Cash on hand
Querist : Anonymous
Suppose a person is running two firms of same group(one main and other sister concern) say ABC and XYZ. Now suppose the CASH receipt in ABC in APRIL-2013 is Rs.300000.00 and that of other XYZ is RS.200000.00. But by mistake he deposited Rs.450000.00 in bank a/c of ABC. Consequently there is negative cash in hand of ABC. What is the remedy ? Can XYZ give loan to ABC in cash for more than 20000.00. Please guide.
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IF FIRMS ARE FIRMLY PARTNERSHIP FIRMS THEN THE REPLY MAY BE DIFFERENT.
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BUT THE FIRMS ARE HIS PROPRIETORY CONCERNS THEN THE CASH TRANSACTIONS MAY BE ROTATED THROUGH THE COMMON PROP. OR A COMMON PARTNER.
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Querist : Anonymous
Querist : Anonymous
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ONE INFERENCE MAY BE TAKEN AS -
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THAT THE TRUST IS ALSO THE PROPRIETOR OF THE BUSINESS CONCERN.
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IT IS ALSO NOT CLEAR THAT ABC IS A TRUST OR A PROP. CONCERN.
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Querist : Anonymous
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In such a situation where there is no way, we have to depend and keep faith only on the truth. Without disturbing the facts, the amount so received from the proprietory firm should be recorded properly in the books of both the assessees. It can be proved that there is no intention and requirement of accepting or giving a loan. Due to human error , such amount has wrongly been deposited in one account in place of depositing the said amounts in two different accounts. You may refer the decision in CIT Vs. Lakshmi Trust Company(2008) 303 ITR 099 (Mad).
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So, the event should be recorded as it is and cleared by issuing account payee cheque.
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Querist : Anonymous
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But don't allow such mistakes to happen again and advise your client to get accounts checked quarterly if he is not having experienced staff.
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Call him to your office and show some more typical instances likely to happen.
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Don't easily explain him there is no need to worry.
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Convert such instances into more professional work.
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