Section 69B addition upheld where comparable sales and surrounding circumstances showed undisclosed investment beyond book value.

Section 69B permits an addition where surrounding material shows the assessee expended more on an investment than the amount recorded in the books and no satisfactory explanation is offered. Fair market value alone is not conclusive, but the Revenue may rely on comparable sales, valuation material, and other circumstances to draw a reasonable inference of undisclosed investment. On the facts noted, the recorded purchase price was substantially below local market rates, comparable instances were available, and the explanation was unacceptable, so the addition was sustained in favour of the Revenue.

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Issues: Whether the addition under section 69B of the Income-tax Act, 1961, based on the estimated fair market value of the plot and the surrounding circumstances was justified.

Analysis: Section 69B permits an addition where the Assessing Officer finds that the amount expended on an investment exceeds the amount recorded in the books and the assessee offers no satisfactory explanation. Merely because fair market value is higher does not by itself justify an addition, but the Revenue can discharge its burden by establishing facts and circumstances from which a reasonable inference arises that the actual investment was more than what was disclosed. On the facts found by the income-tax authorities, the assessee recorded a purchase price that was roughly half the prevailing rate in the locality, comparable sales were available, and no acceptable explanation was offered for the substantial difference. The valuation report and the surrounding material were sufficient to support the inference that the real consideration exceeded the amount shown in the books.

Conclusion: The addition under section 69B was rightly sustained and the issue is decided in favour of the Revenue.

Final Conclusion: The reference was answered against the assessee and in favour of the Revenue, with the Tribunal's view on undisclosed investment upheld.

Ratio Decidendi: An addition under section 69B can be sustained when the Revenue, on the basis of material circumstances and comparable evidence, reasonably infers that the assessee expended more than the amount recorded in the books, even though fair market value alone is not conclusive.

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