Got income tax notice for credit card spends

[friends2b11]

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.

 

[KLB@96]

Can you explain point number 4 in a bit more details sir.

Paying from SB would trigger if the original purchase was non personal, even after recieving the exact same amount money (not more or less), from the beneficiary of that purchase?

Pls explain sir

yes what is point num 4 ? i spend using my cc and i get cash in my savings account and i pay bill using that again

 

[RAMESH BABU N]

1. It is OK to help your immediate family members by using your CC (one or more) for their occasional purchases. If such expenses are regular n repeated, give them ADD-ON cards.

2. For all others (extended family members, family friends, extended family friends, colleagues, locality neighbours...), AVOID using your CC for their purchases. It is better to have a business CC to help all such "outsiders" than using your personal CC.

3. Similarly, AVOID using your personal CC for ANY business use - their's or even your's.

You can use your personal SB account for trxns of 1 listed above. It's good to AVOID 2 and 3 type of trxns listed above thru your personal SB account.

It's irrelevant whether they gave you cash, or credited into your account (cash or transfer or clearing or from abroad) for their purchases.

Remember, it is ALWAYS YOU who needs to answer all uncomfortable questions.

 

[drsel]

Even if you have only SB accounts, there's no issue. The triggering points could be :

1. Students/unemployed - with no declared income n ITRs - excessive use of CCs - trxns running into lakhs - per annum.

2. Self Employed - with low ITRs - but CC trxns running into Lakhs every month.

3. Using only one CC for over 10L cululative total of trxns in a year.

4. Using SB account for for CC payments - where non-personal use of CC is predominant.

5. Using SB account for Business Card payments - even by Self Employed or Professionals. This is where a business Current Account helps.

6. Dealing in speculative sites n crypto curreny dealings.

7. Salaried - spending in excess of ITR figures thru CCs.

8. Earlier - (now not possible) - paying advance amounts in CC accounts by cash.

9. Buying lot many pre-paid Gift Cards n pre-paid CCs.

The above are some of the known trigger points. There could be many.

What about using your debit card instead of credit card? Will there be any triggers, if so which?

 

[RAMESH BABU N]

What about using your debit card instead of credit card? Will there be any triggers, if so which?

Using CC beyond set parameters MAY attract ITD's attention n Notices n even scrutiny.

But, using SB/DC beyond the T&C of SB/DC will be closely monitored n reported by your Banker to the various controlling agencies (which also include RBI, ITD).

Banker may Proactively initiate some actions like blocking or even closing your account. The other controlling agencies can initiate their own actions as per their standards.

So, decide for yourself.