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rajiv_lodha (zz)     26 March 2014

Cash as dowry- how to counter

I am facing false dowry charges. Opp gang are all CAs (Charted Accountants). What they have cooked up (though a lame allegation):- Relative-A appeared as witness and submitted that Reative-B has given money (6 lac on two different dates) to me AS CASH upon my dowry demand. To corroborate it, he has attached CAPITAL ACC. STATEMENT of Relative-B.

I am relieved that they do not have any solid proof as no CHECK OR DRAFT has been ever received by me during the married life. How to corner him the best in cross-examination? I have 1 wk time to prepare:

1) Can I ask for bringing ledger, pass book, cash book, ITR or anything such like papers of Relative-B?

If yes, is it possible to put some application b4 the court so that judge does not brush aside the demand?

Or make some cross-questions in a way that this document loses its shine.

2) It is a computer generated document which is bearing signatures and stamp of Relative –B who is also a CA. He has mentioned : date/Rs 3 lac given to Mr Husband. (Repeat, next date)

3) Is there some rule in IT-Act that money above XX amm has to be given in the form of CHK/Draft only. Being CAs they are manipulating the game. Though I am on safe sde to the larger extent, but I want to corner him to the end of wall.

Members plz suggest best ways out. Thanks



Learning

 21 Replies

Varun Singh (GM)     27 March 2014

Hi, I am not a tax expert, but I can understand that this claim of a firm has no DUM ! You can ask them the documents which they must have produce against those expenses to their auditors. keep insisting on it !

Also file a formal complaint to the Institute of Charterd Accountant, so that if this proves false, his certificate can be cancelled forever !

-Varun

rajiv_lodha (zz)     27 March 2014

Thanx dear for reply. More inputs are needed.

My approach is aggressive. Not mere escaping from it. I want to push this fellow to the edge. After I put up a good defensive show in my court case, I will surely file formal complaint with governing body too.

Plz guide me:

1) What document/ submission to ask for in the court exactly

2) How to compel him to bring it, any CPC order/rule of some help

Varun Singh (GM)     27 March 2014

Hi Rajiv, I agree with you, why not you post this in the CA forum? they can guide you better about the documents and consequences of his false claim.

rajiv_lodha (zz)     27 March 2014

Yes dear, but this platform has more experienced fellows apart from CAs

Gautam Kapoor (IT professional Studying Law)     28 March 2014

@Rajiv , you be the judge and decide. I have a CA statement where in it is clearly mentioned that i paid you 50 lakhs.What will be your next question?

1) Can I ask for bringing ledger, pass book, cash book, ITR or anything such like papers of Relative-B?-> Yes you should.The mantle to proof that they have paid you will be on them.They need to proved that money indeed changed hands via a established mode bills/invoices/receipts/cheque

If yes, is it possible to put some application b4 the court so that judge does not brush aside the demand? -> You should counter saying that these are malicious and baseles allegations on you.

Or make some cross-questions in a way that this document loses its shine. -> Your have already eroded the shine but not confident enough.

2) It is a computer generated document which is bearing signatures and stamp of Relative –B who is also a CA. He has mentioned : date/Rs 3 lac given to Mr Husband. (Repeat, next date) -> They need to prove that you demanded dowry and they paid you via a mode which can be proved.

Normally in any well prepared ledger you will have host of information pertaining debit mode unless it is BLACK MONEY.

3) Is there some rule in IT-Act that money above XX amm has to be given in the form of CHK/Draft only. Being CAs they are manipulating the game. Though I am on safe sde to the larger extent, but I want to corner him to the end of wall.  -> Answered above.

Let them know that you will file prejury cases on them for preparing a false CA sheet.

rajiv_lodha (zz)     28 March 2014

Thanx a ton dear.

Being a layman as far as accounts are concerned, what i want to know is:

* What books exactly they r supposed to maintain/show if they claim that this money was given 2 me. What are they called... like 'ledger-book or cash-book or balance-sheet'. Tell me where is the jugular

* Is it necessary that they have to show it in the ITR too?

* Is it necessary that they have to reflect in in some audit? (they have registered CA-firm)

Gautam Kapoor (IT professional Studying Law)     28 March 2014

I'm not your dear mate... cheers ... any further queries.. feel free to post a PM.

rajiv_lodha (zz)     30 March 2014

Sorry for addressing u as 'dear'

Members, my last post still needs answers. Plz help further. Thanx

harish (manager)     30 March 2014

if u havnt received any chq or draft and if received and not transferred to ur personal a/c ,it will not matter .

as a matter of fact let me tell that i lended 50 lakhs to amitabh bacchan and i had shown a transaction in my books on d particular date but bachhan has'nt received ,now i hope d ans is clear to u 

Varun Singh (GM)     31 March 2014

Anything in cash? just forget about it...! They will have to prove it beyond any reasonable doubt !

Mere allegation and a witness with the common interest won't work.

rajiv_lodha (zz)     31 March 2014

Thanx to members.

Asking him:

1) Did u ever give anything in the form of chk or draft to Mr Husband

2) Any signatures of Mr. Husband as "received" on ur document

3) U did not submit corresponding ITR/ Balance Sheat/ Bank-passbook

will serve the purpose?

 

As a matter of knowledge, somebody told me 2 more facts:

* that sec269 SS of income tax act states that "any transection above 20K be done in the form of chk/drfat only".

* that such computer generated statement shud carry stamp from bank as per "bankers book evidence act 1891"

 Has anybody an idea about it & its use

fight for justice (prop.)     01 April 2014

regarding cash payment above 20000/- u are talking about is covered u/s 40(A)(3) of income tax act.provision 40(A)(3) of income tax does not apply to a payment of expenditure which is not covered u/s 30-37 of the income tax act, i.e business expenditure. basically cash dowry is not an business expenditure at all, thats y , it will not reflect in income tax return.it is allocation of profit withdrawn from business, will be reflect in capital account of payee. and as per section 56 of the income tax act gift is allowed in cash provided made to a relative( defination of relative is also provided in section (2) of the income tax act.

 

feel free to ask regarding the matter related to income tax and finance etc.

1 Like

stanley (Freedom)     01 April 2014

Section 40A(3)(a) of the Income-tax Act, 1961 provides that any expenditure incurred in respect of which payment is made in a sum exceeding Rs.20,000/- otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft, shall not be allowed as a deduction. However if payment is being made for plying, hiring or leasing goods carriages then Limit for these section is Rs 35000/-,instead Of 20000/- Section 40A(3)(b) also provides for deeming a payment as profits and gains of business or profession if the expenditure is incurred in a particular year but the payment is made in any subsequent year in a sum exceeding Rs. 20,000/- otherwise than by an account payee cheque or by an account payee bank draft. Section 40A(3) is an anti tax-evasion measure. By requiring payments to be made by an account payee instrument, it is possible to verify the genuineness of the transaction thereby mitigating the risk of evasion.Person are splitting a particular high value payment to a person into several cash payments, each below Rs.20,000/-. This splitting is also resorted to for payments made in the course of a single day. Courts have also held that the statutory limit in section 40A(3) applies to payment made to a party at one time and not to the aggregate of the payments made to a party in the course of the day as recorded in the cash book.According to the judicial opinion, the words used are ‘in a sum’, i.e., single sum.Therefore, irrespective of any number of transactions, where the amount does not exceed the prescribed amount in each transaction,the rigours of section 40A(3) will not apply. To overcome the splitting of payments (as given above) to the same person made during a day as referred above and to increase the efficacy of the provision, an amendment was made through Finance act 2008 and after 01.04.2008, where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, the disallowance of such expenditure shall be made under the proposed sub-section (3) of section 40A or the payment shall be deemed to be the profits and gains of business or profession under the proposed sub-section (3A) of section 40A,as the case may be. EXAMPLE : To illustrate with an example, let us assume a taxpayer has incurred an expenditure of Rs 40,000/-. The taxpayer makes separate payments of Rs 15,000/-, Rs 16,000/- and Rs 9,000/- all by cash, to the person concerned in a single day. The aggregate amount of payment made to a person in a day, in this case, is Rs 40,000/-. Since, the aggregate payment by cash exceeds Rs 20,000/-,Rs. 40,000/- will not be allowed as a deduction in computing the total income of the taxpayer in accordance with the proposed amendment. EXCEPTION TO ABOVE PROVISION: The provisions of this section are subject to exceptions as provided in Rule 6DD of the Income-tax Rules, 1962. Payment to Specified payee Rule 6DD(a)- Where the payment is made to (i) Reserve Bank of India or any banking company as defined in section 5(c) of Banking Regulation Act, 1949; (ii) State Bank of India or any subsidiary bank as defined in section 2 of SBI (Subsidiary Banks) Act, 1959; (iii) any co-operative bank or land mortgage bank; (iv) any primary agricultural credit society or any primary credit society as defined under section 56 of the Banking Regulation Act, 1949; (v) Life Insurance Corporation of India. Payment to Government Rule 6DD(b)- Where payment is made to the Government and, under the rules framed by it, such payment is required to be made in legal tender. Payment by certain modes Rule 6DD(c) - Where the payment is made by (i) any letter of credit arrangements through a bank; (ii) a mail or telegraphic transfer through a bank; (iii) a book adjustment from any account in a bank to any other account in that or any other bank; (iv) a bill of exchange made payable only to a bank; (v) the use of electronic clearing system through a bank account; (vi) a credit card; (vii) a debit card. Note: “Bank” means any bank, banking company or society referred to in #(i) to (iv) of rule 6DD(a) and includes any bank [not being a banking company as defined in section 5(c) of the Banking Regulation Act, 1949], whether incorporated or not, which is established outside India. Adjustment in books Rule 6DD(d)- Where the payment is made by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payee. Purchase of certain products Rule 6DD(e):Where the payment is made for the purchase of - (i) agricultural or forest produce; or (ii) the produce of animal husbandry (including livestock, meat, hides and skins)***** or dairy or poultry farming; or (iii) fish or fish products; or (iv) the products of horticulture or apiculture, to the cultivator, grower or producer of such articles, produce or products. Cottage industry Rule 6DD(f)- Where the payment is made for the purchase of the products manufactured or processed without the aid of power in a cottage industry, to the producer of such products. No bank service Rule 6DD(g) - Where the payment is made in a village or town, which on the date of such payment is not served by any bank,to any person who ordinarily resides, or is carrying on any business, profession or vocation, in any such village or town. Note: “Bank” means any bank, banking company or society referred to in #(i) to (iv) of rule 6DD(a) and includes any bank [not being a banking company as defined in section 5(c) of the Banking Regulation Act, 1949], whether incorporated or not, which is established outside India. Terminal benefit to employee - Rule 6DD(h) Where any payment is made to an employee of the assessee or the heir of any such employee, on or in connection with the retirement, retrenchment, resignation, discharge or death of such employee, on account of gratuity, retrenchment compensation or similar terminal benefit and the aggregate of such sums payable to the employee or his heir does not exceed Rs. 50,000. Temporary posting of employee - Rule 6DD(i) Where the payment is made by an assessee by way of salary to his employee after deducting the income-tax from salary as per section 192, and when such employee (i) is temporarily posted for a continuous period of 15 days or more in a place other than his normal place of duty or on a ship; and (ii) does not maintain any account in any bank at such place or ship. Bank closed - Rule 6DD(j) Where the payment was required to be made on a day on which the banks were closed either on account of holiday or strike. Payment to agent Rule 6DD(k)- Where the payment is made by any person to his agent who is required to make payment in cash for goods or services on behalf of such person. Foreign currency Rule 6DD(l)- Where the payment is made by an authorised dealer or a money changer against purchase of foreign currency or travelers cheques in the normal course of his business. Note: “Authorised dealer” or “money changer” means a person authorised as an authorised dealer or a money changer to deal in foreign currency or foreign exchange under any law for the time being in force 

1 Like

Gautam Kapoor (IT professional Studying Law)     01 April 2014

:} sums it all. good research. cheers


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