ITAT Delhi Remands Salary Addition for Fresh Check, Deletes Credit Card Expense Addition

ITAT Delhi sent the salary addition back for fresh verification after noting mismatches between Form 16 and Form 26AS, but deleted the credit card expense addition, holding such spending reasonable for a high-income taxpayer. The appeal was partly allowed.

The present appeal was raised by Ravinder Singh before the ITAT Delhi, challenging an order passed by the NFAC Delhi on March 24, 2025, in favour of the tax authorities. Ravinder Singh had not filed his income tax return (ITR) for the assessment year 2014-15. The name of the taxpayer appeared in the list of cases where huge financial transactions were made, and the ITR for the relevant period was not filed. The income tax department started the reassessment proceedings on the case under Section 147 of the Income Tax Act, 1961, on the belief that income had escaped assessment. resulting in the tax officer raising an addition of Rs. 530,581 to the taxpayer’s income on the grounds of an unexplained source of income for credit card expenses and Rs. 11,651,280 on the grounds of receipt of salary.

Dissatisfied Ravinder Singh filed an appeal before ITAT Delhi, where he argued that the CIT(A) mistakenly confirmed both the additions; however, his actual salary was Rs. 96,17,602 and not Rs. 1.16 crore. He further argued that the tax authorities did not properly examine the details of Form 16 with Form 26AS, leading to a discrepancy. He further said that a person earning nearly Rs. 96 lakh annually can easily spend around Rs. 5.3 lakh on credit cards; therefore, this expense should not be treated as undisclosed income.

The tribunal found the arguments served by Ravinder Singh that the tax authorities did not properly check the details of Form 16 with Form 26AS as genuine and hence decided to remand the case back to the tax authorities for fresh verification of the salary details. The tax officer has been instructed to recheck the documents and decide again after allowing the assessee to explain everything.

Regarding the credit card expenses, the Tribunal agreed with the assessee. It held that a person with such a high salary can easily spend Rs. 5.3 lakh on a credit card. Therefore, the addition made by the tax officer on this point was deleted.

In the end, the Tribunal partly allowed the appeal. The issue of salary addition will be re-examined, but the credit card addition has been removed. The assessee is required to cooperate and provide all necessary documents during the fresh assessment process.