Unexplained household expenditure requires proof of actual incurrence; lifestyle indicators alone cannot justify an estimated addition.

Estimated addition for undisclosed household expenditure in block assessment could not be sustained because unexplained expenditure must be supported by material showing actual incurrence and its unexplained character. Chapter XIV-B applies to undisclosed income linked to income or property not disclosed as required under the Act, and a mere inference from lifestyle, status, or presumed standard of living is insufficient. On the facts noted, there was no evidence of proved unexplained domestic expenditure during the relevant years, so the estimate was deleted.

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Issues: Whether the addition made on account of estimated undisclosed household expenditure in block assessment was sustainable in the absence of evidence of actual unexplained expenditure.

Analysis: Chapter XIV-B contemplates taxation of undisclosed income, but the term must be linked to income or property not disclosed or not required to be disclosed under the Act. For an addition under the provision dealing with unexplained expenditure, the Assessing Officer must first establish, on the basis of material or evidence, that such expenditure was in fact incurred and remained unexplained. Mere conjecture, status, or a presumed high standard of living is not enough. In the present case, there was no finding of proved unexplained domestic expenditure during the relevant years, and the assessee's overall circumstances, including the absence of taxable income in the earlier years and his bachelor status till 1992, did not justify the estimate made.

Conclusion: The estimated addition for household expenditure was not sustainable and was deleted.

Ratio Decidendi: An addition for unexplained expenditure cannot be sustained on mere estimate or inference from lifestyle indicators without material showing actual incurrence of such expenditure and its unexplained character.

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