Unexplained investment in ball-bearings rejected where records showed old scrap items and no evidence of undisclosed purchase.

An addition for alleged unexplained investment in ball-bearings was deleted because the assessee showed the items were old, unserviceable and treated as scrap, and the business records did not evidence any fresh unexplained purchase during the year. The appellate authority accepted this factual explanation after considering the prior year repair account and the Revenue's failure to bring evidence of undisclosed acquisition. The Tribunal found no basis to disturb that appreciation of evidence, and the deletion of the addition was upheld.

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Issues: Whether the addition made on account of alleged unexplained investment in ball-bearings was sustainable.

Analysis: The assessee explained that the ball-bearings were old, unserviceable and treated as scrap, and that the business records did not support any fresh unexplained purchase during the year. The appellate authority accepted the explanation after considering the material on record, including the prior year repair account and the absence of evidence brought by the Revenue to prove any undisclosed acquisition. The Tribunal found no reason to interfere with that factual appreciation.

Conclusion: The addition was rightly deleted and the assessee succeeded on the issue.

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