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Tax · Cash entry

Section 269SS / 269ST — cash in a property deal & the tax risk

A cash entry in a builder's ledger, or cash in a sale, is one of the most common triggers for a property-linked income-tax notice. Here's why it happens and how a reply is built — in plain English.

The Income-Tax Act discourages large cash dealings in property. Two sections come up again and again in notices:

  • Section 269SS — broadly, restricts accepting a loan, deposit or a specified sum (including for immovable property) in cash above the prescribed limit.
  • Section 269ST — broadly, restricts receiving a large amount in cash in a single transaction / from one person in a day, above the prescribed limit.

These are general descriptions — the exact limits, exceptions and consequences depend on the provision and the year, and should be confirmed by a qualified professional on your facts.

Why a notice shows up

A notice on a property transaction is often triggered when the department sees a mismatch or a flagged entry:

  • A cash entry in the builder's ledger that doesn't match your bank trail
  • An AIS / Form 26AS entry you don't recognise
  • A property value or payment that doesn't reconcile with your ITR
  • Third-party information under a call for information (133(6))

What a good reply is built on

The reply is not a generic letter — it's a reconciliation. The section, the alleged entry, your bank trail, the builder ledger, receipts, the BBA/allotment and your ITR all have to tell one consistent story:

  1. Map the section and the assessment year, and pin down exactly what is being asked.
  2. Reconcile the payment trail — bank statements and receipts against the alleged cash entry.
  3. Document third-party / AIS data and explain any entry that isn't yours.
  4. File a timely, evidence-backed reply — coordinated with qualified tax and legal professionals.
Don't reply casually, and don't ignore the deadline. Check the exact response date on the notice first. A rushed or generic reply can make things harder; a documented, reconciled one is far stronger.

Income-Tax notice on a property?

Send the notice — we map the section, reconcile your payment trail and prepare an evidence-backed reply before the deadline.

See the Income-Tax Notice desk

FAQs

Why did I get an income-tax notice on my property purchase?

Common triggers are a cash entry in the builder ledger, an AIS/26AS entry you don't recognise, or a payment that doesn't reconcile with your ITR. The reply is built by reconciling your payment trail and documents against the alleged entry.

Is cash in a property deal always a problem?

Not automatically, but cash above the prescribed limits can attract sections like 269SS/269ST. The exact limits, exceptions and consequences depend on the provision and year and should be confirmed by a qualified professional on your facts.

What should I do first after receiving the notice?

Note the section and the response deadline, and gather your bank statements, receipts, builder ledger, allotment/BBA, AIS/26AS and ITR. Get it reviewed early so the reply can be reconciled to documents.

This guide is general and informational — not legal or tax advice, not a solicitation, and no substitute for professional advice on your facts. Outcomes depend on facts, documents, forum, limitation and applicable law.