay N. Kale
CA, Hyderabad
248 Answers
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Hi,
you are supposed to receive the payment either through ACCOUNT PAYEE CHEQUE or through ACCOUNT PAYEE DEMAND DRAFT
Shyam Sunder Modani
CA, Hyderabad
955 Answers
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Dear Tax Payer,

Issue 1: Taxability of Transfer of Rural Agricultural Land: 
------------------------------
Section 2(14) which defines Capital Asset reads as under: “ Capital Asset” means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include agricultural land in India excluding the agricultural land situated within the area specified in item (a) and (b) of sub-clause (iii) of clause (14) of Section 2.
Hence,  if it is a rural agricultural land, it is not falling within the definition of "Capital Asset". Consequently, there is no Capital Gain Tax applicable on transfer.

Further exemption from Capital gains is provided in Section 10(37) of the Income-tax Act, 1961 from sale of Agricultural lands arising to individual assesses or to HUF even if the lands are situated within the area specified in item (a) and (b) of sub-clause (iii) of clause (14) of Section 2.

Issue 2: Cash Transactions
----------------------------------------
It is worthwhile to note that the  w.e.f 1 June 2015 Section 269SS has been amended by the Finance Act, 2015 as follows;
Section 269SS: No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account;
“specified sum” means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.'

Hence, accepting Cash as consideration for transfer of your agriculture property will be a violation as per section 269SS. 

Issue 3: Penalty for failure to comply with the provisions of section 269SS.
----------------------------------------
As per Section 271D (1), If a person takes or accepts any loan or deposit 88[or specified sum] in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit 88[or specified sum] so taken or accepted.

Conclusion:
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Please accept the sale consideration ONLY BY WAY of account payee cheque or account payee bank draft or use of electronic clearing system through a bank account. Otherwise you will be liable for 100% of cash received as penalty u/s 269SS.

Regards,
CA. Rajeev P T
Partner
Rajan Chakravarthy & Associates, Chennai
Email: ca.rajeevpt@gmail.com

*****This Opinion is based on stated facts and the legal position as on date. The views expressed may not be relevant where there is any change in facts or law. This Opinion is not in the nature of an assurance that an alternative view or interpretation cannot emerge.
Rajeev P T
CA, Chennai
34 Answers
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You can ask the buyer to give a cheque or DD, which can be deposited into your bank. The buyer may also transfer through NEFT or RTGS. You will come under cash transaction only if you have cash deposits of more than Rs 10 L  in your bank account.
B Vijaya Kumar
CA, Hyderabad
290 Answers
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