TMI Blog2018 (9) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of credit card expenditure - return filing under wrong PAN - Held that:- In the case in hand, the income as considered escaped assessment in the reasons recorded by the AO was very much part of the salary income which was finally assessed by the AO. As regards the return of income filed by the assessee on 28th July, 2008, admittedly the assessee has filed the said return of income under PAN : AJFPG 6152 K whereas the correct PAN of the assessee is AEXPG 3058 D. The assessee had admitted that the return was filed under wrong PAN. AO has recorded in the reasons that as per the record the assessee did not file any return of income, therefore, the non availability of the return of income in the system and with the AO at the time when the AO proposed to initiate the proceedings under section 147/148 of the Act is not in dispute, though in the enquiry conducted by the AO prior to the issue of notice under section 148 the assessee pointed out that he had filed a return of income on 28th July, 2008 but under wrong PAN. We find that the said response of the assessee of filing return of income under wrong PAN will not change the situation and remedy for processing the return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also noted in the reasons that as per the system no return of income has been filed for the assessment year under consideration. The assessee filed e-ITR on 24.08.2015 in response to the notice under section 148 of the Act wherein the assessee has declared gross salary income of ₹ 9,08,341/- and total income of ₹ 6,98,600/- after claiming the exemption/deduction inter-alia house rent allowance of ₹ 1,07,084/- under section 10(13A) of the Act. The AO issued notice under section 142(1) of the Act with queries and asked the assessee to justify the claim of exemption/deduction under section 10(13A) with supporting evidence. In reply, the assessee did not furnish any evidence in support of the claim and the exemption of HRA was based from the actual payment without working out the same as per Rule 2A of the IT Rules. Accordingly, the AO worked out the exemption of HRA at ₹ 16,250/- as against the claim of ₹ 1,07,084/- and disallowed balance of ₹ 90,834/-. The assessee challenged the action of the AO before the ld. CIT (A) and contended that whatever evidence available with the assessee was submitted before the AO and further the original rent receipts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Rules comes to ₹ 16,250/- being the excess of 10% of the salary or the actual rent paid whichever is less. Thus the salary of the assessee is undisputedly ₹ 9,08,341/- and 10% of the same comes to ₹ 90,834/-. Thus the excess of ₹ 90,834/- of actual rent paid is an allowable deduction and hence the difference between actual rent paid of ₹ 1,07,084/- and ₹ 90,834/- is ₹ 16,250/-. The AO has adjudicated this issue in para 3.3 and 3.4 of the assessment order as under :- 3.3. In view of the above facts circumstances of the case and the provisions of the law and above judgments, the claim of the assessee for exemption of HRA is not verifiable in absence of any substantial evidence of actual payment of expenditure as claimed exempt in respect of residential accommodation occupied by him. The assessee has failed to explain the claim of exemption of HRA with supporting evidence. From perusal of the bank statement of the assessee, it is also not verifiable whether the assessee has actually incurred of expenditure ₹ 1,07,084/- or more on payment of house rent. The assessee has not furnished any evidence to prove about submission of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the year under consideration. However, the AO has not made any addition on account of credit card expenditure in the reassessment order. Therefore, the AO cannot make any other addition. He has thus contended that when the AO has not made any addition of income which he initially formed reason to believe has escaped assessment but finally found no escapement, then it is not open to him to assess some other income. In support of his contention, he has relied upon the decision of Hon ble Jurisdictional High Court in case of CIT vs. Shri Ram Singh. 306 ITR 343 (Raj.) as well as decision of Hon ble Bombay High Court in the case of CIT vs. Jet Airways (India) Ltd., 195 Taxman 117 (Bombay). The ld. A/R has also raised an objection against the reopening and submitted that initially the assessee filed his return of income on 28th July, 2008. However, the AO did not consider the same while recording the reason for reopening and issued notice under section 148 though the return was filed under wrong PAN. However, prior to the notice issued under section 148, the AO conducted an enquiry by issuing a notice under section 133(6) and in response to the same the assessee pointed out that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 008- 09, the above transaction is not verifiable. I have therefore reasons to believe that on account of not filing of return by the assessee, income chargeable to tax has escaped assessment. In view above, I have reasons to believe that the income to the extent of ₹ 3,00,117/- has escaped assessment within the meaning of section 147 of the IT Act, 1961 and this is a fit case for issuance of notice u/s 148. Thus the AO proposed to assess the income on account of credit card bills amounting to ₹ 3,00,117/-. Though the credit card expenditure itself is not an income but the source of the said expenditure has to be explained by the assessee and, therefore, what is to be assessed as income of the assessee is the source of expenditure. The assessee filed his return of income and declared the salary income of ₹ 6,98,600/-. Therefore, the issue as raised in the reasons recorded by the AO has subsumed in the salary income declared by the assessee. The salary income is the only income of the assessee as source of the expenditure incurred by the assessee through credit card and hence this is not a case of an item of income proposed to be assessed while forming t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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