Section 69C requires unexplained expenditure, not mere suspicion; documentary proof of payments justified deletion of both additions.

Section 69C can be invoked only where actual expenditure is shown to have been incurred and its source remains unexplained; it cannot sustain an addition merely because third parties do not respond or compliance is incomplete when the assessee substantiates the payments through agreements, invoices, ledger accounts, bank statements, TDS records and confirmations. Likewise, where GST-based material does not show any actual payment, claim of input tax credit or corresponding expenditure, no addition is made on that basis. On the facts, the first appellate authority's deletion of both additions was upheld because the Revenue failed to rebut the documentary evidence and factual findings.

---

---

Issues: (i) Whether the deletion of the addition of Rs. 20,00,000/- made on the basis of GST data was justified. (ii) Whether the deletion of the addition of Rs. 2,68,17,674/- under section 69C was justified.

Issue (i): Whether the deletion of the addition of Rs. 20,00,000/- made on the basis of GST data was justified.

Analysis: The addition was founded on GST-related material, but the assessee denied the alleged payment. The record showed no payment, no claim of input tax credit, and no booking of corresponding expenditure. In the absence of evidence that any expenditure had actually been incurred, the basis for making an addition was not established.

Conclusion: The deletion of the addition of Rs. 20,00,000/- was upheld.

Issue (ii): Whether the deletion of the addition of Rs. 2,68,17,674/- under section 69C was justified.

Analysis: The assessee produced agreements, invoices, ledger accounts, bank statements, TDS records, confirmations and related material to support the impugned payments. The payments were found to have been made through banking channels and linked to the underlying business arrangement. Section 69C applies where expenditure is incurred but its source remains unexplained; it does not sustain an addition merely because vendors did not respond or third-party compliance was incomplete, when the assessee's own source of payment and business expenditure stand explained.

Conclusion: The deletion of the addition of Rs. 2,68,17,674/- under section 69C was upheld.

Final Conclusion: The Revenue failed to dislodge the factual findings recorded by the first appellate authority, and both additions were correctly deleted.

Ratio Decidendi: Section 69C can be invoked only where actual expenditure is shown to have been incurred and its source remains unexplained; additions cannot rest solely on third-party non-compliance or suspicion when the assessee substantiates the transactions and source by documentary evidence.

---