The Supreme Court of India in the case of The Correspondence, RBANMS Educational Institution vs. B. Gunashekar & Anr has overturned the Karnataka High Court’s decision which earlier dismissed the request of the appellant to reject the case. The court further stated that if there is any lawsuit which involves a cash transactions of Rs. 2,00,000 or more and possibly also violates Section 269ST, then the court has to inform the Income Tax Department of such incidents. 

Brief details of RBANMS Educational Institution vs. B. Gunashekar & Another (2025)

Name of the Case	The Correspondence, RBANMS Educational Institution vs. B. Gunashekar & Anr
Case Number	C.A. No.-005200-005200 – 2025
Dairy Number	21889/2022
Parties of the Case	Appellant – The Correspondence RBANMS Educational InstitutionRespondent – B Gunashekar
Advocates of the parties	Petitioner – AOR Asmita Singh; Advocates Shivangi Chawla, Shrutika Garg and Pranay BhardwajRespondent – AOR Nishe Rajen Shonker; Advocates Abraham Mathews and S Shivaprasad
Equivalent Citations	Civil Appeal No. 5200 of 2025 (Arising from SLP (C) No. 13679 of 2022)
Type of the Case	Civil Appeal
Court	Supreme Court of India
Statutes, Provisions, Judgements Involved In the Case	Section 269ST of Income Tax Act, 1961Section 271DA of Income Tax Act, 1961Section 54 Transfer of Property Act, 1882Section 17 Registration Act, 1908
Bench	Hon’ble Mr. Justice J.B. PardiwalaHon’ble Mr. Justice R. Mahadevan
Judgement Date	16/4/25

Genesis of the dispute

The appellant is an educational institution which was established as a public charitable trust  in 1873.  In this case, a real estate transaction was made between the respondent and the appellant. B Gunashekar claimed to have paid Rs. 75 lakhs to the appellant in cash. The payment was for purchasing a property. However, the claimed sale was done without a registered sale deed or other documentary proof. The claim was refuted by RBANMS Educational Institution. 

The respondents then filed a suit seeking a permanent injunction. Both the Trial Court and High Court rejected the plea to dismiss the suit. 

Legal provisions involved in this case

Section 269ST of Income Tax Act, 1961

Section 269ST is clearly violated in this case. The claim made by the respondent for cash payment of Rs. 75 lakh breaches this provision. The main motive for introducing this provision was to reduce black money and promote digital money transactions.  

Section 269ST vs. 269SS

Basis	Section 269SS	Section 269ST
Application	Applied to acceptance of deposits, advances, or loans	Receipt of Rs. 2 lakh or more in cash
Limit	Twenty thousand	Two lakhs
Condition	This provision covers cash advances in property transactions	This provision applies to cash given to one person in one day per event/transaction.
Penalty	Amount equal to the amount which is received	Amount equal to the amount which is received
Important point to consider	The immovable property advance in cash is covered under this provision.	Excludes all the transactions which are already covered in Section 269SS.

Section 271DA of Income Tax Act, 1961

This provision states that if any payment is received in cash which is more than Rs. 2 lakh, then it attracts a penalty. The amount of the penalty is equal to the amount which is received. 

Section 54 Transfer of Property Act, 1882

As per this section, sale of an immovable property can be executed only by having a registered sale deed. This requirement is mandatory in nature. The current case violates this section. 

Section 17 Registration Act, 1908

This provision states that whenever a sale of immovable property takes place, it is compulsory to register the same. This was not followed under the case; hence, this section was also breached. 

Key issues before the court in RBANMS Educational Institution vs. B. Gunashekar & Anr (2025)

1. Whether a suit can be filed for completing the sale when there is a cash payment of Rs. 75 lakh and no registered sale deed?
2. Whether unrecorded and unaccounted cash transactions are legal and valid?
3. Whether Section 269ST of the Income Tax Act, 1961, violated?

Submission by both sides in this case

Both parties have put their points in front of the bench. Grounds raised by the appellant and respondent are:

Grounds raised by appellant

The appellant has denied receiving any cash payment of 75 lakh in the receipt of any sale agreement. The appellant further argued that receiving a cash payment of such a big amount violates some provisions of the Income Tax Act, 1961. The appellant also emphasised the point that there was no registered instrument to prove that any payment was received for a sale or its acknowledgement. As the appellant is a charitable trust, they abide by the financial rules and regulations very stringently. 

Grounds raised by respondent

The respondent B. Gunashekar claims to have paid Rs. 75 lakh in cash to RBANMS. This cash was paid towards a real estate deal and was relied on unregistered sale deeds. There were a few witnesses as well. It was argued by the counsel of the respondent that such an unregistered and verbal agreement must be enforced under the Specific Relief Act, 1963. Denying the payment of such a big amount was unfair of the appellant. 

List of cases referred in RBANMS Educational Institution vs. B. Gunashekar & Anr (2025)

• T. Arivandandam vs. T.V. Satyapal & Another (1977) 
• Premji Ratansey Shah & Others vs. Union of India & Others (1994)
• K. Basavarajappa vs. Tax Recovery Commissioner, Bangalore & Others (1996)
• Rambhau Namdeo Gajre vs. Narayan Bapuji Dhotra Dead through LRs. & Anr. (2004)
• Om Prakash Srivastava vs. Union of India & Another (2006)
• Anathula Sudhakar vs. P. Buchi Reddy (Dead) by LRs and others (2008)
• Suraj Lamp & Industries (P) Ltd. vs. State of Haryana & Another (2012) 
• Jharkhand State Housing Board vs. Didar Singh & Another (2019)
• Soumitra Kumar Sen vs. Shyamal Kumar Sen & Others (2018) 
• Dahiben vs. Arvindbhai Kalyanji Bhanusali (Gajra) dead through legal representatives (2020) 

Judicial findings in this case

The Apex Court in this case has dismissed all claims made by the respondent, noting the key legal errors. The key legal shortcoming is the lack of a sale agreement to prove the ownership. As per Transfer of Property Act, 1882, only the real owner of the property can transfer the property, and no rights are passed to the buyer until the execution of the sale deed. The Supreme Court further highlighted that a cash payment of Rs. 75 lakh was illegal and violated Section 296ST directly. The court has ordered all the inferior courts to inform the Income Tax Department if there is any report of a transaction involving Rs. 2 lakh or more in cash.

There will be disciplinary action against the Income Tax officers if they fail to report such payments during searches or assessments. These directions were to be widely circulated among all government and income tax officers who were relevant to ensure strict compliance. 

Takeaways from the case

High-value property deals must be properly documented, and no unrecorded cash transactions or verbal agreements of sale will be considered legal.  There should be strict adherence to tax laws in order to avoid penalties and other legal issues. The court is now  required to inform the Income Tax officials if they come across any cash transactions which are more than Rs. 2 lakh. 

This Supreme Court ruling supports the initiatives to increase transparency  and curb black money in property deals. It also ensures that the reputations of charitable organisations are protected and not misused to make such unverifiable agreements. 

References

• https://www.livelaw.in/tags/rbanms-educational-institution-versus-b-gunashekar-another
• https://taxguru.in/income-tax/sc-directs-courts-registrars-report-rs-2-lakh-cash-payments-it-dept.html
• https://www.livelaw.in/supreme-court/courts-sros-must-report-to-income-tax-authorities-if-suitsdeeds-mention-cash-transactions-above-2-lakh-289544