CASH ADJUSTMENT

Theoritically there is no limit for cash in hand, Nobody can challenge as to why you are keeping high cash in hand but from practical point of view one should keep cash balance which can be justified based upon the business needs and size of operations.

Mr.Vinod is correct.

In one case - the assessee was a partnership firm carrying on finance business.  It was having a bank account.  During assessment proceedings the assessing officer noticed that on certain dates huge cash balance was kept on hand.  The assessing officer calculated interest for the period on the huge cash balance after allowing some cash on hand depending upon the legitmate business needs of that firm and treated that interest as income earned and not disclosed.

Hence there is no particular rule regarding the amount of cash on hand to be kept.  It depends on the nature of the business.

Best Wishes

Sathikonda