Unexplained expenditure cannot be added on mere estimate when household withdrawals and family drawings are already supported by records.

An addition for alleged low household withdrawals was deleted because it was based only on estimate and not on evidence of actual unexplained expenditure. Section 69C applies only where expenditure is actually incurred and its source remains unexplained; it does not permit a conjectural addition. The record showed no search material or other proof that the assessee had spent more than the drawings disclosed, and the family drawings taken together were higher than the amount assumed. The estimate also failed to account for related disallowances already made in the business concern for personal elements such as electricity, telephone, conveyance and vehicle depreciation.

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Issues: Whether the addition made on account of alleged low household withdrawals could be sustained where no material was found to show that the assessee had incurred expenditure higher than the drawings shown, and where the family drawings and the disallowances made in the business concern were also not properly considered.

Analysis: The addition rested only on estimate. Section 69C applies where expenditure is actually incurred and the source remains unexplained; it does not authorise addition merely on conjecture. No search material or other evidence established that the assessee had incurred the estimated personal expenditure. The drawings of the assessee's family members were also on record and, when taken together, were higher than the amounts assumed by the Assessing Officer. The estimate further ignored related disallowances already made in the firm for personal elements such as electricity, telephone, conveyance, and vehicle depreciation. The estimate was therefore not supported by the facts on record.

Conclusion: The addition for low household withdrawals was deleted and the assessee succeeded.

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