CASH Payments Exceeding 20k !!

Page no : 2

CA Saurabh (PRACTICE) (1019 Points)
Replied 18 September 2013

CASH EXCEEDING RS 20000/- Some Steps to

1.We can found the same while scrutiniszing Bank Accounts viz a viz Bank Statements, where, since Bearer Cheque is issued & when it is cleared word CASH is written

2. The list (even though Randomly) of such transactionas can be sent to bank for the third party confirmation of such transactions.

3. Payment Vouchers made by the Client Could give some indication in respect of the same....

4 At Planning & Assesement stage of audit per se one can go through Previous year TAX AUDIT REPORTS to gather the information about such discrepencies......

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Prashant Kini (Article Assistant) (154 Points)
Replied 18 September 2013

In case of some bank statements u find the type of transaction carried out, whether it is in cash or clearing or transfer. The one with cash indicates the issuance of bearer cheques. No other way to know if bearer cheque was issued or not

AMIT JAIN (ARTICLE) (38 Points)
Replied 18 September 2013

you should check the bank statement for identifying whether cheque is bearer or account payee. account payee cheq contains the word clg while bearer chq cash with name of the person received payment

AMIT JAIN (ARTICLE) (38 Points)
Replied 18 September 2013

Bank statement should be checked Account payee chq contains the word clg While bearer chq contains the word cash with party name It can be easily identified Bhaiya tell me whether I m correct or not

CA Ayush Agarwal (Kolkata-Pune-Mumbai) (27186 Points)
Replied 19 September 2013

@ Amit Jain, @ Prashant, @ Saurabh, @ iyyapan - Your All Views are almost Same, and You are Correct too.

But i have seen in Some Bank, That they didnt mention Cash Word in bank statement even if it is cleared through Bearer cheque.

& It is also not compulsory that every bank use to show as "clearing" in their bank statement even if it is cleared through cross cheque.

Conclusion:- there is no as such concrete way to check this bearer cheque payments, sometimes it becomes very difficult to check, as generally every month you will find say 100-200 pages of bank statement, how you will check ? its not possible, even you cant go for random basis checking, since each and every payment must be disallowed under income tax act 1961.

Regards,

CA Ayush Agrawal

"Make Your Own Way"

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Mansi (student) (58 Points)
Replied 19 September 2013

@ Ayush as an auditor v have to sscrutiniz the bank statment of the assessee , majority bank s use to write the particular which v CA can judge out... if u r suspicious than go deep... u may get root cause of bearer ch.

Mansi (student) (58 Points)
Replied 19 September 2013

Exactly... its difficult. .. have test check... and go ahead

Biswanath Agrawala (Chartered Accountant) (21 Points)
Replied 19 September 2013

cash payment exceeding 20000 has to be reported y the auditor if not covered by rule 8D

Sajitha (Student) (223 Points)
Replied 19 September 2013

Auditor shall verify the payments with books of accounts and bank statements. he shall obtain suitable certificate from the asessee for such payments and keep in his records. If no proper evidence received as to such payments he shall discose the matter in auditor's report.