The Income Tax Department sent a notice asking a taxpayer to justify haircut and perfume expenses.

This is not routine scrutiny anymore.

Here’s why it matters to every taxpayer

[1] The Case

A tax notice asked a taxpayer to disclose:

Monthly grocery breakup
Haircut expenses
Perfume spending
Other personal lifestyle costs

[2] Why Would the Tax Dept Ask for Personal Expenses?

The department runs a spending vs income mismatch analysis using:

Bank withdrawals
Card transactions
Cash usage
Declared income

If your lifestyle does not match your financial trail, scrutiny begins.

[3] Who Is Most Likely to Get These Notices?

• High declared income
• Low bank withdrawals
• Heavy cash spending observed
• Business owners, professionals, freelancers
• Inconsistent expense patterns

[4] Is the Department Legally Allowed to Do This?

Yes. Under Section 142(1) of the Income-tax Act, officers can ask for:
✅Expense details
✅Source of funds
✅Supporting documents

[5] Why This Is Risky for Taxpayers

If you fail to justify personal spending:

• The department can estimate your household expenses
• That estimate can be added back to your taxable income
• You may face additional tax + interest + penalty

[6] The Real Problem Most Taxpayers Face

🔸Don’t track daily cash spends
🔸Don’t keep bills for vegetables, salons, fuel, tips
🔸Mix business and personal cash

This creates exposure during scrutiny, even for honest taxpayers.

[7] What To Do If You Receive Such a Notice

🔸Verify the notice on the official income-tax portal
🔸Submit all available proofs: Bank statements, Card statements, Rent, EMI, utilities, etc
🔸For cash spends, give a reasonable, consistent explanation
🔸Take CA support immediately