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To curb the increasing cash transactions which are leading to the accumulation of black money, 269SS and 269T were introduced to restrict these cash payments. Applicability of Sections 269SS and 269T of the Income Tax Act pursuant to an agreement to sell was examined by High Court of Delhi, containing Justice Amit Bansal in the matter of Kavita Tushir vs. Pushpraj Dalal [CM(M) 13/2022] on 5.01.2022.

The facts of the case are that a suit for specific performance was filed on behalf of the respondent in respect of purchase of the property belonging to the petitioner in New Delhi. The suit was based on an agreement to sell dated 30th June, 2015 which was later superseded by the agreement to sell dated 10th March, 2018. Besides seeking the relief of specific performance in the suit, an alternate relief of recovery of sum of Rs.1.95 crores towards damages was also sought. The suit was filed in March, 2020 and the petitioner filed her written statement along with an application under Order VII Rule 11 of the CPC on 27th March, 2020. The respondent filed his reply to the said application under Order VII Rule 11 of the CPC on 11th January, 2021, to which a replication was filed by the petitioner on 20th March, 2021. The arguments on the application were concluded on 1st April, 2021 and the Trial Court proceeded to decide the same vide the impugned order passed on 21st August, 2021.

The Counsel for the petitioner submitted that the plaint is barred by law as the sale transaction, which is the subject matter of the agreement to sell, was not permissible in law. It was alleged in the plaint that Rs.57,00,000 was paid by the respondent to the petitioner in cash, which is barred under the provisions of the Income Tax Act. In this regard, reliance on Sections 269SS and 269T of the Income Tax Act was placed and it was said that all amounts in terms of the agreement to sell have been paid to the sons of the petitioner and not to the petitioner.

The Counsel for the respondent contended that the amounts through cheques were paid to the sons of the petitioner as per the instructions of the petitioner herself but the cash amounts were paid to the petitioner herself. The sons were the witnesses to the agreement to sell and the agreement to sell bears their signatures as witnesses also the details with regard to payments have been provided in the plaint and in the agreement to sell. It was submitted that clause 1 of the agreement to sell dated 10th March, 2018 contained the details of the payment already made by the respondent to the petitioner. It has been recorded therein that out of the total sale consideration of Rs. 1,20,00,000 and a sum of Rs.1,10,75,500 haveread judgment.read judgment.read judgment. already been paid by the respondent to the petitioner. Without prejudice to the contention that Sections 269SS and 269T of the Income Tax Act are not applicable in the facts and circumstances of the present case, the payments in cash were made before the said sections became part of the statute.

The High Court of Delhi held that it is a settled position of law that while deciding an application under Order VII Rule 11 of the CPC, the Court only has to see the averments made in the plaint and the documents filed along with the plaint. This Court is of the prima facie view that Sections 269SS and 269T of the Income Tax Act would not be applicable in the facts of the case as the said Sections deal with loans or deposits made and not payments made pursuant to an agreement to sell. In any case, the said Sections became part of the statute only from June, 2015. Even if it is assumed that the relief of specific performance cannot be granted and that the agreement to sell was not valid in law, the respondent has made an alternative prayer for recovery of Rs.1.95 crores towards damages. There cannot be any piecemeal rejection of a plaint under provisions of Order VII Rule 11 of the CPC. Therefore, in any case, the suit would have to proceed with trial. In the view of Court, the present petition was completely frivolous and misconceived. Therefore, Dismissed with costs of Rs.30,000.

Judgment reviewed by Shristi Suman. read judgment.