The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the addition under Section 69C of the Income Tax Act, 1961 as explanation as to source of credit card payment was not furnished by the assessee.
During the course of scrutiny of the income tax return by the assessee,Pavuluri Sylendra, the Assessing Officer found that the assessee made cash payments towards the expenditure met by him through credit card. According to the Assessing Officer, when called upon, the assessee failed to explain the source. Thus, he added the same.
AP Babu appeared on behalf of the revenue and submitted that no material contrary was produced by the assessee during the proceedings.
As per Section 69C of the Income Tax Act, “Where in any year the taxpayer has incurred any expenditure and he fails to explain the source of such expenditure or any portion thereof, or where the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or any portion thereof, as the case may be, may be deemed to be the taxpayer’s income for such year.”
The aforementioned illogical expense, which is regarded to represent the taxpayer’s income by virtue of section 69C, should not be permitted as a deduction under any head of income.
The Bench observed that the assessee had taken a plea before the Commissioner of Income Tax Appeals (CIT(A)) that he had received a sum of Rs. 2.5 lakhs by way of cash gifts from his father, from out of the pension savings but the assessee failed to substantiate the same with reference to the ITR, bank statement etc., of his father.
The assessee had also failed to appear and to dispute the correctness of the additions made by the AO and confirmed by the learned CIT(A) before the tribunal. Thus, the Single Bench of K. Narasimha Chary, (Judicial Member) dismissed the appeal filed by the assessee
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