Demonetisation

So long as bank has accepted the currency forget about demonetization and give regular treatment.

Originally posted by : Mohan
	So long as bank has accepted the currency forget about demonetization and give regular treatment.

Ya, but many traders are trading in cash and not adequate depositing into bank,from this point of view what will be consequenses if trader deposit old notes (rs.5 lac) .pls suggest mohan sir.

 

 

 

 

 

 

 

 

Dear Mohan Ji, as the old currency is no longer a legal tender after 08/11/2016 you should not accept the said currency even for settlement of old debt. The ITO may treat the same as income from undisclosed sources u/s 69 and may impose penalty also.

Dear Ramkumarji
One can account settlement pre 8/11 and deposit cash post 8/11

Currecy was legal tender before 8/11!

Sir how can it be conidered as income from undisclosed source,

The source is very genuine and being disclosed,

Moreover I am not sure if Sec. 69 deals with undisclosed income or income from undisclosed source,

Section 69 deals with unexplained investment.

Probably Ram Kumarji was referring to section 68 which again dwals with unexplained cash credits where cash is spend but source of cash is either not declared or not satisfactorily explained. He need not worry since he is settling his debtor's account by accepting cash against sales or income.

Mohan Ji, yes it is section 68 unexplained cash credit. Deposit of cash in Bank Account. Right if it is manipulated as having received before 8/11 as some fellows have opined but the debtor also must have cash in his books before 8/11. Otherwise accepting money which is not legal tender whether in settlement of debt claim should not, in my opinion, be accepted by the AO and in case he does not accept this explanation he can invoke section 68 although the creditor may claim the debt as bad but penal consequences are there for invoking section 68. But this is my personal opinion and experts opinion is welcomed.

Dear Ram Kumarji, cash credit means one having cash against items on liability side in balance sheet. In your case it is against debtor and income for that you must have shown in your profit and loss account. In such case it should be perfectly acceptable. So far as your debtor declaring your account as bad debts in his books is concerned even in that case he will have to declare that as income since you are his creditor. So in both cases government is in receipt of tax on it and hence you should not have problem. But taking account confirmation from your debtor upon settlement of account by cash is suggested.

Sir , I feei acceptance of non- legal tender and unexplained income are two different issues.

Howcome acceptance of non-legal tender can be regarded as offence under income tax-act.

Moreover even the banks are being allowed to settle their loans from the amount received in SCBs.

 

Sir.

I feel acceptance of non-legal tender and income from undisclosed source or undisclosed income are two different things.

How can acceptance of non-legal tender penalized under income tax act.

Moreover even the banks have been allowed to accept SCBs in settlement of their dues.

Dear Vipinji, of course acceprance of demonetized currency is not an offence under Income Tax Act as of now. The original query was whether depositing demonetized currency after 8/11 wiuld be legal or not to which my answer is as long as currency is accepted before demonetization it is legal.

Rest other was just foregoing discussion and exchange of views.