Celebrate Freedom and save 20% OFF on CAclubindia Pro Subscription! Use code: FREEDOM20

Limit of cash on hand

Kollipara Sundaraiah (B.com) (2963 Points)

28 December 2020

a assess i.t.return filed in f.y.19-20.but cash on hand balance as per books Rs:15 lacs as on date:31-03-2020.
question:
assess cash balance Rs:15 lacs future any problem.

Reply
Follow
Share

3 Replies

Fazil Ahmad (75 Points)
Replied 28 December 2020

It depends in the turnover of the assessee

Upgrade to CAclubindia Pro. Subscribe Now!

ayusmita (Tax consultant) (5885 Points)
Replied 29 December 2020

Cash in hand as per book means which books you talking about ?
cash in hand calculation depends upon different factors including his previous year income tax cash in hand also

CA Salman Ansari (Salman Ansari & Assoc.) (247 Points)
Replied 29 December 2020

Declaration of any amount of cash would not be a problem as long as it can be explained to be acquired by legal means and tax has been paid on the same in the current or any of the earlier years.

For example, if the assessee has filed an income tax return of around 3 lakh each year for the past 10 years, then, notwithstanding any other investments or acquisition of property, he can justify being in possession of (or having a book balance of) ₹15 lacs.

However, despite not being illegal, holding or declaring such large amount of cash is unadvisable because it increases your chances of scrutiny by income tax authorities that may lead to other avoidable complications.