Unsecured loan in cash.

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 February 2012 Dear sir,
If an individual receives a cash sum of Rs. 10 lacs from his father as a unsecured loan to employ that sum in his business.
Whether such transaction would be allowed for income tax purpose?
Thanks !

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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13 February 2012 No. He can not take as unsecured loan in cash. He should take it by an account payee cheque.
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His father must be in a position to explain the legitimate source also.
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If he can not get opened his father's bank account, even, he is not a fit person to do any business.
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He can accept the amount as cash gift, but such a gift can also create a problem for both.
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