Accounting entries passed allowed in i.t.act

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This discussion examines the permissibility of accounting entries related to unsecured loans and sundry debtors under the Income Tax Act. It specifically addresses the transfer of a sundry debtor balance to an unsecured loan account and the recording of cash receipts from a debtor. The key question is whether these adjustments are allowed, particularly if the parties involved are different.

Kollipara Sundaraiah

Kollipara Sundaraiah (Querist)
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06 February 2021 sir,
i.t. assess un secured loan and sundry debtor(cash Loan) outstanding balance in books show as on 31-03-20.
un secured loan amount Rs:4 lacs
sundry debtor(cash loan) amount Rs:5 lacs

1.assess sundry debtor balance amount Rs:5 lacs transferred to un secured loan account adjustment accounting entries(contra) passed.
2.Differance amount Rs:1 lacs amount cash receipts from debtor entries passed in books in f.y.20-21.
question:
Assess adjustment entries in books allowed in i.t.act