Unsecured loan decline Books audit

Dear Sir

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.
Replies (4)
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.

Applicability of Tax Audit under section 44AB

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:

  1. cash receipts are limited to 5% of the gross receipts or turnover 
  2. 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:

Scripbox source

Unsecured loan should be shown under Loans and Liabilities under non current liabilities. You can receive upto 200000 rupees in cash u/s 269

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.

Thank you very much poornima madam

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