MOHAMMED IBRAHIM ALI SIDDIQUI JUNAID,HYDERABAD vs. INCOME TAX OFFICER, WARD-7(2), HYDERABAD

It was further submitted that the assessee had approached the learned counsel through his Chartered Accountant, Shri Mansoor Ahmed, during the second week of September, 2025 for filing the appeal before the Tribunal. However, on account of the learned counsel being preoccupied with old and final hearing matters listed before the Tax Bench of the Hon'ble High Court for the State of Telangana, the appeal could not be filed within the prescribed period. It was submitted that only when the assessee again

The learned Senior A.R. for the Revenue, Shri B. Laxmi Kanth, on the other hand, opposed the condonation petition filed by the assessee. He submitted that the assessee has failed to file the appeal within the prescribed period and, therefore, the delay may not be condoned. However, he fairly submitted that the issue may be decided in accordance with law on the basis of the facts and material available on record.

We have heard both the parties, perused the petition and affidavit filed by the assessee seeking condonation of delay of 11 days in filing the appeal before the Tribunal. We find that, the 4 reasons explained by the assessee appear to be genuine and bona fide and come under 'sufficient cause'. We further find that, the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji, reported in 167 ITR 471 (SC), has laid down certain principles for condoning the delay and directed that a lenient approach should be followed to avoid dismissal of meritorious cases on technical grounds. Going by the principles laid down in Mst. Katiji (supra), and also considering the submissions of the assessee, we condone the delay of 11 days in filing the appeal before the Tribunal and admit the appeal for adjudication.

The brief facts of the case are that the assessee is an individual and advocate by profession, filed the return of income for A.Y. 2017-18 on 31.03.2018, declaring a total income of Rs. 4,38,000/-. The case was selected for scrutiny to verify large cash payments made for credit card purchases. During the course of assessment proceedings, the A.O. noticed that the assessee had made credit card payments of Rs. 7,36,000/- on SBI credit card and Rs. 4,35,000/- on Punjab National Bank credit card, and in aggregate, Rs. 11,71,000/- towards credit card purchases. The A.O. called upon the assessee to furnish the details and also 5 explain the source, but the assessee did not file any details. Therefore, the A.O. made an addition of Rs. 11,71,000/- under Section 69C of the Income-tax Act, 1961 as unexplained expenditure and brought the same to tax under Section 115BBE of the Act.

Aggrieved by the assessment order, the assessee preferred an appeal before the learned Addl/JCIT. Before the learned Addl/JCIT, the assessee explained the source for the credit card expenditure out of the income declared for the year under consideration and also out of the savings from the income declared for the earlier financial year. The learned Addl/JCIT, after considering the submissions of the assessee and also taking note of the income declared for both the assessment years, observed that, going by the amount of income declared by the assessee, after meeting the household expenses, the assessee may be able to save a sum of Rs. 2,00,000/- and, therefore, allowed relief of Rs. 2,00,000/- out of the addition made towards credit card expenditure of Rs. 11,71,000/- and sustained the balance amount of Rs. 9,71,000/- on the ground that the explanation

Aggrieved by the order of the learned Addl/JCIT, the assessee is now in appeal before us.

The learned counsel for the assessee, Shri A.V. Raghuram, Advocate, submitted that the learned Addl/JCIT erred in allowing relief to the extent of Rs. 2,00,000/-, even though the assessee had explained the source by filing the cash flow statement, as per which the source available to the assessee was at Rs. 12,65,000/-, whereas the credit card expenditure for the year under consideration was at Rs. 11,71,000/-. The learned counsel for the assessee further submitted that the learned Addl/JCIT erred in estimating the household expenses and possible savings, even though it is a well-established principle of law that the expenditure incurred in any financial year may not be only from the current year's income, but may also be from the earlier income declared by the assessee and past savings. Therefore, he submitted that the addition made by the A.O. should be deleted.

The learned counsel for the assessee, further referring to the additional ground filed by the assessee, submitted that the A.O. erred in levying tax at 60% in light of Section 115BBE of the Act, even though the amendment to Section 115BBE by the Finance Act is applicable from 01.04.2017 and for A.Y. 2018-19. In this regard, he relied upon the decision of the Hon'ble Rajasthan High Court in the case of Deepak Maratha Vs. Union of India and others in Civil Writ Petition No.3625/2020 dated 27.05.2026. 11. The learned Senior A.R. for the Revenue, Shri Laxmi Kanth, on the other hand, supporting the order of the learned Addl/JCIT, submitted that the assessee could not explain the source for the credit card expenses of Rs. 11,71,000/-. Although the assessee claims to have explained the source out of past savings and current year income, the learned Addl/JCIT, after considering the income declared by the assessee, has rightly estimated the savings at Rs. 2,00,000/- for explaining the credit card expenses. The assessee could not file any details for the remaining amount of credit card expenditure. The learned Addl/JCIT, after considering the relevant facts, has rightly upheld the balance amount of credit card expenditure under Section 69C of the Act. Therefore, he

The learned Senior A.R. for the Revenue, further referring to the decision in the case of Spectra Equipment Private Limited Vs. ITO in ITA No.500/Hyd/2023 dated 18.12.2024, submitted that the Coordinate Bench of the Tribunal has considered the provisions of Section 115BBE of the Act, and the amendment to the same by the Finance Act, 2016, and by following the decision of the Hon'ble Kerala High Court in the case of Maruthi Babu Rao Jadav Vs. ACIT (W.A. No.984 of 2019 dt.23.09.2020), held that the liability, if any, needs to be examined by the A.O. with reference to the addition made under Sections 68 to 69D for the relevant assessment year. Going by the amendment, it is applicable for A.Y. 2017-18, and thus the A.O. has rightly invoked the provisions of Section 115BBE of the Act. Therefore, he submitted that the addition made by the A.O. and the tax computed under Section 115BBE of the Act, should be upheld.

We have heard both parties, perused the material available on record and had gone through the orders of the authorities below. The assessee had incurred credit card expenditure of Rs.

We have gone through the relevant explanation of the assessee and find that, as per the cash flow statement filed before the learned Addl/JCIT, the assessee had declared net income of Rs. 3,15,000/- under the head "Income from House Property" and Rs. 2,17,500/- as income from business under Section 44AD of the Act. The assessee claims to have declared total income of Rs. 3,15,000/- under the head "Income from House Property" for A.Y. 2016-17. For A.Y. 2016-17, there is no business income, which is evident from the return of income filed on 31.03.2018. Going by the amount of income declared by the assessee for both the assessment years, the total income declared by the assessee was Rs. 8,47,500/- for both the assessment years. If we consider the amount declared by the assessee for both the assessment years and the possible expenditure required for household expenses, the assessee may save an average of Rs. 3,00,000/- per year. If we

In so far as the taxation of the addition made under Section 69C of the Act, the issue is covered by the decision of the Hon'ble Rajasthan High Court in the case of Deepak Maratha Vs. Union of India and others (supra) where the Hon'ble High Court, after considering the amended provisions of Section 115BBE of the Act by the Finance Act, 2016, with effect from 01.04.2017, held that the higher rate of tax at 60% is applicable for A.Y. 2018-19 and not for A.Y. 2017-18. Therefore, we direct the A.O. to levy tax at the normal rate of tax applicable for A.Y. 2017-18 on the addition made towards unexplained expenditure under Section 69C of the Act.

In so far as the case law relied upon by the Revenue in the case of Spectra Equipment Private Limited Vs. ITO, in our considered view, once there is a decision of Hon’ble High Court, even if it is a non-juri ictional High Court, the same is binding

To sum up, the addition made by the A.O. towards unexplained expenditure under Section 69C of the Act in respect of credit card expenditure is sustained to the extent of Rs. 2,71,000/-. Further, the A.O. is directed to compute tax at the normal rate applicable for A.Y. 2017-18. 18. In the result, the appeal filed by the assessee is partly allowed.

The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file