On-money additions need corroboration before extrapolation, while seized-material based unexplained expenditure can be sustained.

Alleged on-money additions cannot be extrapolated across other flats or shops merely from loose papers, draft booking forms or a third-party statement unless there is corroborative enquiry linking the cash component to identifiable transactions; on that basis, the tribunal found the wider additions unsustainable for assessment years 2017-18 and 2018-19, while accepting only the specific differential amount supported by seized booking forms for assessment year 2019-20. Separately, unexplained expenditure under section 69C was sustained where seized material showed project-related payments and the assessee failed to produce a credible explanation or supporting evidence to reconcile the entries.

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Issues: (i) Whether the addition on account of alleged on-money receipts could be sustained for assessment years 2017-18 and 2018-19 and extrapolated to other sales in the absence of corroborative enquiry and evidence; (ii) Whether the addition of unexplained expenditure under section 69C for assessment year 2019-20 was justified.

Issue (i): Whether the addition on account of alleged on-money receipts could be sustained for assessment years 2017-18 and 2018-19 and extrapolated to other sales in the absence of corroborative enquiry and evidence.

Analysis: The additions were founded mainly on loose papers, draft or alternate booking forms, and a statement recorded from a sales manager under section 131, while the assessee's managing partner denied receipt of on-money in the statement recorded under section 132(4). No buyers were examined, no cash or valuables were found, and no further enquiry was made to correlate the alleged cash component with identifiable purchasers. The Tribunal held that, although seized material could be used, extrapolation to other flats and shops could not rest on uncorroborated assumptions where the alleged practice was not independently verified in respect of those transactions.

Conclusion: The addition based on on-money extrapolation was not sustainable for assessment years 2017-18 and 2018-19, and the issue was decided in favour of the assessee. For assessment year 2019-20, only the specific differential amount evidenced by two booking forms was accepted, and extrapolation beyond that was rejected.

Issue (ii): Whether the addition of unexplained expenditure under section 69C for assessment year 2019-20 was justified.

Analysis: The seized material showed expenditure entries relating to project-related payments, but the assessee did not satisfactorily explain the source of those payments or produce supporting documentary evidence to displace the material relied upon by the Revenue. In the absence of a credible reconciliation, the Tribunal found no infirmity in the concurrent findings sustaining the addition.

Conclusion: The addition under section 69C was upheld and the issue was decided against the assessee.

Final Conclusion: The appeals succeeded on the principal issue of on-money additions for assessment years 2017-18 and 2018-19, succeeded only in part for assessment year 2019-20, and failed on the separate unexplained expenditure addition for that year.

Ratio Decidendi: An addition based on alleged on-money receipts cannot be extrapolated to other transactions without corroborative enquiry or evidence linking those transactions to the assessee, though a specific addition supported by seized material may be sustained.

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