Loading judgment…
Facts
The assessee did not file an income tax return for AY 2020-21. The AO initiated reassessment proceedings under section 147 based on information about substantial credit card payments. The AO added the entire credit card payments of Rs. 75,29,077/- as unexplained expenditure under section 69C.
Held
The Tribunal noted that the assessee claimed the credit cards were given to another person for use on commission, but could not provide documentary evidence. However, an FIR against that person and the availability of the person's PAN and email suggested a dispute, making it difficult to obtain evidence. The Tribunal found merit in the assessee's argument that the AO could have used powers under section 133(6) for better verification.
Key Issues
Whether the addition of credit card payments as unexplained expenditure under section 69C was justified without proper verification by the Assessing Officer, especially when the assessee provided reasons for not producing direct evidence.
Sections Cited
139, 147, 148A(d), 148, 144B, 69C, 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘ DB-A ‘ Bench, Hyderabad
Before: Shri Ravish SoodShri Madhusudan Sawdia
आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ DB-A ‘ Bench, Hyderabad �ी रिवश सूद,�ाियक सद� एवं �ी मधुसूदन साविड़या लेखा सद� सम� | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.2122/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2020-21) Shri Satyanarayana Vs. Income Tax Officer Murthy Kancharla Ward 12 (1) Hyderabad Hyderabad PAN: ALYPK6305P (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: CA Hemalatha राज� व �ारा/Revenue by:: Shri D Praveen, Sr. AR सुनवाई की तारीख/Date of hearing: 24/03/2026 घोषणा की तारीख/Pronouncement: 30/03/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:
This appeal is filed by Shri Satyanarayana Murthy Kancharla (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) dated 24.09.2025 for the A.Y.2020-21.
At the outset, it is observed that there is a delay of one day in filing the appeal before this Tribunal. In this regard, the assessee has filed a condonation petition supported by an affidavit explaining the reasons for the delay. The Learned Authorized Representative (“Ld. AR”) submitted that due to technical glitches in receiving the OTP on the registered e-mail ID of the assessee, the OTP could not be received in time, resulting in a delay of one day in filing the appeal. It was further submitted that the delay was neither intentional nor deliberate, but occurred due to circumstances beyond the control of the assessee. Accordingly, the Ld. AR prayed before the Bench to condone the delay and admit the appeal for adjudication on merits.
Per contra, the Learned Departmental Representative (“Ld. DR”) did not raise any objection to the condonation of the delay.
We have considered the submissions and perused the material available on record. Considering the explanation furnished by the assessee and the fact that the delay is of only one day, which has been satisfactorily explained, and also in view of the settled principle that a liberal approach should be adopted in matters of condonation of delay so as to advance substantial justice, we are inclined to condone the delay. Accordingly, the delay of one day in filing the appeal is condoned and the appeal is admitted for adjudication on merits.
The assessee has raised the following grounds of appeal:
6. The brief facts of the case are that the assessee is a salaried employee working with Tech Mahindra Limited, who did not file any return of income under section 139 of the Income Tax Act, 1961 (“the Act”) for the assessment year 2020-21. Based on the information available, the Learned Assessing Officer (“Ld. AO”) observed that the assessee had made substantial payments towards four credit cards during the year under consideration. Accordingly, proceedings under section 147 of the Act were initiated. After passing the order under section 148A(d) of the Act on 28.03.2024, the Ld. AO issued notice under section 148 of the Act on 28.03.2024. In response thereto, the assessee filed the return of income on 20.04.2024 declaring total income of Rs.5,97,460/-. During the course of assessment proceedings, the Ld. AO called upon the assessee to explain the source of payments amounting to Rs.75,29,077/- made towards credit card dues. Being not satisfied with the explanation furnished by the assessee, the Ld. AO treated the entire credit card payments as unexplained expenditure and made an addition of Rs.75,29,077/- under section 69C of the Act in the hands of the assessee. Accordingly, the assessment was completed by the Ld. AO under section 147 r.w.s. 144B of the Act on 24.01.2025, determining the total income of the assessee at Rs.81,26,537/-.
7. Aggrieved with the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A). However, the Ld. CIT(A), after considering the submissions of the assessee, was not Page 4 of 8 convinced and upheld the addition made by the Ld. AO, thereby dismissing the appeal.
8. Aggrieved with the order of the Ld. CIT (A), the assessee is in appeal before this Tribunal. The Ld. AR submitted that the solitary issue involved in the present appeal is the addition of Rs.75,29,077/- under section 69C of the Act on account of payments made through credit card accounts. The Ld. AR submitted that all the credit cards belonging to the assessee were handed over to one Mr. G. Nageswararao for use, on an agreed commission of 2% on the transactions carried out through such credit cards. It was contended that all the transactions reflected in the credit card statements pertain to Mr. G. Nageswararao and none of the transactions belongs to the assessee. The Ld. AR further submitted that these facts were brought to the notice of the lower authorities also. However, the authorities required the assessee to furnish documentary evidence in the form of an agreement with Mr. G. Nageswararao and confirmation from him. In the absence of such evidences, the addition was made in the hands of the assessee. The Ld. AR drew our attention to the copy of the FIR lodged by the assessee against Mr. G. Nageswararao placed at page nos. 117 to 121 of the paper book and submitted that due to disputes between them, Mr. G. Nageswararao had absconded during the assessment as well as appellate proceedings. Therefore, the assessee could not obtain the necessary evidences or confirmation from him. It was submitted that the assessee had furnished the PAN and email ID Page 5 of 8 of Mr. G. Nageswararao before the lower authorities. It was further contended that the Ld. AO could have exercised powers under section 133(6) of the Act to obtain necessary information, including bank statements of Mr. G. Nageswararao, and could have cross-verified the same with the credit card payments to ascertain the true nature of transactions. The Ld. AR submitted that due to the absence of proper verification, the addition was made without fully examining the facts. Accordingly, it was prayed that the matter may be restored to the file of the Ld. AO for proper verification.
9. Per contra, the Ld. DR relied on the orders of the lower authorities and submitted that in the absence of any documentary evidence or confirmation from Mr. G. Nageswararao, the Ld. AO had rightly invoked the provisions of section 69C of the Act. It was submitted that the burden to explain the source of expenditure lies on the assessee, which has not been discharged in the present case.
We have heard the rival submissions and perused the material available on record. The issue before us relates to the addition of Rs.75,29,077/- made under section 69C of the Act on account of credit card payments. The case of the assessee is that the credit cards were handed over by the assessee to Mr. G. Nageswararao for use on commission basis and that the transactions do not belong to the assessee. However, the assessee could not furnish any documentary evidence such as agreement Page 6 of 8 or confirmation from the said person before the lower authorities. At the same time, we have gone through the copy of the FIR filed by the assessee against Mr. G. Nageswararao, placed at page no. 117 to 121 of the paper book. On perusal of the same, we find that although the FIR has not been lodged specifically for misappropriation of credit card transactions and does not have a direct nexus with the issue before us, it does indicate that there existed a dispute between the assessee and Mr. G. Nageswararao. Therefore, it cannot be completely ruled out that the assessee was unable to obtain the necessary evidences from the said person. We further find merit in the contention of the Ld. AR that the Ld. AO could have exercised powers under section 133(6) of the Act to call for information from Bankers of Mr. G. Nageswararao, especially when basic details such as PAN and email ID were available on record. Proper verification of bank accounts and correlation with credit card payments would have assisted in determining the true nature of the transactions. Considering the totality of facts and circumstances of the case, in the interest of justice, we deem it appropriate to set aside the orders of the lower authorities on this issue and restore the matter to the file of the Ld. AO for de novo adjudication. The Ld. AO is directed to issue notice under section 133(6) of the Act to Mr. G. Nageswararao as well as to the concerned banks, obtain necessary details including bank statements, and thereafter verify the claim of the assessee in accordance with law. The assessee is also directed to extend full cooperation and furnish all available details in support of his Page 7 of 8 claim. Needless to say, the Ld. AO shall provide reasonable opportunity of being heard to the assessee before passing the order.