Third-party documents and unexplained expenditure additions fail without corroboration or proof of assessee-funded outgoings.

Third-party documents and impounded material did not justify additions where the assessee's regular books already recorded the relevant commission income and the figures would have led to duplication. The commentary also states that unexplained expenditure under section 69C cannot be added unless it is shown that the assessee actually incurred the expenditure from its own funds; entries found at a third party's premises, without corroboration, were insufficient. On the facts described, the assessee was treated as a broker or marketing associate acting as a conduit, and the Revenue's appeal failed on both additions.

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Issues: (i) Whether the deletion of the addition of Rs. 3,48,000 made on account of estimated marketing income was justified. (ii) Whether the deletion of the addition of Rs. 2,86,14,610 made as unexplained expenditure under section 69C of the Income-tax Act, 1961 was justified.

Issue (i): Whether the deletion of the addition of Rs. 3,48,000 made on account of estimated marketing income was justified.

Analysis: The addition was based on impounded documents, but the assessee had already furnished transaction-wise details and regular books showing commission income that exceeded the amount alleged by the Assessing Officer. The material relied upon by the Assessing Officer did not conclusively establish any undisclosed receipt, and the addition would have resulted in duplication of income already reflected in the regular accounts.

Conclusion: The deletion of the addition of Rs. 3,48,000 was upheld and the issue was decided in favour of the assessee.

Issue (ii): Whether the deletion of the addition of Rs. 2,86,14,610 made as unexplained expenditure under section 69C of the Income-tax Act, 1961 was justified.

Analysis: The impugned entries originated from documents found at a third party's premises and were not supported by corroborative evidence establishing that the assessee itself had incurred any expenditure. The assessee's role was found to be that of a broker or marketing associate acting as a conduit between customers and the developer, and the material on record indicated that the payments were made by plot purchasers, not by the assessee. In the absence of proof that the assessee had expended its own funds, invocation of section 69C was held to be unsustainable.

Conclusion: The deletion of the addition of Rs. 2,86,14,610 was upheld and the issue was decided in favour of the assessee.

Final Conclusion: The Revenue's appeal failed on both additions and the relief granted by the first appellate authority was sustained.

Ratio Decidendi: An addition under section 69C cannot be sustained unless it is shown that the assessee actually incurred the expenditure from its own funds, and third-party documents must be supported by corroborative evidence before they can be used to make an addition in the assessee's hands.

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