Capital and cash on hand introduced

[Sundaraiah kollipara]

Sir,

One of new I.t. person strated new business from 01-04-2019 retaile trading for kirana stores.i. t. return filed 2019-2020 f.y. for the purposes of bank loan.

Sales turnover finicial year :2019-2020 rs 25 lacs.net profit rs.3,10,000/-

Question:

Assess How much amount capital and cash on hand minimum and maximum limit of opening balances introduced as on dt.01-04-2019 shown in balance sheet (I.t. returns) under I.t. act

[YAGAY andSUN]

In our view it should be at Actuals and Cash in Hand at any given point of time must match with your books of accounts.

[Sundaraiah kollipara]

Sir,

Assess sales and purchases transactions entries passed in ledger book maintained only.

Capital introduce rs.5,00,000/-

Cash on hand balance rs.5,00,000/-as on 01-04-2019 accepted or no.

[YAGAY andSUN]

You need to show the source of cash, it must be mentioned in your books of accounts and duly accounted for in your Tax Returns.

[SHARAD ANADA]

GUJARAT HIGH COURT

M/S. CERA SANITARYWARE LIMITED VERSUS STATE OF GUJARAT & 1 OTHER (S) = 2020 (7) TMI 445 - GUJARAT HIGH COURT

 

AI Summary

Source of cash must be disclosed and reconciled in books and tax returns when declaring opening capital and cash balances. Opening capital and cash balances for a new retail business must reflect actuals recorded in the books of account, with cash in hand reconciling to those records; the source of cash must be recorded, evidenced in the ledger entries and properly disclosed in the income tax return to substantiate opening balances shown in the balance sheet.