please suggest we have audit books under 44AB.where in books of account one entry unsecured loan decline by CA. unsecured loans Rs.86000 received from a individual person in a Cash.
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Quick Summary
This discussion addresses an unsecured loan of Rs. 86,000 received in cash, which was declined by a Chartered Accountant (CA) during a tax audit under Section 44AB. The CA's decision is based on Section 269SS of the IT Act, which prohibits accepting unsecured loans of Rs. 20,000 or more in cash, with a potential 100% penalty for violations. While the general tax audit threshold is Rs. 1 crore (proposed to increase to Rs. 5 crore), specific rules regarding cash transactions also apply. An exception exists for trade advances, provided they comply with Section 269ST.
A taxpayer must mandatorily undergo a tax audit of his/ her books of accounts if the sales, turnover, or gross receipts exceeds Rs 1 crore in a financial year.
The threshold limit of Rs 1 crore is proposed to be increased to Rs 5 crore with effect from AY 2020-21 (FY 2019-20. The following condition applies to the taxpayer’s cash receipts and payment:
cash receipts are limited to 5% of the gross receipts or turnover
cash payments are limited to 5% of the aggregate payments
A taxpayer might have to comply with tax audit provisions under other scenarios as well. The following are all such scenarios in which an income tax audit is mandatory:
Unsecured loans (>=20,000) in the form of cash cannot be accepted by anyone as per section 269SS of IT Act. Consequence of violation is 100% penalty. That's why CA has not allowed the same. However, this restriction (in your case) is not applicable if such receipt is a trade advance (such as advance from debtor in connection with sale of goods/services), subject to the provisions of section 269ST.