Chamru Ram Vs ACIT (ITAT Varansi)
Section 69C Not Applicable to Salary/Wages Disallowance Where Source Is Explained
The appeal concerns assessment year 2017–18 and arises from an order passed by the National Faceless Appeal Centre confirming additions and disallowances made by the Assessing Officer (AO). The assessee challenged the assessment on multiple grounds, including rejection of books of account under section 145(3), additions under sections 69A and 69C relating to cash deposits during the demonetisation period, and partial disallowance of workmen and staff welfare expenses.
Grounds of Appeal
The assessee contended that:
- Proper books of account were maintained in the regular course of business, including a stock register reflecting quantities and sales of petrol and diesel.
- Cash purchases and sales of petroleum products were permitted during the demonetisation period, and therefore bank deposits during that period could not be treated as unexplained under sections 69A or 69C.
- Disallowance of a portion of workmen and staff welfare expenses was unjustified.
- The assessment was bad in law and on facts.
Difference of Opinion Between Members
While adjudicating the appeal, a difference of opinion arose between the Judicial Member (JM) and the Accountant Member (AM) on a limited issue:
Whether section 69C was applicable to the disallowance made on account of unexplained expenditure relating to compensation to employees, salary, and wages, or whether the issue required restoration to the AO for fresh adjudication.
