Real estate cash transactions

[Guest]

I purchased a property 3yrs back with 100% white money.

But the seller insisted on paying in cash. I ended up paying in cash in 2Crs. and closed the bank account as i moved from that area.

Now income tax dept is asking for old bank transactions. Will I be in trouble if income tax dept finds out that i paid in cash? if so, what kind of trouble would it be? Will they have authority to fine me because i withdrew white cash?

[DR.MARIAPPAN GOVINDARAJAN]

If you are in business and you add this amount as an expenditure, then such expenditure will be disallowed as the payment exceeding ₹ 20,000/- is paid in cash instead of cheque. But withdrawing cash is not bothered. The said amount may be retained with you and you may spend in a phased manner.

AI Summary

Cash payment rules: business payments in cash can render expenditure disallowable; withdrawing cash alone not penalized. A taxpayer made a substantial cash payment for real estate. If that payment is asserted as a business expenditure, the expenditure may be disallowed because statutory rules discourage business payments in cash beyond prescribed limits. Withdrawing legitimately obtained funds is treated as separate and is not identified as a penal offence in the advisory; the taxpayer may retain and spend the cash over time. The principal tax risk on inquiry is adjustment by disallowance of the claimed expenditure rather than punishment for withdrawing white cash.