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Loan existed in balance sheet but payment made by unaccounted money. no source available

Harddik A Thakkar (Credit Analyst ) (101 Points)

08 December 2016

Dear Sir/ Madam In the balance sheet of an individual, loan has shown, but the repayment was made by unaccounted money. How to deal with this loan in balance sheet. Person wants to remove it from balance sheet permanently. What accounting and taxation matters taken into account. Can it be shown as Defaulter? What compliance and consequences should be taken into account. Thanks a lot

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Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 08 December 2016

Dear Hardik ,

First of all acceptance of loan/repayment of loan in CASH for more than rs. 20000/- will attract 269SS/269T.

later ,

if it is not made in cash then it can be say it is obtained from genuine source.

now,

for the repayment as per ur que. repayment is made from unaccounting source of income.

cheque issued can not be said to be issued towards the discharge of legally recoverable debt or liability. Therefore, under Sec. 139 NI Act, that the cheque has been issued towards the discharge of legally enforceable debt or liability stands rebutted.even though it is hard to understand that wheather such cheque is issued from the liquidity avail. to company.