Mumbai businessman’s ₹6.42 lakh work travel claim denied as he used his wife’s credit card; here’s what ITAT ruled

A Mumbai businessman's claim for ₹6.42 lakh in business travel expenses was rejected by the income tax department after he paid these bills using his wife's credit card. The department questioned the deduction despite the expenses being incurred for business purposes.

This case concerns a resident of Kanjur Village Road in Mumbai who travelled to Paris, Russia and other countries for professional requirements, according to a news report by The Economic Times.

According to the submissions before the tribunal, he incurred total travel expenses of ₹20.32 lakh. Of this amount, he paid ₹6.42 lakh using his wife's credit card, which was reimbursed by him after returning to India.

However, the income tax department was not convinced by his explanation. It argued that the ₹6.42 lakh remains unexplained, as his wife had no connection with his business travel, and the expenses in questions were made using her credit card. The income tax assessing officer (AO) consequently disallowed the expenditure from the assessee's business income.

What did the tax officer find?

The income tax officer also examined the other travel expenses claimed by the businessman. He found that ₹1.49 lakh had been paid in cash and disallowed 20% of the amount, citing difficulties in fully verifying the expenses.

He also made a further disallowance of 20% on the remaining foreign travel expenditure of ₹12.4 lakh due to the businessman's failure to furnish details of the foreign travel expenses, including the particulars of the persons who travelled, and the services rendered by them.

Another issue was the mismatch between the income disclosed by the businessman in his books of accounts and income reflected in his Form 26AS. While it showed income of ₹79.87 lakh, the taxpayer had reported ₹75.51 lakh in his books. The difference of ₹4,36,400 was also sought to be brought to tax.

As a result, the businessman was tangled in two key disputes, which included business expenditure made using wife’s credit card, as well as income mismatch shown in Form 26AS and books of account.

Under the Income-tax Act, specific professionals, business owners, and all corporate entities must maintain books of account based on their profession type, income, and gross receipt.

Meanwhile, resident individuals eligible for presumptive tax scheme under section 44AD are not required to maintain books of account unless their income exceeds the maximum exemption limit and has opted for the presumptive scheme in any of the last five previous years but does not opt for the same in the current assessment year, according to tax department's website.

Businessman approaches higher authorities

Feeling aggrieved by the decision, the businessman filed an appeal before the Commissioner of Appeals (CIT A), but the authority rejected his appeal. He did not stop there and sought relief from other higher authorities.

Through his chartered accountant, the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT) Mumbai.

On August 31, 2026, the tribunal granted partial relief to the businessman regarding the travel expenditure made using his wife’s credit card. However, it sent the issue regarding the mismatch between income shown in Form 26AS and books of accounts back to the tax officer for further verification.

In its judgement, ITAT Mumbai ruled that there is nothing in law that prevents an individual from incurring business expenditure using the credit card of his spouse and subsequently reimbursing these expenses to the spouse.