Capital introduction

why has he received the money and in which mode has he received the money?
You can treat it as Loan as well if not intent to add to capital account

40000 was received in bank transfer, 20000 from friends was received from a friend as bank transfer and 20000 from a friend as a cash deposit.

What should be done here?

If the amount is to be repaid to them in future, then it shall be shown under Unsecured loan at liability side .
If it is not intended to repay them in future then it shall be shown under Capital account as suggested by your CA

The CA says that all the amount should be consider as capital introduction from parents? is it right?

No, parents can provide as loan also.
In such case it has to be shown in Unsecured loans.
It's not mandatory that all amount received from parents to be considered as Capital introduction.

I am a bit confused

 

No amount mentioned above needs to be repaid? so capital introduction for all of them?

Accounting of amount received from parents shall be based on purpose for which it has been received..
Generally there are only 2 circumstances,
1. They provide it as a loan which shall be repaid in future, then in this case it shall be treated as Unsecured Loan from parents

2. They had generally provided it with no intention of getting back, then this amounts to Gift received from them and it shall be routed through capital account.

What about the friends?

same treatment as above, however if received as gift then note that if you receive total amount of more than 50,000 in entire year in aggregate from all friends, then same shall be taxable.
It shall include both received in cash as well as bank transfer

So the summary is that 40000 from parents and 40000 from friends total is 80000

And according to the above scenario both are exempt from tax?

If yes do i need to prove to A.O about this credits under 44AD?

Ok one more scenario - the friend A gifted 20000 to friend B.

The friend B business started taking off and he hired and paid friend A in his company the 20000

How will it be explained in 44AD