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Facts
The assessee, an individual, filed a return for AY 2017-18 declaring income. The AO added Rs. 15,85,528/- representing credit card payments as unexplained money under Section 69C of the Act, as the assessee failed to explain the source of credits in the bank account from which these payments were made. This addition was confirmed by the FAA.
Held
The Tribunal held that while the assessee had income from house property, agricultural income, etc., and made payments through bank transfers, they did not provide complete details regarding the source of credits. However, considering past disclosures and the interest of justice, the assessee was granted one more opportunity to explain the source of credit card payments.
Key Issues
Whether the addition of credit card payments as unexplained money under Section 69C is justified when the assessee claims the source is bank transfers from disclosed income, and if an opportunity to explain further should be granted.
Sections Cited
250, 69C, 143(3)
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Income Tax Appellate Tribunal, ‘C’ (SMC
Before: SHRI GEORGE GEORGE K
आदेश/ O R D E R
This appeal filed at the instance of the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 20.02.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.
2 -: 2. The solitary issue raised is whether the First Appellate Authority (FAA) is justified in confirming the addition made by the AO amounting to Rs.15,85,528/- being credit card payments treated as unexplained money u/s.69C of the Act.
Brief facts of the case are as follows: The assessee is an individual earning income from house property and other sources. For the assessment year 2017-18, return of income was filed on 30.03.2018 declaring total income of Rs.3,16,250/-. The assessment was selected for limited scrutiny to examine the source of credit card payments. In response to the notice issued, assessee uploaded the credit card statement, bank statements and computation of total income. The assessee however, did not explain the source of credits in the bank account from which payments were made for the credit card expenditure. The AO held that credit card payments to the tune of Rs.15,85,528/- is unexplained and added the same u/s.69C of the Act vide assessment order dated 16.12.2019 passed u/s.143(3) of the Act.
Aggrieved by the assessment completed u/s.143(3) of the Act, assessee preferred appeal before the First Appellate Authority (FAA). Before the FAA, it was submitted that the credit card 3 -: payments were made through bank transfers except for a sum of Rs.1,00,000/-. However, since assessee did not give the details with regard to source of various credits in the bank account, addition made by the AO was sustained by the FAA.
Aggrieved by the order of the FAA, the assessee has filed the present appeal before the Tribunal. The assessee has filed a paper-book enclosing therein the response filed during the e- proceedings along with the annexures, the Central Bank credit card statement, ITR copy along with the statement of income, Central Bank saving bank account statement, etc. The Ld.AR submitted that assessee had income from house property, agricultural income, etc., and the credit card payments are out of bank transfers. It was submitted that assessee was having adequate income which is reflected in the bank statement from which the credit card payments were made. It was further stated for the earlier assessment years namely 2014-15 and 2015-16, the assessee had disclosed substantial income of Rs.33,69,340/- and Rs.31,22,180/- respectively. The credits in the bank accounts are out of the income being disclosed in the earlier years. It was submitted since assessee was having adequate source for the credits in the bank account, assessee may be
The Ld.DR on the other hand submitted that assessee inspite of several opportunities, did not provide the source of credit card payments. Hence, the appeal filed by the assessee may be dismissed.
I have heard rival submissions and perused the material on record. The assessee is a well-known person in the field of motor sports. Out of the total credit card payments which was added u/s.69C of the Act, a sum of Rs.14,85,528/- was by bank transfers. Only a sum of Rs.1,00,000/- made in the month of April, 2016 was cash payment. The assessee for the assessment years 2014-15 and 2015-16 had disclosed income of Rs.33,69,340/- and Rs.31,22,180/- respectively. For the immediately preceding assessment year, assessee had disclosed agricultural income of Rs.6,25,000/-. In the interest of justice and equity, I’m of the view one more opportunity should be provided to the assessee to explain the source of credit card payments. Accordingly, the case is restored to the files of the AO. The assessee is directed to explain the source of various
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 1st July, 2025 at Chennai.