Unexplained Expenditure reversed where documentary evidence proved genuineness; addition deleted for lack of verification and fair hearing.

Disallowance of purchases as unexplained expenditure under Section 69C read with Section 115BBE was contested on the ground that extensive documentary evidence-purchase invoices, confirmations, ledgers, accounts, tax audit report, bank statements, e-way and freight bills-was on record and remained unverified by revenue. The note emphasises the legal principle that revenue must verify and afford fair hearing (audi alteram partem) before making additions; absence of verification and mechanical treatment vitiates the assessment. Operative effect recorded: the addition was found unjustified and deleted, and the appeal allowed in favour of the assessee.

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Issues: Whether the disallowance of purchases amounting to Rs. 9,00,63,954/- held to be unexplained expenditure and added as income under Section 69C read with Section 115BBE of the Income-tax Act, 1961 was justified when the assessee had filed documents and evidences during assessment and appellate proceedings.

Analysis: The appeal examines whether the authorities below rightly concluded that the assessee failed to discharge the onus of proving the genuineness and creditworthiness of purchases. Relevant statutory provisions include Section 69C and Section 115BBE of the Income-tax Act, 1961 concerning unexplained expenditure and deemed income. The record shows extensive documentary material was filed by the assessee during assessment proceedings and before the appellate authority, including purchase invoices, confirmations, creditors ledgers, annual accounts, tax audit reports, bank statements, e-way bills, freight bills and e-proceedings acknowledgements, as indexed in the paper book. The authorities below proceeded on the finding that only confirmations were furnished and that balance sheets, bank statements and transportation evidence were not provided; the appellate record demonstrates these findings to be incorrect. The material filed remained unverified by the revenue despite being on record, and the appellate order failed to apply principles of fair hearing and verification, infringing audi alteram partem and resulting in a mechanical and callous disposal of the issue.

Conclusion: The disallowance of Rs. 9,00,63,954/- as unexplained expenditure under Section 69C read with Section 115BBE of the Income-tax Act, 1961 is not justified; the addition is deleted and the appeal is allowed in favour of the assessee.

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