Shri Varun Jain vs Income Tax Officer

This appeal in ITA No.2692/Del/2026 for assessment year 2020-21 has arisen from the appellate order dated 13^th January, 2026 passed by the learned CIT(A)(DIN & Order No. ITBA/NFAC/S/250/2025-26/1084741188(1)) u/s 250 of the Income-tax Act, 1961(hereinafter called “the Act”), which, in turn, has arisen from the re-assessment order dated 18^th March, 2025 passed by ld. Assessing Office under Section 147 read with Section 144B of the 1961 Act (DIN:ITBA/AST/S/147/2024-25/1074631836(1)).

The brief facts of the case are that the case of the assessee was reopened by Revenue by invoking provisions of Section 147 read with Section 148 of the Act. The assessee did not originally file return of income. The reason for reopening is the possession of the information with the Department as per Risk Management Strategy which suggests that income chargeable to income-tax for assessment year 2020-21 has escaped assessment within the meaning of Section 147 of the Act with respect to payments aggregating to Rs. 73,26,872/- being made by the assessee towards credit card payments issued by HSBC Bank, HDFC Bank and American Express Bank. The assessee is an individual , mainly engaged in the business of travel agent and tour operator . It is observed by the AO that assessee received amounts from the clients which were deposited in the bank accounts and payments of credit cards are made through bank of the assessee. No return of income was originally filed by the assessee. Hence, as per the AO income to the tune of Rs. 73,26,872/- has escaped assessment in the hands of the assessee. The notice under Section 148 dated 16.03.2024 was issued to the assessee , and assessee duly filed return of income in response to issue of notice under Section 148 , on 29^th May, 2024, declaring income of Rs. 6,34,248/- after claiming deduction of Rs. 1,45,343/- . The assessee was issued statutory notices under Section 143(2) , 142(1) and SCN by the AO , during the course of reassessment proceedings . The assessee participated in the reassessment proceedings by submitting part-replies to the queries made by the AO. The assessee declared income under presumptive scheme of taxation u/s 44AD wherein business income of Rs. 6,31,748/- was computed @8% of gross turnover of Rs. 78,96,850/- and income from other sources to the tune of Rs. 2,500/- was declared. The AO observed that the assessee has not submitted any documents in support thereof. It was also observed by the AO that the assessee is engaged in the business of travel and tours operator. The assessee was also asked to explain details of credit card expenditure. The AO issued SCN to the assessee proposing to make three additions . The Assessee submitted replies, but the AO was not fully satisfied with the replies. The AO observed that the assessee has submitted details with respect to credit cards held by the assessee, except for credit card-2 issued by American Express Bank (ending with 6006) wherein Rs. 20,90,015/- was made, which was treated as an unexplained expenditure u/s 69C of the Act by the AO and added to the income of the assessee. Further, the Assessing Officer observed that the assessee has shown total turnover of Rs, 78,96,850/- and availed presumptive rate of taxation u/s 44AD @8%, in the return of income filed in pursuance to notice u/s 148. The AO observed that the assessee has not maintained books of accounts. The AO referred to the Google searches made by AO wherein AO observed that in the similar nature of business , income of the tour operator in terms of the average income usually comes within the range of 10 to 15% , and the Assessing Officer applied the net profit rate of 10% of the gross turnover and brought to income-tax differential income to the tune of Rs.1,57,937/-. Further, the Assessing Officer made an addition of disallowance of deduction claimed by the assessee under Chapter VI-A to the tune of Rs. 10,843/-(Rs. 5843/- under Section 80C towards LIC payments and Rs. 5,000/- towards Preventive Health Checkup), as the assessee has not submitted documentary evidences for claiming these deductions.

Aggrieved, the assessee filed first appeal with ld. CIT(A). The assessee participated in the appellate proceedings before ld. CIT(A). The learned CIT(A) observed that the assessee has not submitted the documentary evidences with respect to the credit card Amex Card-2(ending with 6006) and merely submitted details of monthly payments. As per ld. CIT(A), the assessee has not submitted credit card statements, bank payment proofs or invoices supporting the nature of expenditure. The ld. CIT(A) confirmed the addition to the tune of Rs. 20,90,015/-. The additions made by the AO towards enhanced profit @10% of the turnover declared by the assessee as against the presumptive rate of taxation @8% u/s 44AD was deleted by ld. CIT(A). The other addition of Rs. 10,843/- was confirmed by the learned CIT(A) as the assessee has not produced the documentary evidence for claiming deduction under Chapter VI-A of the 1961 Act.

Still aggrieved, the assessee has filed second appeal with the Tribunal and, at the outset, learned Counsel for the assessee submitted that the assessee has duly given reply before the authorities below with respect to monthly usage of the Amex Card-2(ending with 6006) and payments to the tune of Rs. 20,90,015/-. My attention was drawn to page 16 of the paper book wherein the reply dated 19^th February, 2025 is placed wherein the assessee has explained the Amex Card-2 details month-wise. The statement was made by learned Counsel for the assessee before the Bench that the payment of Rs. 20,90,015/- was made from the regular bank account of the assessee which was declared to the department, and the said amount of is duly accounted for in the gross turnover of the assessee and the same was offered to tax under the presumptive scheme availed by the assessee under Section 44AD of the Act. It was submitted that complete details with respect thereto will be submitted. It was prayed by the learned Counsel that the matter can be restored back to the file of the Assessing Officer, and the AO can verify the payments from the bank account as well as its corresponding inclusion in the turnover of Rs.78,96,850/- declared and disclosed to the department, on which due taxes stood paid.

I have heard the rival contentions and perused the material placed before me. The facts in brief and contentions of both the parties are already recorded in the preceding para’s of this order and are not repeated. The short question in this appeal is with respect to payment of Rs. 20,90,015/-being made by the assessee towards Amex Card-2 ending with 6006. The same were held by both the authorities below that the assessee could not explain the said payments , and hence the same was held to be unexplained expenditure u/s 69C of the 1961 Act. It is now the contention of the assessee that the assessee has duly submitted the monthly usage details of the said credit card . It has now been stated before me that the aforesaid payments was made from the regular bank account of the assessee which was declared and disclosed to the department. It has been stated that the payments were towards the travel and tour related expenditure for which corresponding income invoices have been raised to the customers, and were duly included in the total turnover of the assessee to the tune of Rs. 78,96,850/- declared to the Revenue in return of income filed u/s 148 under the presumptive regime of taxation under Section 44AD and due taxes have been paid to Revenue. It has been submitted by ld. Counsel for the assessee that matter can be restored to the file of the AO for denovo determination of the issue on merits in accordance with law by the AO after considering the submissions and evidence with respect thereto. It has been submitted that all the necessary evidences thereto will be submitted by the assessee before the AO to denovo determine the issue on merits in accordance with law. Both the parties are ad-idem that the matter can go back to the file of the Assessing Officer to verify the contentions of the assessee with the evidences thereof that the amount was paid from regular bank account of the assessee, the same was incurred towards travel and tour related business activities of the assessee, corresponding income invoices were raised on the customers which were included in the turnover declared with the department u/s 44AD, and has suffered taxation. Thus, the matter is restored back to the file of the Assessing Officer for verification and denovo determination with respect to the aforesaid payment of Rs. 20,90,015/- in the manner indicated above. There is another issue of disallowance of Rs. 10,843/- under Chapter VI-A, and the same is also restored to the AO for denovo determination of the issue , and the assessee is directed to provide necessary evidences thereto to substantiate its claim. The assessee is directed to co-operate in set aside remand proceedings before the AO and submit all the desired information called for by the AO to decide the issue’s, otherwise the AO shall be free to decide the issue on merits in accordance with law after affording proper opportunity of being heard to the assessee. The AO shall admit all the necessary evidences/contentions filed by the assessee in its support. I clarify that I have not commented on the merits of the issue. I order accordingly.

In the result, the appeal of the assessee is allowed for statistical purposes in the manner as indicated above.

Order pronounced in the open Court on conclusion of hearing on 11^th May, 2026 in the presence of both the parties, and reduced to writing and signed on 18^th May, 2026.