AYUB KHAN KADER,CHENNAI vs. ITO, NCW-9(1), CHENNAI

ITA 3343/CHNY/2026Status: DisposedITAT Chennai07 October 2026AY 2018-1910 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the aggregate amount appearing in credit card statements cannot automatically be treated as unexplained expenditure under Section 69C. It reasoned that taxing repeated utilization of the same funds for credit card payments would result in taxing the same money multiple times. The Tribunal emphasized that the relevant inquiry should focus on identifying the actual unexplained source of funds, rather than treating gross turnover or rotation in credit card accounts as unexplained expenditure. While acknowledging the assessee's explanation regarding the rotation of credit cards and funds received from family members, the Tribunal found that the authorities below had not undertaken a proper exercise to examine and correlate the furnished documents. Therefore, the Tribunal restored the issue to the file of the Jurisdictional Assessing Officer (JAO) for fresh examination. The JAO is directed to examine all supporting documents, correlate the flow and rotation of funds, and ensure that the same amount is not treated as unexplained more than once. The JAO shall then determine the actual net amount of unexplained payments after giving credit for declared income and all other satisfactorily explained sources. The assessee will be given an opportunity to furnish further evidence. The Tribunal expressly refrained from expressing any final finding on the acceptability of each individual source claimed by the assessee.

What were the facts?

The assessee, an individual, filed an income tax return for Assessment Year 2018-19 declaring an income of Rs. 3,48,560/-. The case was selected for limited scrutiny to verify credit card payments totaling Rs. 88,04,852/-. The assessee explained that these payments were made using funds from other credit cards, availing the interest-free credit period, and that the funds were utilized for his daughter's marriage and personal expenses. The Assessing Officer (AO) treated the entire Rs. 88,04,852/- as unexplained expenditure under Section 69C of the Income-tax Act, 1961, and added it to the assessee's total income, as the assessee failed to provide satisfactory details of the ultimate source of funds. The assessee appealed this order to the Commissioner of Income Tax (Appeals) [CIT(A)], who upheld the AO's decision.

What were the issues?

1. Whether the Tribunal can treat the aggregate amount appearing in credit card statements as unexplained expenditure under Section 69C of the Income-tax Act, 1961, solely based on the gross turnover or rotation appearing in the credit card accounts, without identifying the actual unexplained source of funds? 2. Whether the authorities below have undertaken a proper exercise to examine and correlate the various documents furnished by the assessee, including credit card statements, bank statements, cash-flow statement, reconciliation statement, and details of family loans, to determine the actual unexplained expenditure? Assessee's Contentions: The assessee argued that the entire amount cannot automatically be treated as unexplained expenditure under Section 69C. He contended that taxing every payment as a separate unexplained expenditure would lead to taxing the same money multiple times if funds were repeatedly utilized for making payments against different credit cards. The assessee also argued that the income declared by him, along with other explained and supported credits, cannot be ignored when determining the source of payments. Amounts received from identifiable persons through banking channels and supported by evidence require verification before adverse inferences are drawn. Revenue's Contentions: The judgment does not explicitly record the revenue's specific contentions during the Tribunal's proceedings. However, the AO's assessment order indicates the revenue's position that the assessee failed to provide satisfactory details of the ultimate source of funds for the credit card payments, leading to the addition of the amount as unexplained expenditure.

Which sections of the Income-tax Act were involved?

Section 69C,Section 143(3),Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA

Hearing: 08.09.2026Pronounced: 07.10.2026

PER S. R. RAGHUNATHA, AM : This appeal has been preferred by the assessee against the order passed by the Learned Commissioner of Income Tax, Appeal (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “the Ld. CIT(A)”], dated 29.04.2026, arising from the assessment order dated 27.08.2021 for the Assessment Year (AY) 2018-19 passed by the Assessing Officer, Income Tax Department, Nati

The order continues below.

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