Cash payment for land purchase

1670 views 3 replies

Rohit Tulshyan

RTProfessionals

333 Points Joined December 2010

Hey,

Their are two parties

one- an individual with tax audit applicable having pan no and every legal requirement.

two- an individual with no pan and no books of account. In other words a farmer.

now "one" is selling land to "two". now he can accept cash suppose around 15 lacks from "two" but than the deal was cancelled. now can he repay cash worth rs 15 lakh in cash like instead of paying through cheque. Is ia allowed under the income tax act or if he pays back in cash that amount is will be added back to his income.

What are your views in this.

Thank you.

Replies (3)

Anvesh Desai

Chartered Accountant

156 Points Joined September 2009

he has to pay by cheque if transaction has entered into the books. If deal is cancelled out before any entry of transaction in books then he can pay cash.

CA Saiyum khan

Practicing CA

690 Points Joined November 2008

It is advisable to pay back cash without entering the same in the books of account. If the sale deed was registered and there was cancellation clause then the same may be accounted in the books of account. Repayment may be made in cash If the books of account is having sufficient balance.

Rohit Tulshyan

RTProfessionals

333 Points Joined December 2010

Thank You Mr. Desai and Mr. khan.

Mr. Desai, could you confirm meaning of transaction. I meant the person has shown acceptance of cash. than can he repay cash.

I mean will it be taken as his income if he repaid in cash or their is a section explaining it. i read section 40a but it is silent about it.i am still a beginner so i may be unable to understand.

Thank You.