Unexplained expenditure under section 69C fails without specific material linking the alleged payment to the assessee.

An addition under section 69C for unexplained expenditure cannot stand unless the revenue establishes, through specific material and intelligible reasoning, that the assessee actually incurred the expenditure. Where seized papers merely indicated alleged cash payments by parents of medical students, but no document or analysis linked the alleged capitation fee to the assessee personally, the adverse inference fails. On that footing, the addition was held unsustainable and deleted in favour of the assessee.

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Issues: Whether the addition of Rs. 24,00,000 made as unexplained expenditure under section 69C on account of alleged capitation fee payment was sustainable in the absence of specific material showing that the assessee himself made such payment.

Analysis: The seized material referred to by the Assessing Officer showed alleged cash payments by parents of students taking admission in medical courses, but the reasons recorded and the assessment order did not identify any cogent document or intelligible analysis establishing that the assessee had personally paid the disputed amount. The appellate authorities also did not point to any material linking the alleged capitation fee specifically to the assessee. In the absence of such nexus, the adverse inference drawn against the assessee could not be sustained.

Conclusion: The addition of Rs. 24,00,000 was not sustainable and was deleted, in favour of the assessee.

Ratio Decidendi: An addition under section 69C cannot be sustained unless the revenue establishes, by specific material and reasoning, that the unexplained expenditure was actually incurred by the assessee.

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