Have you ever been called for a scrutiny by the tax authorities for high credit card spends? If yes, what happened afterwards.

[yashbhavnani]

Please narrate your experience of going through this situation. Thanks in advance.

 

[Strange]

In Fy 2011-12
I had file return of income of around 3L against my salary
But I made a transaction of 3L in cash deposit and 3L of credit card transaction
So they added 3L salary 3L cc and 3L deposit as my income and demanded tax and penalty and interest on it
They sent me notice in 2019 a year before lockdown. Around 1 year in lockdown nothing moved they block my icici salary account with 1.5L amount lein (total demand)
Finally after numerous visits and giving handwritten application they released the amount

I paid finally 75k due as demand without penalty (waived in vivaad se viswas scheme 2021) but still waiver not reflecting so they showing outstanding balance and adding around 20k interest on it per year

@wokrishnahai CC Transaction below 10L doesn't get reported to AIS but still he got notice for 3L spend on his CC. Can you tell us why?

 

[wokrishnahai]

@wokrishnahai CC Transaction below 10L doesn't get reported to AIS but still he got notice for 3L spend on his CC. Can you tell us why?

Hey, So I have never mentioned anywhere that the criteria for notice are Rs. 10Lac AIS reporting.

The criteria are Simple If your Expense is more than your Income then you may get a notice from the IT dept. It has nothing to do with the 10 LAC thing.

In his case, his salary was Rs. 300,000 and he filed a return for the same. Matter closed.

BUT

IT Dept issues a notice asking for an explanation before issuing a demand Notice or blocking your ones account. He must have been issued the notice but either his email address/personal address wasn't updated in the system. Or the notice was served online and he never replied to it in the given time about giving an explanation of those 3 lac cash + 3 Lac CC expenses.

As for the other two amounts let's understand them:

3 Lac Deposit in Cash?
If he can explain that deposit and has got proof then he can present the same to IT Dept. The only way to justify Cash is to have a reference entry for the same. If that is a gift from his family then he has to submit a proper explanation for that. He couldn't so that is considered his income.

3 Lac Expense on CC?
Any transaction done on a credit card is considered an expense in the eyes of the IT Dept. Unless otherwise proved by the individual on whom notice has been served. So given that this was done in 2011-12 He might not have maintained the proper records of it and again couldn't provide an explanation for the expenses. So again it would be considered his income and will be added accordingly.

See any thing which is passing through your Savings/ Current accounts has to have accounted for it. Without proper accounting, you are in For a ride with the IT officials.

He could have contacted a CA and a CA might have guided him better.


I hope this clarifies your query.

 

[Deleted member 9785]

Thes

Even 3L income/spends cases are also being investigated is really an eye-opener.. and here everyone is talking about 10L limit per bank etc. Even the IT notice seems to be touching the 7-year limitation period

These days notices even come for Rs 100. Its all automated.

Good thread for people who take IT department as clowns

 

[great]

Hey, So I have never mentioned anywhere that the criteria for notice are Rs. 10Lac AIS reporting.

The criteria are Simple If your Expense is more than your Income then you may get a notice from the IT dept. It has nothing to do with the 10 LAC thing.

In his case, his salary was Rs. 300,000 and he filed a return for the same. Matter closed.

BUT

IT Dept issues a notice asking for an explanation before issuing a demand Notice or blocking your ones account. He must have been issued the notice but either his email address/personal address wasn't updated in the system. Or the notice was served online and he never replied to it in the given time about giving an explanation of those 3 lac cash + 3 Lac CC expenses.

As for the other two amounts let's understand them:

3 Lac Deposit in Cash?
If he can explain that deposit and has got proof then he can present the same to IT Dept. The only way to justify Cash is to have a reference entry for the same. If that is a gift from his family then he has to submit a proper explanation for that. He couldn't so that is considered his income.

3 Lac Expense on CC?
Any transaction done on a credit card is considered an expense in the eyes of the IT Dept. Unless otherwise proved by the individual on whom notice has been served. So given that this was done in 2011-12 He might not have maintained the proper records of it and again couldn't provide an explanation for the expenses. So again it would be considered his income and will be added accordingly.

See any thing which is passing through your Savings/ Current accounts has to have accounted for it. Without proper accounting, you are in For a ride with the IT officials.

He could have contacted a CA and a CA might have guided him better.


I hope this clarifies your query.

To tell you frankly I was overconfident that I may not receive such notice . I am too small fish that IT people will come behind me. But I was taken by surprise.

Now as says दूध का जल छाछ को भी फूंक I am prepared now. all small details are maintained and more importantly spend in limits.

 

[wokrishnahai]

https://www.livemint.com/money/pers...out-rewards-but-has-risks-11687194465449.html

Give a read. It is for those who are mindlessly busy making reward point by using their credit card for others.

 

[Card noob]

To tell you frankly I was overconfident that I may not receive such notice . I am too small fish that IT people will come behind me. But I was taken by surprise.

Now as says दूध का जल छाछ को भी फूंक I am prepared now. all small details are maintained and more importantly spend in limits.

But isn't that a harassment. After 7 years they had come from sleep and flag such case and then they couldn't do anything in the case of all big fish who escaped India or still committing fraud on a big level.
Too bad that you had to face this

 

[VijayflyRaven]

I spent just 2 lakhs on Citibank credit card and they reported it. My income was zero. I had to explain that I spent from previous year savings. Had to submit details of it.

 

[wokrishnahai]

I spent just 2 lakhs on Citibank credit card and they reported it. My income was zero. I had to explain that I spent from previous year savings. Had to submit details of it.

2 Lacs, seriously?

Who reported it, the bank?

 

[VijayflyRaven]

2 Lacs, seriously?

Who reported it, the bank?

It must be Citibank. I used Citibank credit card to buy stuffs when income became zero. I went from an employee to a student. So I had to show savings and FD from previous year to IT. I also showed that I had to break FD to pay credit card. They were satisfied.

If I had known about this, I would have paid using debit card or cheque or cash. Waste of time to go and explain it. Citibank helped with detailed bank statement for previous 3 years.

 

[Deleted member 9785]

I spent just 2 lakhs on Citibank credit card and they reported it. My income was zero. I had to explain that I spent from previous year savings. Had to submit details of it.

One should always file ITR below taxable limit. Whats the harm

 

[VijayflyRaven]

One should always file ITR below taxable limit. Whats the harm

There is no harm. We must file the actual. If I earned zero, I will report zero. But if we use credit card using previous savings, IT does not consider it and will send conpliance notice.

 

[wokrishnahai]

T

One should always file ITR below taxable limit. Whats the harm

True that is. There is no harm in filing an IT return.

 

[CardSeeker]

But isn't that a harassment. After 7 years they had come from sleep and flag such case and then they couldn't do anything in the case of all big fish who escaped India or still committing fraud on a big level.
Too bad that you had to face this

Yeah They Always Fall Behind Small Fishes And Leaving BIG Fishes

 

[CardSeeker]

It must be Citibank. I used Citibank credit card to buy stuffs when income became zero. I went from an employee to a student. So I had to show savings and FD from previous year to IT. I also showed that I had to break FD to pay credit card. They were satisfied.

If I had known about this, I would have paid using debit card or cheque or cash. Waste of time to go and explain it. Citibank helped with detailed bank statement for previous 3 years.

When This Was Happened?

 

[VijayflyRaven]

When This Was Happened?

If my memory serves me right, transaction was in 2011 and received notice in 2015 or 2016.

 

[CardSeeker]

If my memory serves me right, transaction was in 2011 and received notice in 2015 or 2016.

Yeah That Time Limits Are Very Less So They Reported I Think

Now Limits Revised