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U* Assuming the son in a family of 3 earning members (mother, son & his wife) owns a good credit card like HDFC Infinia.
* Wife & mother also spend decently every month using the son’s credit card or add on credit card. Example : say Rs. 30000 p.m. each.
* And in turn both willingly also pay Rs. 30000 every month to the credit card company i.e. HDFC ( for their fair share of the spends).
* The rest of the monthly bill amount is paid by the son himself as that are his own or household expenses.* The annual spends on this credit card become more than 80% of the annual income of son.
* Surely, Income tax department does track these spends and also reports them in the son’s annual income sheet (AIS).I read in the news that a person using their good Credit Card for their friend’s spends just to get reward points, was fined as total spends were more than his income.
Need to understand:
**1- what will be consequences in the above described family scenario?**
**2- Will the IT department be okay or attack the son some day?**
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NIT department does not “attack” people, they just send notices asking for further details or evidences.
In your case everything seems perfectly fine, 99% chance son will not even get a notice if he files ITR properly and reports all his income and also wife and mother file their ITRs for their incomes. In case any notice is issued son can always provide evidences in the form of card and bank statements. Nothing in this scenario is illegal.
It is not always necessary that expenditure should be within the income reported for that year. One may spend previous years’ income/savings, spend money gifted by close relatives (exempt from tax) etc. IT tracks any expenditure which is several times higher than reported income (over few previous years), they dont bother about one off cases like this,
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