Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH “SMC”, DELHI
ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Additional/Joint Commissioner of Income-tax (Appeals), Faridabad (hereinafter referred to as ‘the CIT (A)’) dated 26.09.2025, for the Assessment Year 2011-12.
Shri Satyajeet Goel, appearing on behalf of the assessee submits that the assessee is a salaried employee and had filed his return of income declaring income from salary and house property on 04.02.2012 for AY 2011-12. The assessment for AY 2011-12in the case of assessee was reopened and notice u/s.148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 28.03.2018 was issued to the assessee. The reasons for reopening are at page 2 of the paper book. A perusal
of the reasons would show that the assessment has been reopened to examine payment of Rs.37,62,149/- against credit card bills during FY 2010-11 i.e. relevant to AY 2011-12. However, while framing the assessment, the Assessing Officer (AO) made disallowance of expenditure to the tune of Rs.16,37,426/-. Further, the AO made ad-hoc disallowances of Rs.2,01,900/- of expenditure made on account of domestic travel, electricity and water expense, mobile and internet services, vehicle running expenses, conveyance expense, business promotion, entertainment expenses, LIC expenses in respect of the payments made through credit card. The AO further made addition of Rs.1,05,718/-on account of difference in the credit card bill and the total payment made. The assessee had explained to the AO that the payments made through credit card were in respect of the expenditure of the company M/s. Capital Residency P. Ltd. where the assessee is working as Chief Executive Officer. He contended that the AO without appreciating the fact that the assessee was merely an employee made disallowance of the expenditure in the hands of individual rather than making disallowance in the hands of the company. The assessee filed an appeal before the CIT(A), against the assessment order dated 21.12.2018, the CIT(A) in ex-parte proceedings dismissed the appeal of assessee on merits. Hence, the present appeal.
Shri Keshav Kishor Anand, representing the department vehemently supported the impugned order and prayed for dismissing appeal of the assessee. He submitted that ample opportunity was given by the CIT(A) and multiple notices were issued to the assessee, however, the assessee failed to respond to any of the notices. He thus, prayed for upholding the impugned order.
Both sides heard. The assessee in appeal has raised multiple grounds inter alia challenging validity of reopening, as well as, challenging the addition on merits.
After hearing assessee’s submissions on validity of reopening I find the submissions of the assessee are devoid of any merit. The assessee was holding two PANs. As is apparent from the reasons recorded for reopening, the assessee got the credit card issued on the basis of PAN AAZPT 6665 P, whereas, the assessee had filed return of income for AY 2011-12 under PAN ADCPT 9376 R. The ld. Counsel for the assessee has stated before us, that the assessee had already sent letter to the AO for cancellation of PAN AAZPT 6665 P. In the first instance holding two PAN cards by the assessee is illegal and attracts penalty and can also lead to prosecution in some cases. If at all the assessee had written to the AO for cancellation of one PAN, it was incumbent upon the assessee to follow up and ensure that one of the PAN is cancelled. Now the assessee cannot take advantage of the fact that the reasons were recorded for a different PAN and the assessment was made in the name of the assessee on a different PAN. Therefore, the legal grounds raised by the assessee in ground no. 2 to 4 are dismissed.
On merits, contention of the assessee is that the expenditure made through credit card was in respect of expenses of the company M/s. Capital Residency P. Ltd. where he was working as Chief Executive Officer. The said expenditure is duly recorded in the books of company. The assessee is only a salaried employee. This fact also emerges from the return of income filed by the assessee wherein the assessee has declared income under the head salary, income from house property and bank interest. The disallowance of expenditure made through credit card on behalf of the company could only be made in the hands of the company not the assessee. I find merit in the submissions made by ld. Counsel for the assessee. The expenditure made through credit card prima facie appears to be in the nature of business expenditure. It is not the case of Revenue, that the assessee is carrying
on any business, the AO has accepted the return of income filed by the assessee wherein the income is declared under the head salary. Therefore, the disallowance of expenditure made through credit card in the hands of assessee is unsustainable. Accordingly, the additions made by the AO are directed to be deleted. The succeeds on ground of appeal no. 5 to 7.
In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on Wednesday the 17th day of December, 2025.