Regarding fd amount given to x person in cash.

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jinesh (Querist)

09 April 2015 i would like to know that i have client whose having FD of rs 20 Lakhs.
he wants to withdraw the same in cash and give to third party In cash
that third party gives him the interest at the market rate. He has not files
ITR for A.Y.2013-14 onwards so how can route this transaction to avoid scrutiny in future.
He is ready to show Interest Income in his return exactly equal to the Exempotion limit
So can he do So? what are the repurcussions to be kept in mind from withdrawing from Bank to Doorstep ofParty

Pls guide me asap

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)

09 April 2015 From the point of view of third party to whom money will be given he will have to incur penalty u/s 269SS if he accepts Rs. 20 lakh in cash as loan or deposit so it is advisable to give him money by way of cheque.
From the point of view of money lender I don't see any repercussion of money lent as he is willing to show interest from money lent in his return and also money is lent at market rate. However only question may be the source of investing in FDR of Rs. 20 lakh.

jinesh

jinesh (Querist)

09 April 2015 I am further giving u reply that That source is clear.Entire 20 Lacs is from Retirement of govt Organisation. I have suggested them to show the interest amount recd in cash from X person in the Income tax return. Interest recd in Cash please keep in mind. so cai show the same?

Further How he can withdraw the amount from Bank ( Becoz he has to pay X person inm cash)entire Amount of FD matured can be withdrawn in cash? How ? le t me Know.

If i will not show the interest Amount in Return then what would be repurcussion. I have not filed last 2 years return( of which interest income is recd from FD Income) So what should i do? As Interest Income is below exemption limit.

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