1.12 Crore Income Tax Notice for Credit Card usage !

[ramkumar_yramkumar_y is verified member.]

Recently a video posted on Taxpuram Youtube channel (Tamil) discusses about Rs.1.12 Crore Income Tax Demand Notice received by one of his clients for spend of Rs.68.97 Lakhs in AY 2020-21. * LINK TO VIDEO *

Income Tax Notice is issued under Section 156 of IT Act demanding ₹1.12 crore from one of his clients in Chennai. The person made transactions for Rs.68.97 Lakhs by Credit Card money rotation, lending card to friends and not filing returns since 2020-21. He spent Rs.68.97 lakhs using his HDFC Bank and SBI Credit cards which is treated by Income Tax Dept as unexplained expenditure u/s 69C of IT Act.








There's another video on same case posted by Tamil Tech Youtube channel A2D Channel * VIDEO LINK *

Even though we've discussed about possible IT Notice for High Credit Card spends and even cases about receiving Notice for Credit cards, this looks like the first case with IT Demand above 1 Crore for such usages?

Kindly share your views on this and also feel free to edit this Wiki post to add more information related to this 🙏

 

[rajarancho]

Wow. 1-2% chakkar mein 30-40% money gaya .. he rotated money.. now he needs to rotate bw court and it dept.

 

[kumars_001]

I guess form 26AS is where we check the credit card spends right

 

[TechnoFinoTechnoFino is verified member.]

This is a classic case of credit card spends being misinterpreted as income by the IT department. ₹68.97 lakhs spent doesn’t mean that much income was earned... it could very well be credit card rotation, loans, or money already taxed.

The notice under Section 156 and addition under Section 69C (unexplained expenditure) usually happens when a taxpayer doesn’t file returns or fails to explain the source of funds. Since this person hasn’t filed returns since AY 2020–21, the IT Dept is treating the spends as unexplained and taxing it at 60%+ penalty, which resulted in the ₹1.12 crore demand.

The right approach here is not to panic but to reply through a qualified CA or tax lawyer, submit bank statements, card statements, and proof of income/funds. Once explained properly, the demand should come down drastically or even get dropped.

Moral of the story: high credit card usage is not a problem, but always file ITR and keep proper documentation so spends are matched with income.

 

[Wealth is my birth right!]

This is a classic case of credit card spends being misinterpreted as income by the IT department. ₹68.97 lakhs spent doesn’t mean that much income was earned... it could very well be credit card rotation, loans, or money already taxed.

The notice under Section 156 and addition under Section 69C (unexplained expenditure) usually happens when a taxpayer doesn’t file returns or fails to explain the source of funds. Since this person hasn’t filed returns since AY 2020–21, the IT Dept is treating the spends as unexplained and taxing it at 60%+ penalty, which resulted in the ₹1.12 crore demand.

The right approach here is not to panic but to reply through a qualified CA or tax lawyer, submit bank statements, card statements, and proof of income/funds. Once explained properly, the demand should come down drastically or even get dropped.

Moral of the story: high credit card usage is not a problem, but always file ITR and keep proper documentation so spends are matched with income.

Yes I saw that video where user said he give his card to friends and they will swipe upto 3lakhs in a month and pay it later lol
Moral: ITR what we file should not be less than our spends via card or cash deposits in account at bank.
Simple logic pour the water till pot fills once full don’t try in that Financial year just cool back if poured then the excess going out will bring IT notice

 

[RAMESH BABU N]

I am happy to see that ITD is really functioning well. With all the data available to it, thanks to it's AI assisted 360 degrees scanning n collating, tax evaders will be having a tough time.

More so, in the next 2-3 years.

Thumbs up to ITD.

 

[Lorddiesel]

I am happy to see that ITD is really functioning well. With all the data available to it, thanks to it's IA assisted 360 degrees scanning n collating, tax evaders will be having a tough time.

More so, in the next 2-3 years.

Thumbs up to ITD.

This is the only dept which works very well in India.

 

[Trust Me]

Moral: ITR what we file should not exceed our spends via card or cash deposits in account at bank.

Hehe ...

I think what you really meant was 'should not be less than' rather than 'should not exceed' ! 🙂

Peace.

.

 

[Wealth is my birth right!]

Hehe ...

I think what you really meant was 'should not be less than' rather than 'should not exceed' ! 🙂

Peace.

.

Sure it makes sense
Edited now thanks

 

[theflash]

I guess form 26AS is where we check the credit card spends right

A I S

 

[subham23]

Now he wants to pay that 1.12 Cr notice through credit card

 

[Wealth is my birth right!]

Now he wants to pay that 1.12 Cr notice through credit card

Lol
What will be the mcc
Which card give high rewards 😉

 

[HumorSimpson]

Now he wants to pay that 1.12 Cr notice through credit card

HDFC biz black 🖤

 

[sunit123]

Now he wants to pay that 1.12 Cr notice through credit card

Waiting for his post

"Which credit card gives maximum cashback?"

 

[desiviru]

From the wording of it, I can clearly say this is a fake notice being shared. These days many people are making videos and create fake notices.

They should share notice ID also through which others can verify whether notice is actually served by IT dept.

But yes, these fake stories can help many CC users understand that money rotation should be done in limits and stop using your father, mother or borther CC for illicit things in life.

If you think within limits you are safe then think again. You can be served notice for within limits also if there are any discrepancies.

P.S: Things like these help video makers get more and more views because the chor janta of India always live in fear of getting caught.

 

[BhaiyaJi]

I am happy to see that ITD is really functioning well. With all the data available to it, thanks to it's AI assisted 360 degrees scanning n collating, tax evaders will be having a tough time.

More so, in the next 2-3 years.

Thumbs up to ITD.

Yeah, but all these only for the service middle class.

 

[desiviru]

Yeah, but all these only for the service middle class.

You don't live among rich. Ask rich people. They will tell you how many notices they receive every year for smallest of things.

The area I live in Delhi has many 2 numbari income people and they keep getting notices almost every year. So not only middle class, tax dept eyes everyone and big fishes are always in their net.

Anyways, I am moving out of Delhi to Chandigarh on permanent basis. Will have to transfer PAN AO jurisdiction.

 

[BhaiyaJi]

You don't live among rich. Ask rich people. They will tell you how many notices they receive every year for smallest of things.

The area I live in Delhi has many 2 numbari income people and they keep getting notices almost every year. So not only middle class, tax dept eyes everyone and big fishes are always in their net.

Anyways, I am moving out of Delhi to Chandigarh on permanent basis. Will have to transfer PAN AO jurisdiction.

 

[aayusharyan]

Wow, investing so much time, money and energy into rotating funds and maximizing rewards, instead one should spend on skilling up.

 

[Wealth is my birth right!]

Wow, investing so much time, money and energy into rotating funds and maximizing rewards, instead one should spend on skilling up.

Absolutely right
Cc rewards max 2% to 33.33% whereas real life skills improved then we can generate wealth even to next generation
👍