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Facts
The assessee, an employee, declared an income of Rs. 7,93,910 for AY 2017-18. The AO observed credit card payments totaling Rs. 21,69,933. The assessee explained that payments for IndusInd Bank and Syndicate Bank credit cards were made from cash generated by his brother's transportation business, used for fuel expenses. The ICICI Bank payment was explained by the assessee's own sufficient income.
Held
The Tribunal found that the assessee had successfully explained the sources of payment for the credit card dues for all three banks. The cash payments for IndusInd Bank and Syndicate Bank credit cards were linked to the brother's business expenses, and the ICICI Bank payment was covered by the assessee's declared income.
Key Issues
Whether the credit card payments made by the assessee and his brother are sufficiently explained and not liable for addition as unexplained investment under section 69C.
Sections Cited
250, 143(3), 143(2), 142(1), 69C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
आदेश / ORDER
The captioned appeal at the instance of assessee pertaining to A.Y. 2017-18 is directed against the order dated 15.03.2025 of Addl/JCIT (A)-2, Chennai passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of Assessment Order dated 24.12.2019 passed u/s. 143(3) of the Act.
Brief facts of the case are that the assessee is an individual and is a salaried employee of M.S. Agri Marketing Board, Pune. Income of Rs.7,93,910/- declared in the return for A.Y. 2017-18 furnished on 20.05.2017. Case selected for Limited Scrutiny under CASS for the reason of “Credit Card payment”. Statutory notices were issued and duly served upon the assessee u/s.143(2) and 142(1) of the Act. Ld. Assessing Officer (AO) has observed that the assessee has made payment to Credit Cards issued by the following banks at Rs.21,69,933/- :
IndusInd Bank Rs.9,73,444/- Syndicate Bank Rs.10,49,989/- ICICI Bank Rs.14,65,500/- Total Rs.21,69,933/-
Ld. Assessing Officer further observed that the outstanding payments for credit cards of IndusInd Bank and Syndicate banks have been paid in cash. Assessee was asked to explain the source of cash deposited for clearing the credit card dues. It was stated by the assessee that the credit cards issued in his name have been used by his brother Mr. Sachin Prakash Pawar in the course of carrying on the business of Transportation and credit cards have been majorly used for purchase of fuel. It is also submitted that his brother is also filing regular income-tax returns and that he had sufficient funds to make the payment towards the outstanding credit card dues. However, ld. AO was not satisfied and he raised doubt on the source of cash utilised for credit card payments and finally concluded the assessment proceedings making addition for unexplained investment u/s.69C of the Act at Rs.21,69,933/-.
Aggrieved assessee preferred appeal before ld.CIT(A) but failed to succeed. Now the assessee is in appeal before this Tribunal.
Ld. Counsel for the assessee reiterated the submissions filed before the lower authorities and also took me through the paper book running into 105 pages indicating the details of credit card summary and statement of IndusInd Bank and Syndicate banks stating that the credit cards have been used for the purchase of Petrol and Diesel. Reference was also made to the income-tax Mahendra Prakash Pawar return, computation and financial statements of assessee’s brother Mr. Sachin Prakash Pawar. He submitted that credit card payments for IndusInd Bank and Syndicate banks have been cleared by the funds available with the brother and sofar as the credit card payment of Rs.1,46,500/- of ICICI Bank, the same has been utilised by the assessee and funds have been given from his own sources.
On the other hand, ld. DR supported the orders of the lower authorities.
I have heard the rival contentions perused the record placed before me. I note that the assessee is aggrieved with the addition of Rs.21,69,933/- confirmed by ld.CIT(A) which has been made by ld. AO invoking section 69C of the Act for unexplained investment. The impugned addition has been made for the unexplained payment for credit card dues and the details of the same are as under :
IndusInd Bank Rs.9,73,444/- Syndicate Bank Rs.10,49,989/- ICICI Bank Rs.14,65,500/- Total Rs.21,69,933/-
Now from the above details filed before me, I notice that the payment of Rs.9,73,444/- has been made to the IndusInd Bank credit card and as per the summary of the credit card I notice that the credit card has been used to purchase Petrol and Diesel amounting to Rs.9,73,444/-. I also observe that the assessee’s brother Mr. Sachin Prakash Pawar carries on the business of Transportation, Hiring and Plying of Trucks and the gross receipts received for the F.Y. 2016-17 have been declared at Mahendra Prakash Pawar Rs.55,85,811/- and net profit after claiming depreciation of Trucks and Furniture has been declared at Rs.5,24,632/-. I also notice that Mr. Sachin Prakash Pawar has claimed Power and Fuel expenses at Rs.27,07,690/- and that the credit cards have been used for purchasing the fuel by the Drivers employed by Mr. Sachin Prakash Pawar. Source of cash payment to clear dues of IndusInd Bank are from the funds available with Mr. Sachin Prakash Pawar from his business sources. Details have been filed to state that the cash withdrawals from Axis Bank by Mr. Sachin Prakash Pawar is Rs.37,85,900/- by ATM and Rs.2,35,000/- through self cheque.
Similar is the situation for the credit card issued by Syndicate Bank. As per the details filed in the paper book, out of the total credit card payment of Rs.10,49,989/- sum of Rs.10,01,452/- has been incurred for making payment for purchase of Fuel. Now considering the cash withdrawals made by Mr. Sachin Prakash Pawar from his Axis Bank account and the genuineness of Power and Fuel expenses incurred by him during the year for the business purposes and the credit cards have been used by the employees of assessee’s brother for purchase of Fuel. I find that the assessee has successfully explained the source of cash payment of Rs.9,73,444/- and Rs.10,49,989/- totalling to Rs.20,23,433v/- for clearing the due of credit cards issued by IndusInd Bank and Syndicate Bank.
So far as the credit card issued by ICICI Bank is concerned, payment made on this credit card is only Rs.1,46,500/- and the same being utilised by the assessee and on perusal of the record I find that the assessee has sufficient funds at his disposal for making payment of Rs.1,46,500/- as assessee has declared income during the year at Rs.7,93,910/-.
In view of the above discussion and considering the facts and circumstances of the case, I find that since the assessee has successfully explained the sources of payment made for the credit cards issued by the above mentioned three banks totalling to Rs.21,69,933/- therefore the impugned addition is deleted. Finding of ld.CIT(A) is set aside and Grounds of appeal raised by the assessee are allowed.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on this 24th day of September, 2025.