In a recent decision, the Surat bench of the Income Tax Appellate Tribunal ( ITAT ) held that credit card payment without showing income source attracts addition under Section 69A of the Income Tax Act, 1961. The Bench dismissed the appeal filed by the assessee due to non-compliance to the notices and lack of evidence on the part of the assessee and upheld the addition of Rs. 6.16 lakhs under Section 69 A of the Income Tax Act for unexplained cash payments. Know Practical Aspects of Tax Planning, Click Here The assessee filed his Income Tax Returns ( ITR ) for the assessment year ( AY ) 2017-18 and declared income at Rs. 2,78,400. It was noted by the Assessing Officer ( AO ) that the assessee had made cash payments of Rs. 6,16,142 towards credit card purchases, and when asked by the AO to explain the source of this amount, the assessee failed to respond, even after a show-cause notice was issued. Due to this the AO deemed the cash payments as unexplained income under Section 69A of the Income Tax Act and applied tax under Section 115BBE of the Act. It is to be noted that the assessee appealed before the Commissioner of Income Tax ( Appeals ) [ CIT( A ) ] but he did not comply with the 7 notices issued to him. The CIT( A ) held that there was a failure on the assessee’s part to explain the Rs. 6.16 lakh cash payments for credit card purchases and thus upheld the addition made by the AO and dismissed the assessee’s appeal. Know Practical Aspects of Tax Planning, Click Here The bench noted that despite multiple notices, the assessee failed to explain the source of these funds.

The tribunal observed that the AO was justified in making the additions under Section 69A of the Income Tax Act as there was non-compliance by the assessee to the statutory notices as well as the show cause notice. The ITAT, comprising Pawan Singh ( Judicial Member ) and Bijayananda Pruseth ( Accountant Member ) dismissed the appeal filed by the assessee.