2018 (7) TMI 1996 - AT - Income Tax

Assessment u/s 153A - Addition on account of credit card expenses - taxability of expenses incurred on credit cards as perquisite - HELD THAT - ITAT in assessee s own case for assessment years 2007-08 to 2012-13 similar addition on account of credit card expenses was deleted by the ITAT addition u/s 153A in respect of not abated assessment based on the judgment of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT while adjudicating the issue of addition made on addition of disclosure u/s 132(4) of the Act. It is a fact that no incriminating material relating to credit card expenses was found during the course of search. CIT (DR) has also no dispute on this issue. Under these circumstances, the addition on account of credit card expense in respect of the captioned assessment years deserves to be deleted. - Decided in favour of assessee.

Summary

Issues involved:
1. Taxability of expenditure incurred on credit cards as perquisite in the hands of the assessee.

Analysis:

Issue 1: Taxability of expenditure on credit cards as perquisite
The appeal was filed against the order directing the Assessing Officer to examine the taxability of expenses incurred on credit cards as perquisite in the hands of the assessee for the assessment year 2006-07. The case arose from a search and seizure operation under section 132 of the Income Tax Act, 1961. The Assessing Officer considered credit card expenses amounting to &8377; 1,25,99,657 as a perquisite. The assessee appealed, arguing that similar additions in previous assessment years were deleted by the ITAT. The ld. C.I.T. DR contended that the expenditure was personal and not for business purposes, relying on incriminating documents seized during the search. However, the ITAT noted that no incriminating material related to credit card expenses was found during the search. Citing precedents and the earlier decision in the assessee's case, the ITAT allowed the appeal and directed the Assessing Officer to delete the addition.

This judgment highlights the importance of consistency in tax assessments and the necessity of establishing a clear link between expenses and income. It also underscores the significance of legal precedents and the need for concrete evidence to support tax assessments.