Trading addition remanded for fresh verification; unsupported affidavit held insufficient to prove claimed expenditure.

A trading addition based on rejection of books and estimated gross profit was found to have been deleted on a cryptic appellate record, so the matter was remanded for fresh adjudication after relevant material, including the re-cast trading account and inventory, was verified. On the claimed expenditure linked to a property dispute, the assessee failed to produce receipts or other credible corroboration, and an affidavit alone was held insufficient to prove actual incurring of the expense. The deletion of that addition was therefore set aside, while the short-term capital gains-related addition was restored.

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Issues: (i) Whether the deletion of the trading addition required interference or the matter needed fresh adjudication on the basis of relevant material; (ii) Whether the assessee had satisfactorily proved the alleged expenditure of Rs. 3.50 lakhs and the deletion of the addition relating to short-term capital gains could be sustained.

Issue (i): Whether the deletion of the trading addition required interference or the matter needed fresh adjudication on the basis of relevant material.

Analysis: The assessment proceeded on rejection of the books of account and the trading addition was sustained by the Assessing Officer on the basis of estimated gross profit. The appellate finding deleting the addition was found to be cryptic and not supported by adequate material, while the assessee's re-cast trading account and fresh inventory required proper verification. The record was therefore considered insufficient for a conclusive finding at the appellate stage.

Conclusion: The issue was remanded to the appellate authority for fresh adjudication after bringing on record the relevant material.

Issue (ii): Whether the assessee had satisfactorily proved the alleged expenditure of Rs. 3.50 lakhs and the deletion of the addition relating to short-term capital gains could be sustained.

Analysis: The assessee claimed that part of the sale consideration was spent on settling a property dispute, but no receipt or other credible corroborative evidence was produced to show actual incurring of the expenditure. The explanation was unsupported by the books of account and remained unverified by documentary material. An affidavit, without supporting evidence, was held insufficient to discharge the onus of proof in the facts of the case.

Conclusion: The deletion of the addition was set aside and the Revenue's ground on this issue was allowed.

Final Conclusion: The appeal succeeded only in part, with one issue sent back for reconsideration and the other decided against the assessee on merits.

Ratio Decidendi: A claimed expenditure must be proved by credible corroborative evidence, and an unsupported affidavit does not by itself discharge the assessee's burden of proof; where the appellate finding on a trading addition is inadequately reasoned and material verification is incomplete, remand is warranted.

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