No Additions Invoking Sec. 69B if Exp. Was Held Disallowable u/s 40A(3) & Not for Unexplained Exp. | ITAT

  • News|Blog|Income Tax|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 27 May, 2024

Disallowable u/s 40A(3)

Case Details: Gurinder Makkar vs DCIT - [2024] 162 731 (Chandigarh-Trib.)

Judiciary and Counsel Details

    • Vikram Singh Yadav, Accountant Member & Aakash Deep Jain, Vice President
    • Sudhir Sehgal, Adv. for the Appellant.
    • Smt. Amanpreet Kaur, Sr. DR for the Respondent.

Facts of the Case

The assessee was engaged in the manufacturing of fabrics and readymade garments. A survey action under section 133A was conducted at the business premises of the assessee wherein the assessee surrendered an amount on account of excess stock over and above its normal business income, discrepancy in cost of building and on account of disallowance under section 40A(3).

Subsequently, the assessee filed its return of income by declaring total income, including the surrendered income. The Assessing Officer (AO) contended that the surrendered income on account of cash expenditure was chargeable under section 69B and to be taxed as per the provisions of section 115BBE.

Aggrieved by the order, the assessee preferred an appeal to the CIT(A). The CIT(A) confirmed the AO’s additions, and the matter reached the Amritsar Tribunal.


The Tribunal held that there was no finding that cash expenditure had been found and that it had not been accounted for. In such a situation, it was not understood as to how the deeming provisions can be invoked.

Where the expenditure has been held disallowable in terms of section 40A(3), which means that certain expenditure has been incurred, accounted for in books of accounts and is incurred in cash in violation of section 40A(3), the question of unexplained expenditure or unaccounted expenditure doesn’t arise for consideration.

Hence, the action of the AO in invoking the deeming provisions in this regard was to be set aside.

List of Cases Referred to

    • CIT v. Deepak Agarwal [2013] 35 293/357 ITR 741/216 Taxman 153 (Allahabad) (para 6.6)
    • Famina Knit Fabs v. Asstt. CIT [2019] 104 306/176 ITD 246 (Chandigarh – Trib.) (para 6.6)
    • Chokshi Hiralal Maganlal v. DCIT 131 TTJ (Ahd.) 1 (para 8.3)
    • DCIT v. Shri Ram Narayan Birla ITA No. 482/JP/2015 (para 8.5).

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied