New Delhi, Sept. 25 -- The Supreme Court today set aside the Kerala High Court's view that a debt arising out of a cash transaction exceeding Rs 20,000, in violation of the Income Tax Act, 1961, cannot be treated as a "legally enforceable debt" under Section 138 of the Negotiable Instruments Act (NI Act).
A Bench comprising Justice Manmohan and Justice N.V. Anjaria, while deciding an appeal against a Bombay High Court judgment, held that violation of Section 269SS of the Income Tax Act which restricts cash transactions above Rs 20,000 does not render such transactions illegal, void, or unenforceable.
The Court clarified that breach of Section 269SS merely invites the statutory penalty prescribed under Section 271D, and does not invalidate...