Cash received & cheque issued

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 March 2013 my frd has received cash of r.s 2lakhs frm another person, and same deposited into bank..
against this cash he issued cheque of r.s 2lakhs,
how such transaction reflect in final a/c.he has business income & filing itr 4..
pls reply

@VaibhavJ

@VaibhavJ (Expert)
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01 March 2013 Hi Anonymous,

Cash deposited will be treated as income by IT dept.

& for making payment either it could be settlement of your creditrs, loan repaid & advances given.

Thanks!!

CA Himanshu Kansal

CA Himanshu Kansal (Expert)
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01 March 2013 In that case, Your friend has to show the unsecured loan from the person Rs. 2 lakhs and on the other side the bank balance will increase by Rs. 2 lakhs, after that, when he has make the payment of Rs. 2 lakhs, then make the normal entry of payment. But as per Income Tax as per section 56(2)(vii), there is income from other sources because the amount exceeds Rs. 50000.

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CA Parul Saxena

CA Parul Saxena (Expert)
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01 March 2013 1st entry:-
Cash A/c Dr....................xxxx
To person (Loan)..............xxxxx
2nd entry
Bank A/c Dr...................xxxx
To Cash.......................xxxx
3rd entry
Person Dr.(Settlement of loan).......xxxxx
To Bank..............................xxxxx

@VaibhavJ

@VaibhavJ (Expert)
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01 March 2013 Hi

Its violation of 269 SS which may attract penalty u/s 271 D for an amount equal to loan amount.

Thanks!!

Querist : Anonymous

Querist : Anonymous (Querist)

02 March 2013 THANKS EXPERTS..
FOR UR VALUABLE REPLY & TIME