GURPREET SINGH,DELHI V. ITO WARD-61(4), DELHI

ITA 1189/DEL/2025

AI Insights

The case involves Gurpreet Singh, the appellant, who is engaged in the business of trading metal scrap under the name M/s. India Metal Traders. For the assessment year 2017-18, Singh declared his business income under section 44AD of the Income Tax Act, 1961, amounting to Rs.3,57,708, along with income from other sources of Rs.2,37,477. The primary contention arose from the disallowance of credit card expenditures claimed by Singh, which the AO initially disallowed based on the absence of credit card statements, only accepting bills totaling Rs.3,43,450. The CIT(A) dismissed Singh's appeal in ex-parte proceedings, leading to the current appeal before the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360780 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR
• Assessee Lawyers: S MUKESH JAIN; SAMYAK JAIN
• Keywords: Business income
• Section: 44AD

Judgement Text

"आयकर अपीलीय अिधकरण िदʟी पीठ “एस एम सी”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER आअसं.1189/िदʟी/2025(िन.व. 2017-18) ITA No.1189/DEL/2025 (A.Y.2017-18) Gurpreet Singh, 20, Bharat Nagar, Near Ashok Vihar, Delhi 110052 PAN: AQJPS-0193-D ...... अपीलाथᱮ/Appellant बनाम Vs. Income Tax Officer, Ward-61(4), Civic Centre, Minto Road, Delhi 110002 .... ᮧितवादी/Respondent अपीलाथŎ Ȫारा/ Appellant by : S/Shri Mukesh Jain & Samyak Jain, Chartered Accountants ŮितवादीȪारा/Respondent by : Shri Manoj Kumar, Sr. DR सुनवाई कᳱ ितिथ/ Date of hearing : 19/05/2025 घोषणा कᳱ ितिथ/ Date of pronouncement : : 23/05/2025 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against an ex-parte order of Commissioner of Income Tax (Appeals)/Additional/Joint Commissioner of Income Tax (Appeals)-2, Chandigarh (hereinafter referred to as 'the CIT(A)') dated 26.12.2024, for assessment year 2017-18. 2. Shri Mukesh Jain, appearing on behalf of the assessee narrating facts of the case submits that the assessee is engaged in the business of trading of metal scrap under the name & style of M/s. India Metal Traders. The assessee declared his business income u/s. 44AD of the Act Income Tax Act,1961 (hereinafter referred to 2 ITA No.1189/Del/2025 (AY 2017-18) as ‘the Act’) Rs.3,57,708/- and income from other sources Rs.2,37,477/-. The assessee had claimed expenditure of Rs.3,43,450/- made through credit card. The Assessing Officer (AO) made disallowance of credit card bills payment. Although the total expenditure during the relevant period was Rs.3,43,450/-, the AO made disallowance of Rs.7,09,500/-. During assessment proceedings the assessee had submitted credit card statements and had explained that cash paid towards credit card bills was out of cash available from the business income. He further submitted that payment made through credit card was for the purpose of business only. 3. Per contra, Shri Manoj Kumar representing the department vehemently defended the impugned order. The ld. DR submitted that assessee has failed to show that the expenditure made through credit card is relation to the business of assessee. The ld. DR thus prayed for upholding the order of CIT(A)/assessment order and dismissing appeal of the assessee. 4. Both sides heard, orders of the authorities below examined. The AO disallowed assessee's claim of expenditure with respect to cash payments towards credit card bills. The AO observed that the assessee could not furnish credit card statements but only produced credit card bills totaling to Rs.3,43,450/-. Therefore, in the absence of credit card statement it could not be ascertained whether the expenditure was incurred for the business or on personal account. Thus, the AO made addition of Rs.7,09,500/-. The assessee carried the issue in appeal before the CIT(A). The assessee failed to respond to the notices issued by CIT(A). The CIT(A), in ex-parte proceedings dismissed appeal of the assessee. Since, the assessee had filed return of income declaring business income u/s. 44AD of the Act there was no requirement for the assessee to maintain books of account. The nature of 3 ITA No.1189/Del/2025 (AY 2017-18) expenditure could very well be ascertained from credit card statements for the relevant assessment year. 5. A perusal of the assessment order reveals that the AO has made disallowance of Rs.7,09,500/- on the basis of SFT information, whereas as per the assessee, he had made total payments of Rs.3,43,450/- in respect of credit cards during Financial Year 2017-18. Except for SFT information, there is reference to no other material by the AO. On the contrary, the ld. Counsel has placed on record monthly statements of credit cards used by the assessee. Therefore, disallowance if at all, could not be more than the aggregates of total payments made by assessee in respect of credit cards, used by the assessee. Therefore, disallowance in excess of Rs.3,43,450/- is directed to be deleted. 6. Further, the possibility of some expenditure through credit cards on personal account cannot be ruled out. Considering entire facts of the case, I am of the view that disallowance of 25% of the total credit card bill payment Rs.3,43,450/- on account of personal expenditure would meet the ends of justice. 7. In the result, appeal of the assessee is partly allowed in the terms aforesaid. Order pronounced in the open court on Friday the 23rd day May, 2025. Sd/- Sd/- (VIKAS AWASTHY) ᭠याियक सद᭭य/JUDICIAL MEMBER िदʟी/Delhi, ᳰदनांक/Dated 23.05.2025 NV/- 4 ITA No.1189/Del/2025 (AY 2017-18) ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. The PCIT/CIT(A) 4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी 5. गाडᭅ फाइल/Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, DELHI "