CASH DEPOSIT

[DURGAVADHYULA SUBBA RAO]

One of my friends has borrowed loan of ₹ 8 Lakhs for construction

purpose. The amount was paid to him by a contractor in cash.

He deposited the amount in Bank and using for his needs as

and when necessary. Now a question has arisen whether

this amount is questionable by I.T. authorities at a later date

since cash is deposited in Bank ?

AI Summary

Cash deposit scrutiny: banked loan funds may trigger income-tax inquiry unless documented proof of loan and source is maintained.
Query concerns whether a substantial cash deposit representing loan proceeds for construction may be questioned by income-tax authorities absent contemporaneous documentation proving the loan character and bona fide source, and highlights the need to retain loan agreements, receipts, or corroborative evidence to meet assessment enquiries.