Can Criminal Proceedings be Initiated for Cash Transactions Above ₹2 Lakh? Allahabad HC to Examine S.269ST of Income Tax Act [Read Order]

The Allahabad High Court recently met with a case challenging the initiation of criminal proceedings in a case involving cash transactions exceeding ₹2 lakh; the Court accordingly took steps to adjudicate the case in light of the restrictions imposed under Section 269ST of the Income Tax Act, 1961.

Applicant Nikhil Mittal filed an application under Section 528 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), seeking to invoke the inherent powers of High Court which enables it to make such orders as may be necessary to give effect to any order under the Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice.

The applicant sought to quash a charge-sheet dated 4 August 2025 and the cognizance order dated 7 October 2025 passed by the Chief Judicial Magistrate, Saharanpur in a criminal case registered under Sections 420, 467, 468, 471 and 506 of the Indian Penal Code.

The applicant contended that the allegations pertained to his receipt of cash exceeding ₹2 lakh.

Section 269ST ofthe Income Tax Act prohibits any person from receiving ₹2 lakh or more in cash from a single person in a day, in a single transaction, or in relation to one event or occasion except through other permissible banking channels such as an account payee cheque or electronic modes.

Ram Adhar Yadav, appearing for the applicant submitted that where more than ₹2,00,000/- is paid in cash in a registered deed, the Sub-Registrar is to inform the Income-tax Department.

The applicant counsel relied on the Supreme Court decision in The Correspondence, RBANMS Educational Institution vs. B. Gunashekar and Another (2025), where it was held that the court/authority shall inform the Income-tax Department if any cash payment of Rs.2,00,000/- or more is involved.

The applicant further contended that in the present case an amount exceeding ₹2 lakh was alleged to have been paid in cash, and therefore the statutory process should have been completed by the authorities.

Upon hearing the submissions, Justice Praveen Kumar Giri permitted the counsel for the State to obtain instructions from the concerned police station and directed that notice be issued to the opposite party No. 2 for filing a counter affidavit.

The High Court directed that the matter be freshly listed for further hearing on 10 March 2026.

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