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Legal or illegal

SACHIN KHETAWAT (Student) (349 Points)

21 November 2013

whether cash transaction for buisness is illegal in the eyes of income tax law??

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15 Replies

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 21 November 2013

Here it is not a matter of illegal or legal because it is allowed under companies act 1956 as an expenditure.Generally a matter which is legal is not illegal in any other act.and the theme is just to track all high value transcations so that no one can escape from tax liability

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SACHIN KHETAWAT (Student) (349 Points)
Replied 21 November 2013

What is in the act 1956..plz tell

SACHIN KHETAWAT (Student) (349 Points)
Replied 21 November 2013

R u talking abt 20,000 allowable cash exp. Which are revenue in nature

Mihir (Wealth Manager) (5293 Points)
Replied 22 November 2013

Refer to section 40 and 68 of IT Act.

Manoj Garg (Final student) (150 Points)
Replied 22 November 2013

its not legal or illegal question

it is just question of allowablity in calculating taxable income

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SACHIN KHETAWAT (Student) (349 Points)
Replied 22 November 2013

I am only talking about legal or illegal sir....i alao knw its a matter of calcultion...but i m just asking that whether it is said to be illegal if there is cash transactions....or not

Sunil (Internal Auditor) (334 Points)
Replied 22 November 2013

First you understand the meaning of legal and illegal. Legal means as per the law and illigal means against the law in simple words. cash transactions are not illegal upto the extent which is not prohibited by any law. If it is prohibited or regulated then beyond that level it is illegal.

SACHIN KHETAWAT (Student) (349 Points)
Replied 22 November 2013

So u mean ki above 20,000 exp of revenue nature are illegal..right na

CA HIRAL PATEL (CHARTERED ACCOUNTANT) (536 Points)
Replied 22 November 2013

are dude don t take tension. hamare politicin bhi cash transaction hi karte he......to ham kare usme konsi galat bat he.

SACHIN KHETAWAT (Student) (349 Points)
Replied 22 November 2013

Are boss..mai q tension lunga..mai to bas clr krna chahta tha

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Manoj Garg (Final student) (150 Points)
Replied 22 November 2013

its not illegal

but this is only to reduce tax evasion

Amit Kumar Pathak (Advocate ) (35 Points)
Replied 23 November 2013

any cash trasantion in bussines above Rs. 20000.00 in income tax law is illegal

Mihir (Wealth Manager) (5293 Points)
Replied 23 November 2013

Any illegal transactions are disallowed, but transactions which are disallowed are not illegal. Illegal is a very strong word in Income tax. That section has been inserted only to curb tax evasion. There are plenty of cases where a transaction is disallowed but after the assessee goes for appeal, the disallowance is then lifted.