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Got income tax notice for credit card spends

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friends2b11

friends2b11

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I have placed various orders from Flipkart with Flipkart Axis Bank credit card and after buying those orders sold them outside at lower prices.I gave the outside shopkeeper a lower price than the prize I bought.But since I got five percent cashback, I got some profit and not loss.

Besides, I have ordered many things for friends & family.(Your annual fee is waived off if you spend a certain amount on your credit card and clear the amount on time. )

Besides credit card payment showed deposit for which I have already replied with bank statement.And all the deposits were made by myself and no money was sent to anyone.

Can I now tell the income tax department that I used to run a cyber cafe and have customers there and for them I bought these things with my credit card.
Income tax department has asked me for credit card statement and which I will send them.
But income tax asked me about the payment I sent and their details and PAN number but I don't have any details.

And yes I have been filing regular income tax for 3-4 years and I show that my income is less than 5 lacs in the year.
And since I didn't file income tax on time I also paid 1000 late payment fee.


I got this notice from it dept-

Please refer to the notice under section 133(6) issued from this office and the subsequent reply made by you. Please note that as per
the Trading & Profit and Loss Account furnished by you, the total sales is Rs.18,xx,xxx/- whereas as per information, your total
payment by credit card amounts to Rs.25,xx,xxx/-. So you are requested explain the issue and submit the details of the person
(including PAN and Contact number) for whom the payment has been made. You are also requested to submit the credit card
statement for the F.Y. 2020-21. You are requested to comply within xx/xx/2023.
Response to the letter can be furnished through Compliance Portal only.

I have done a lot of shopping with credit cards for the rest of the years but since I paid the income tax on time I didn't get the notice.
Income tax notice was sent to me because I did not fill the income tax in that year but after sending the income tax notice I paid the income tax with late payment free.

To the first notice I have given the reply in due time and this is the second notice that I have been questioned again.
Now how do I give the reply to the IT department yes I will send the cc statement but how do I tell them can someone explain me so that I can give the reply properly.




the original notice which I received two to three months ago.At that time I had not filled ITR for that year and I was asked to fill revised ITR and I filled ITR with late payment fee ( 1000 INR ).

And I gave answers to the questions that were put to me and I also sent my trading PL statement statement and bank statement.

But today I got another reply to that notice.


Remaining year ITR-4 is already filed and business name is ABC Trading & Online
Nature of bussiness shown in ITR- Electronic Goods and Accessories

But since my card got canceled in the last month, I didn’t get the cashback that I earned in last month, so I didn’t have any money in my pocket.”

“The cash pack of the last month was so much more than the first two months”.So since I didn’t get the last match cashback, ultimately the cashback I earned for the first two months is no longer in my pocket.
 
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gowthamv said:
Sorry if this question is dumb.

In his situation, Can he just simply explain that he paid the amount through CC to help his friends?

I mean, his friends (maybe customers) wanted a phone. They didn't have a CC. So they asked him to help with the purchase.

For example, Let's consider him to be X.

A friend of X wanted a mobile phone for 20k. He didn't have a CC. So he paid 20k to X. X used the 20k to order a mobile phone.
In this case, Money in = Money out, right?

So if IT asks what is the source of 20k, he can just point out that his friend gave him 20k to place an order.

This is clearly against CC T&C, but since money in = money out, IT problems can be solved.

Am I missing something?
Click to expand...
If there is an inflow into your account, it is your responsibility to explain it. IT will assume that the entire income is taxable. If it is not your net income and you want to claim expenses, it is your responsibility to maintain the trail of expenses with requisite proof. You cannot 'just point it out' to IT Dept. If you claim it si a quid pro receipt you will need a signed (with PAN) declaration from that person. IT is likely to check that person's ITR and wether he has the required amount in cash on hand on that day. He may be called to explain if they do not find any cash withdrawals from his account (say he is salaried and uses gpay and cc for all transactions). So people who are willing to back you need to be ready to explain if required.

All this is not pretty. The IT guys know when they have got a 'bakra'. Hence, it is best to use a CA. They have the requisite domain knowledge and know recent instances of problems and solutions. All this is just broad gyaan. They are likely to have hands-on experience in related cases or can check with othres in their community. (Note: I am not a CA. But I feel they are absolutely unavoidable when you run into problems like this.)
 
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samm255 said:
Your example perfectly works for 20k but not for 25 lakh. IT wouldn't have asked him anything if it was under his 3 lakh declared income.
Click to expand...
yeah the amount is huge. I accept that.

But, let's again consider another scenario for example.

A manufacturing firm near X's house gets electricity bill of 2L per month.
X pays their Electricity Bill using his Credit card for getting rewards.
The manufacturing firm deposits the amount of 2L in X's bank account.
X uses that amount to pay his CC bill.

Again, I am aware that this is completely against Credit Card's T&C.

But, why should X pay income tax for the amount he receives from the manufacturing firm?
 
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gowthamv said:
yeah the amount is huge. I accept that.

But, let's again consider another scenario for example.

A manufacturing firm near X's house gets electricity bill of 2L per month.
X pays their Electricity Bill using his Credit card for getting rewards.
The manufacturing firm deposits the amount of 2L in X's bank account.
X uses that amount to pay his CC bill.

Again, I am aware that this is completely against Credit Card's T&C.

But, why should X pay income tax for the amount he receives from the manufacturing firm?
Click to expand...
He won't need to because he can back up his claim about where he recd the 2L in his account (assuming he gets a confirmation from the firm for the same, else he will be in the same boat as the OP. But at least in this case amount is deposited by cheque. Even then, IT can claim that it is for some services and not against a bil. It is upto the assessee to prove otherwise)
 
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friends2b11 said:
I have placed various orders from Flipkart with Flipkart Axis Bank credit card and after buying those orders sold them outside at lower prices.I gave the outside shopkeeper a lower price than the prize I bought.But since I got five percent cashback, I got some profit and not loss.

Besides credit card payment showed deposit for which I have already replied with bank statement.And all the deposits were made by myself and no money was sent to anyone.

Can I now tell the income tax department that I used to run a cyber cafe and have customers there and for them I bought these things with my credit card.
Income tax department has asked me for credit card statement and which I will send them.
But income tax asked me about the payment I sent and their details and PAN number but I don't have any details.

And yes I have been filing regular income tax for 3-4 years and I show that my income is less than 5 lacs in the year.
And since I didn't file income tax on time I also paid 1000 late payment fee.


I got this notice from it dept-

Please refer to the notice under section 133(6) issued from this office and the subsequent reply made by you. Please note that as per
the Trading & Profit and Loss Account furnished by you, the total sales is Rs.18,xx,xxx/- whereas as per information, your total
payment by credit card amounts to Rs.25,xx,xxx/-. So you are requested explain the issue and submit the details of the person
(including PAN and Contact number) for whom the payment has been made. You are also requested to submit the credit card
statement for the F.Y. 2020-21. You are requested to comply within xx/xx/2023.
Response to the letter can be furnished through Compliance Portal only.

I have done a lot of shopping with credit cards for the rest of the years but since I paid the income tax on time I didn't get the notice.
Income tax notice was sent to me because I did not fill the income tax in that year but after sending the income tax notice I paid the income tax with late payment free.

To the first notice I have given the reply in due time and this is the second notice that I have been questioned again.
Now how do I give the reply to the IT department yes I will send the cc statement but how do I tell them can someone explain me so that I can give the reply properly.

Screenshot20230927200413-02

Screenshot20230927200821-01


This is the original notice which I received two to three months ago.At that time I had not filled ITR for that year and I was asked to fill revised ITR and I filled ITR with late payment fee ( 1000 INR ).

And I gave answers to the questions that were put to me and I also sent my trading PL statement statement and bank statement.

But today I got another reply to that notice.

Screenshot20230927203239-01

Remaining year ITR-4 is already filed and business name is ABC Trading & Online
Nature of bussiness shown in ITR- Electronic Goods and Accessories
Click to expand...
Tumne rokda ko ghumaya hai

Ab rokda tumhe ghumayega
 
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samm255 said:
Your example perfectly works for 20k but not for 25 lakh. IT wouldn't have asked him anything if it was under his 3 lakh declared income.
Click to expand...
There is even a matter of buying something from a credit card that I have to buy from my income for that year ?

I can buy any goods with my credit card from my capital right ?

And here the money that I have deposited in my account is because I will make the credit card payment.
 
Upvote 0 Downvote
friends2b11 said:
I have placed various orders from Flipkart with Flipkart Axis Bank credit card and after buying those orders sold them outside at lower prices.I gave the outside shopkeeper a lower price than the prize I bought.But since I got five percent cashback, I got some profit and not loss.

Besides credit card payment showed deposit for which I have already replied with bank statement.And all the deposits were made by myself and no money was sent to anyone.

Can I now tell the income tax department that I used to run a cyber cafe and have customers there and for them I bought these things with my credit card.
Income tax department has asked me for credit card statement and which I will send them.
But income tax asked me about the payment I sent and their details and PAN number but I don't have any details.

And yes I have been filing regular income tax for 3-4 years and I show that my income is less than 5 lacs in the year.
And since I didn't file income tax on time I also paid 1000 late payment fee.


I got this notice from it dept-

Please refer to the notice under section 133(6) issued from this office and the subsequent reply made by you. Please note that as per
the Trading & Profit and Loss Account furnished by you, the total sales is Rs.18,xx,xxx/- whereas as per information, your total
payment by credit card amounts to Rs.25,xx,xxx/-. So you are requested explain the issue and submit the details of the person
(including PAN and Contact number) for whom the payment has been made. You are also requested to submit the credit card
statement for the F.Y. 2020-21. You are requested to comply within xx/xx/2023.
Response to the letter can be furnished through Compliance Portal only.

I have done a lot of shopping with credit cards for the rest of the years but since I paid the income tax on time I didn't get the notice.
Income tax notice was sent to me because I did not fill the income tax in that year but after sending the income tax notice I paid the income tax with late payment free.

To the first notice I have given the reply in due time and this is the second notice that I have been questioned again.
Now how do I give the reply to the IT department yes I will send the cc statement but how do I tell them can someone explain me so that I can give the reply properly.

Screenshot20230927200413-02

Screenshot20230927200821-01


This is the original notice which I received two to three months ago.At that time I had not filled ITR for that year and I was asked to fill revised ITR and I filled ITR with late payment fee ( 1000 INR ).

And I gave answers to the questions that were put to me and I also sent my trading PL statement statement and bank statement.

But today I got another reply to that notice.

Screenshot20230927203239-01

Remaining year ITR-4 is already filed and business name is ABC Trading & Online
Nature of bussiness shown in ITR- Electronic Goods and Accessories
Click to expand...

friends2b11 said:
I have placed various orders from Flipkart with Flipkart Axis Bank credit card and after buying those orders sold them outside at lower prices.I gave the outside shopkeeper a lower price than the prize I bought.But since I got five percent cashback, I got some profit and not loss.

Besides credit card payment showed deposit for which I have already replied with bank statement.And all the deposits were made by myself and no money was sent to anyone.

Can I now tell the income tax department that I used to run a cyber cafe and have customers there and for them I bought these things with my credit card.
Income tax department has asked me for credit card statement and which I will send them.
But income tax asked me about the payment I sent and their details and PAN number but I don't have any details.

And yes I have been filing regular income tax for 3-4 years and I show that my income is less than 5 lacs in the year.
And since I didn't file income tax on time I also paid 1000 late payment fee.


I got this notice from it dept-

Please refer to the notice under section 133(6) issued from this office and the subsequent reply made by you. Please note that as per
the Trading & Profit and Loss Account furnished by you, the total sales is Rs.18,xx,xxx/- whereas as per information, your total
payment by credit card amounts to Rs.25,xx,xxx/-. So you are requested explain the issue and submit the details of the person
(including PAN and Contact number) for whom the payment has been made. You are also requested to submit the credit card
statement for the F.Y. 2020-21. You are requested to comply within xx/xx/2023.
Response to the letter can be furnished through Compliance Portal only.

I have done a lot of shopping with credit cards for the rest of the years but since I paid the income tax on time I didn't get the notice.
Income tax notice was sent to me because I did not fill the income tax in that year but after sending the income tax notice I paid the income tax with late payment free.

To the first notice I have given the reply in due time and this is the second notice that I have been questioned again.
Now how do I give the reply to the IT department yes I will send the cc statement but how do I tell them can someone explain me so that I can give the reply properly.

Screenshot20230927200413-02

Screenshot20230927200821-01


This is the original notice which I received two to three months ago.At that time I had not filled ITR for that year and I was asked to fill revised ITR and I filled ITR with late payment fee ( 1000 INR ).

And I gave answers to the questions that were put to me and I also sent my trading PL statement statement and bank statement.

But today I got another reply to that notice.

Screenshot20230927203239-01

Remaining year ITR-4 is already filed and business name is ABC Trading & Online
Nature of bussiness shown in ITR- Electronic Goods and Accessor
Click to expand...
 

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friends2b11 said:
There is even a matter of buying something from a credit card that I have to buy from my income for that year ?

I can buy any goods with my credit card from my capital right ?

And here the money that I have deposited in my account is because I will make the credit card payment.
Click to expand...
Sure, you can - as long as you can prove that it is your capital.

Where did that "your capital" come from? Did you steal? Is it black money? Is it income that you are earning but not declaring and evading taxes? That's probably what ITD would assume unless you prove otherwise...
 
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gowthamv said:
yeah the amount is huge. I accept that.

But, let's again consider another scenario for example.

A manufacturing firm near X's house gets electricity bill of 2L per month.
X pays their Electricity Bill using his Credit card for getting rewards.
The manufacturing firm deposits the amount of 2L in X's bank account.
X uses that amount to pay his CC bill.

Again, I am aware that this is completely against Credit Card's T&C.

But, why should X pay income tax for the amount he receives from the manufacturing firm?
Click to expand...
What I think for this is
1) X has to file business return and file income tax on rewards
2) Manufacturing firm should be ready to give confirmation that they allowed to pay - in case such query raised
 
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TheTrickySid said:
View attachment 30719
@FINOKAKA
Click to expand...
🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏
friends2b11 said:
There is even a matter of buying something from a credit card that I have to buy from my income for that year ?

I can buy any goods with my credit card from my capital right ?

And here the money that I have deposited in my account is because I will make the credit card payment.
Click to expand...
Mera ak hi suggestion hoga koyi income tax officer ki beti se shadi kar lo ... Nahi too gopal sharma vai ki CA ko pakdo 😎
 
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