1. Debtors A/c (Name of the Party) Dr. 80,000
Loans & Advances(Name of the Party) Dr 20,000
To, Sales 80,000
To, Cash 20,000
2. Bank A/c Dr 1,00,000
To, Debtors A/c (Name of the Party) 80,000
To. Loans & Advances(Name of the Party) 20,000
But As Per Income Tax Act, Section 40 (A) (3) you cannot make payment in cash exceeds Rs.10,000/- for one person in a day.
@ Noor Arora ,
It is not specifically mentioned that Rs. 20,000/- paid in advance is for Expenses or Loan. If payment is made for expenses it is a case of section 40 (A) (3) dis-allowance and if Payment made as a loan is a case of sec 269SS (Cash Payment Rs.20,000/- and above)
Section 269 states specifically about the cash transactions. I think it doesn't matter loan taken or paid in cash Rs.20000 or more
Section 269T prohibits any person to repay the loan or deposit or specified sum otherwise than by an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, if –
a. Amount of loan or deposit, including interest amount, is Rs. 20,000 or more, or
b. The aggregate amount of loans or deposits, including the interest amount, held by such person in his own name, or jointly with any person, is Rs. 20,000 or more.
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