Section 69B addition on alleged extra machinery payment fails where Revenue cannot prove assessee's unrecorded investment.

Section 69B addition for alleged understatement of the cost of imported machinery is unsustainable unless the Revenue proves that the assessee actually incurred investment or expenditure over and above the amount recorded in the books. The Tribunal found no reliable evidence that the assessee made the alleged extra payment; at most, the supplier's documents suggested a higher aggregate payment, and any excess was attributable to a third party outside the Indian tax net. Because the Revenue failed to discharge its burden of proving unrecorded investment by the assessee, the addition was rightly deleted in favour of the assessee.

---

---

Issues: Whether addition under section 69B of the Income-tax Act, 1961 towards understatement of the cost of imported machinery was sustainable when the Revenue did not establish that the assessee itself had made payment over and above the amount recorded in the books.

Analysis: Section 69B applies only when the Revenue proves that the assessee has incurred investment or expenditure in excess of the amount shown in the books of account. The Tribunal found that although the supplier's documents reflected a higher aggregate payment, there was no reliable evidence that the assessee had actually made the alleged extra payment. The finding was that the excess payment, if any, was made by a third party outside the Indian tax net, and the Revenue had not discharged its burden of proving that the assessee invested more than what stood recorded.

Conclusion: The addition under section 69B was rightly deleted and the issue was decided in favour of the assessee.

---