| Originally posted by : rajesh |
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Dear Sir
I was do the Below transactions by way of Cash and if any amount is disallow please tell in which sec
1) Cash Sales Made to a Person for his individual purpose is Rs. 2,50,000/-
2) I was taken a Cash Advance towards Goods Sold Rs. 1,50,000/-
3) I was taken a Loan of Rs. 45,000 from Individual Person
4) I was Given a Advance to Sundry Debtor not a Trade Rs. 75,000/-
If a Person accept a Loan or Deposit and Repay the amount Above Rs. 20,000/- by way of Cash is disallowed U/s 269SS and 269T. My query is in the above situation a IND or FIRM is do that transaction by way of Cash (Note- IND and FIRM are not covered u/S 44AB in Last Year or Next Year)269SS AND T is applicable or not.
Please tell
Thanks in advance |
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To answer your query we need to do combined study of Sec.40A(3), Sec.269SS & Sec.269T.
As per Sec.40 A(3), which deals with disallowance of cash payment made in excess of Rs.20,000/- for Purchases or Expenses.
Sec. 269SS deals with mode of taking accepting certain loans and deposits, which says “No person shall take or accept from any other person except Govt., banking company, any Govt. company etc, any loan or deposit otherwise than by an account payee cheque or account payee draft”.
Sec. 269T deals with mode of repayment of certain Loans or deposits, which says “No branch of a banking company or co-operative society and no firm or other person shall repay to any other person except repayment of any loan or deposit taken or accepted from Govt., banking company, Govt. company etc., otherwise than by an account payee cheque or account payee draft”.
Sec. 269SS & 269T does not apply on Advance paid to supplier & Advance received from customer.
Consequences of contravention of Section 269SS & 269T:-
If 269SS & 269T is violated then a penalty equivalent to the amount of such loan or deposit repaid may be levied by the Joint commissioner.
So in your case answer will be as follows:-
1) Cash Sales Made to a Person for his individual purpose is Rs. 2,50,000/-
Ans: Sec. 40A (3) was introduced to curb the black money.
It does not matter, whether it was sold for his personal use or office use.
There are some exceptions which are provided in Rule 6DD.
If it does not fall under Rule 6DD, then it will be disallowed.
2) I was taken a Cash Advance towards Goods Sold Rs. 1,50,000/-
Ans: Will be disallowed u/s 40A (3)
It is not governed by Sec. 269T, so there will no legal consequences.
3) I was taken a Loan of Rs. 45,000 from Individual Person
Ans: After combined study of Sec. 40A(3) & 269SS and 269T, we can reach to the following conclusion.
Sec. 40A (3) deals about the cash expenditure.
So Loan is not an expenditure so it is not covered by u/s 40A (3).
Therefore it will not be disallowed.
Also considering Sec.269SS, which says you can’t accept loan or deposit in excess of Rs.20,000/- in cash.
So you have violated Sec.269SS, therefore it will be an audit point and if your assessment will be done then you will have to pay penalty equivalent to transaction value on the discretion of Joint commissioner.
4) I was Given a Advance to Sundry Debtor not a Trade Rs. 75,000/-
Ans: If it was paid towards any expenditure, then it will be disallowed u/s 40A (3).
If it was towards purchase of Capital goods/assets then it will be not covered by u/s 40A (3), and the same will be allowed.
Further it is not covered u/s 269T.
CAclubindia
