Validity of section 153D approval and seized diary evidence sustained the unexplained expenditure addition; 60% tax rate held inapplicable.

Approval under section 153D was held valid because it is an administrative safeguard, and mere brevity of reasons did not by itself prove non-application of mind; no material showed that the approving authority had failed to examine the seized and appraisal material before granting approval. The addition for unexplained expenditure under section 69C was sustained because the seized diary contained election-related entries and connecting details that, read with surrounding circumstances and the presumption under section 292C, sufficiently linked the expenditure to the assessee while the explanation offered remained incomplete and uncorroborated. The higher tax rate of 60% under section 115BBE was held inapplicable for the relevant assessment year.

---

---

Issues: (i) Whether the approval granted under section 153D was mechanical and invalid for want of application of mind; (ii) whether the addition of Rs. 42,98,086 as unexplained expenditure under section 69C was sustainable on the basis of the seized diary and surrounding evidence; and (iii) whether the tax treatment under section 115BBE could be applied at 60% for the relevant assessment year.

Issue (i): Whether the approval granted under section 153D was mechanical and invalid for want of application of mind.

Analysis: Approval under section 153D is administrative in nature and serves as supervisory confirmation of the draft assessment. The absence of detailed reasons in the approval order does not by itself establish non-application of mind. The burden to rebut the statutory presumption of regularity in official acts lay on the assessee. On the record, there was no material to show that the approving authority had not examined the seized material, appraisal material, or draft assessment before granting approval.

Conclusion: The approval under section 153D was valid and the challenge to jurisdiction failed.

Issue (ii): Whether the addition of Rs. 42,98,086 as unexplained expenditure under section 69C was sustainable on the basis of the seized diary and surrounding evidence.

Analysis: The seized diary contained election-related expenditure entries, references to the assessee, his family members, and his concerns, along with phone numbers and other connecting details. The author of the diary offered only a selective explanation and did not satisfactorily explain the full contents, source of receipts, or complete expenditure trail. The surrounding circumstances and seized material were treated as sufficient to connect the diary entries with the assessee and to reject the claim that the entries were merely estimates or belonged wholly to a third party. The presumption under section 292C and the factual links from the record were held to support the addition.

Conclusion: The addition under section 69C was sustained.

Issue (iii): Whether the tax treatment under section 115BBE could be applied at 60% for the relevant assessment year.

Analysis: The applicable tax rate had to be determined with reference to the law in force for the relevant assessment year. The higher rate of 60% was not applicable for that year, and the issue was confined only to the applicability of that rate.

Conclusion: The issue was decided in favour of the assessee to the extent that the 60% rate was held inapplicable.

Final Conclusion: The jurisdictional challenge failed, the addition for unexplained expenditure was upheld, and only the tax-rate issue was decided for the assessee.

Ratio Decidendi: Approval under section 153D is an administrative safeguard whose validity is not vitiated merely by brevity of reasons unless the assessee rebuts the presumption of regularity with material showing non-application of mind; a seized diary, read with surrounding circumstances and statutory presumptions, can sustain an addition for unexplained expenditure under section 69C where the explanation offered is incomplete or uncorroborated.

---