Unexplained income claim based on estimated personal living expenses rejected after employer-borne costs established, appeal allowed

Unexplained money under provisions concerning unexplained income was challenged on the quantum of personal living expenses attributed to the assessee for 126 days in India. The tribunal found the assessing officer's estimate lacked any comparative benchmark or defendable source and noted the employer had borne the relevant expenditures and recorded them in income computation; consequently the appellate authority's sustainment of the addition lacked credible basis and was not supportable. The tribunal deleted the addition relating to personal living expenses and allowed the appeal of the assessee.

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Issues: (i) Whether the addition of Rs.3,00,000 made under Section 69A / Section 115BBE as unexplained personal living expenses for the assessee's 126 days stay in India is justified.

Analysis: The authorities estimated monthly living expenses without reference to comparative benchmarks or verifiable data while the company had borne and accounted for the assessee's living expenses. The appellate authority allowed part of the claimed expenditure (Rs.2,00,000) as borne by the company and sustained only Rs.1,00,000. Upon review, there was no credible basis for the assessing officer's higher computation and the company-borne nature of the expenses undermined the AO's independent estimation.

Conclusion: The addition of Rs.3,00,000 under Section 69A / Section 115BBE is deleted and the appeals are allowed in favour of the assessee.

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