CHAMRU RAM,CHANDAULI vs. DC/ACIT, CIRCLE - 3, VARANASI

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ITA 14/VNS/2023Status: DisposedITAT Varanasi05 January 2026AY 2017-2018Bench: SHRI KUL BHARAT (Vice President), SHRI ANADEE NATH MISSHRA (Accountant Member)30 pages

AI SummaryPartly Allowed

Facts

The assessee, a petrol pump proprietor, challenged additions made by the Assessing Officer under Sections 69A and 69C of the Income Tax Act, totaling Rs. 17,19,275/- and Rs. 9,07,100/- respectively, related to cash deposits during demonetization and unexplained expenses. The assessee also contested a disallowance of Rs. 1,38,143/- from workman and staff welfare expenses. The case involved a difference of opinion between the Judicial Member and Accountant Member, leading to a referral to a Third Member.

Held

The Third Member resolved the difference, holding that Section 69C was not applicable to the additions of Rs. 17,19,275/- and Rs. 9,07,100/-, thereby allowing ground 2 of the appeal. However, the disallowance of Rs. 1,38,143/- for workman and staff welfare expenses was confirmed as there was no difference of opinion among the members on this point, leading to the dismissal of ground 3.

Key Issues

The key legal issues were the applicability of Sections 69A and 69C for unexplained cash deposits and expenses during demonetization, and the validity of disallowing workman and staff welfare expenses.

Sections Cited

Section 69A, Section 69C, Section 145(3), Section 255(4)

AI-generated summary — verify with the full judgment below

(A) This appeal has been filed by the assessee against impugned appellate order, dated 19/01/2023 (DIN & Order No.ITBA/NFAC/S/250/2022-23/1048934293(1). The grounds of appeal are as under:

“1. Because it was fully explained that the books of account have been maintained in due course of business reveals fully and truly each and every aspect of business, the stock register has Assessment Year:2017-18 2 been maintained which clearly indicate the sales amount against the quantity of petrol and diesel sold by the assessee.

The learned Assessing Officer has erred and acted illegally in applying the provision of section 145(3) of the I. T. Act.

The learned CIT(A) has also erred and acted illegally in confirming the same.

Because it was fully explained that the purchase and sales of petrol and diesel i.e. petroleum product against cash were allowed during demonetization period and therefore, the provision of section 69A/69C of the Act is not applicable on the deposit in bank account during demonetization period.

The learned Assessing Officer has erred and acted illegally in not placing reliance on the same and erred and acted illegally in applying the provision of section 69A/69C of the I. T. Act on the excess amount and adding back Rs.17,19,275/- u/s 69A of the I. T. Act as well as Rs.9,07,100/- u/s 69C of the I. T. Act.

The learned CIT(A) has also erred and acted illegally in confirming the same.

Because the learned Assessing Officer has erred and acted illegally in disallowing Rs.1,38,143/- out of workman and staff welfare expenses.

The learned CIT(A) has also erred and acted illegally in confirming the same.

Because the assessment is bad both on facts and in law and not maintainable.”

(B) In this case, there was difference of opinion between Hon'ble Judicial Member and Hon'ble Accountant Member. The question of difference between the Division Bench of the Members is as under:

“(1)Whether in the facts and circumstances of the case, the provisions of section 69C are not attracted in respect of the disallowance made by the Assessing Officer on account of unexplained expenses under Assessment Year:2017-18 3 head compensation to employees/salary and wages or the issue is required to be set aside to the record of the Assessing Officer for fresh adjudication ?”