Loading judgment…
Facts
The assessee made a credit card payment of Rs. 5,80,000/- for LIC premiums of his parents. He received cash from his parents to cover this expense. The Assessing Officer added this amount as unexplained expenditure, which was upheld by the CIT(A).
Held
The Tribunal held that the assessee had sufficiently explained the source of funds for the credit card payment, as he had received cash from his parents to cover the LIC premiums. Therefore, the addition made by the Assessing Officer and confirmed by the CIT(A) was incorrect.
Key Issues
Whether the credit card payment for LIC premiums, funded by cash received from parents, can be treated as unexplained expenditure.
Sections Cited
69C, 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Dr. BRR Kumar & Ms. Suchitra Kamble
आदेश/ORDER Per Suchitra Kamble, Judicial Member:
This is an appeal filed against the order dated 12-03- 2025 passed by CIT(A)/Addl/JCIT(A)-2, Chennai for assessment year 2017-18.
The grounds of appeal
are as under:-
1. That the Ld. CIT(A) erred in law and in the facts of the case in confirming the order of the AO in making addition of Rs. 5,80,000/- u/s 69C of the act. Total tax effect Rs. 3,48,000/-”
The assessee filed return of income on 20th December, 2017 declaring income at Rs. 4,96,040/-. During the year under consideration, the assessee derived income from small Dhairya Jyotish Dandwala, A.Y. 2017-18 construction work and as advisor and director in real estate. The assessee also received income as advisor for catering business. The case of the assessee was selected for limited scrutiny for the reason large cash payments made for credit card purchases. Statutory notices were issued and the same was replied by the assessee. The Assessing Officer observed that the assessee made substantial payment for credit card purchase in cash amounting to Rs. 5,80,000/- through credit card during assessment year 2017-18. The assessee has deposited cash of Rs. 5,80,000/- on 16-11-2009 in City Bank for assessee’s credit card payment. The notice u/s. 133(6) of the Act was issued to City bank calling for the credit card statement of the assessee, the same was submitted and after going through the same, the Assessing Officer held that the assessee failed to discharge his onus regarding the payments made for the purpose of LIC payment by him for his father and mother. The Assessing Officer made addition of Rs. 5,80,000/- u/s. 69C as unexplained expenditure.
The ld. A.R. submitted that the assessee has paid LIC premium of his parents through his credit card. For the said payment of premium, the assessee received Rs. 1,50,000/- on 03-11-2016 from his mother. The assessee also received Rs. 1,50,000/- on 31-10-2016, Rs. 1,00,000/- on 07-11-2016 and Rs. 1,80,000/- on 10-11-2016 from his father. Thus, the assessee after receiving the said cash from his parents paid the LIC premium amounting to Rs. 5,80,000/- on 16-11-2016. Therefore, assessee explained all the expenditure on the credit card to the Assessing Officer.
We have heard both the parties and perused all the relevant material available on record. The assessee made payment of LIC premium of his father and mother for which he received cash from his parents and the assessee also explained the source of their payment. Therefore the credit card payment has been categorically explained by the assessee. These payments of LIC premium were not doubted by the Assessing Officer. Hence the CIT(A) was not right in making addition to the extent of Rs. 5,80,000/- u/s. 69C of the Act. Thus, the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed. 7.
Order pronounced in the open court on 14-08-2025