Sec 269ss and 269t applicable of contra entry

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This discussion clarifies the applicability of Sections 269SS and 269T of the Income Tax Act concerning contra entries. It addresses a scenario involving a cash loan from a creditor and a cash loan to a debtor, where the creditor balance was transferred to the debtor account. The consensus is that these transactions, when properly accounted for as book adjustments rather than a true contra entry, are permissible under the IT Act, and Sections 269SS and 269T do not apply.

Kollipara Sundaraiah

Kollipara Sundaraiah (Querist)
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10 June 2021 Sir,
It assess ledger balance as on 31-03-2021(20-21) in accounting books parties details mentioned below
Cash loan from creditor balance rs:5 lacs
Cash loan to debtor balance rs:6 lacs.
Assess creditor balance amount rs:5 lacs transferred to debtor balance account Contra entry passed in books in f.y.21-22.
Question:
Above transactions allowed in it act and sec 269ss and sec 269t provisions applicable.

CMA Poornima Madhava

CMA Poornima Madhava (Expert)
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10 June 2021 Query is a bit confusing!
1) Have you received cash of Rs.5 lacs from creditors?
2) Similarly, have you paid cash of Rs.6 lacs to debtors?
Book adjustment is not a contra entry.