Unexplained expenditure requires independent proof, limiting purchase additions and rejecting unsupported accommodation-entry commission estimates for the relevant years.
Alleged bogus purchases may warrant a limited addition where banking payments and GST registration are unsupported by verifiable counterparties or contemporaneous records; only 3% of the disputed purchases remains added. Unexplained expenditure requires proof that the assessee actually incurred it and a nexus supported by invoices, payment trails, goods movement, or other independent evidence. Uncorroborated third-party statements and unilateral GST reporting do not establish such expenditure, so the accommodation-entry addition does not survive. Commission additions based only on presumption or estimation, without proof of payment or a financial trail, are also deleted.
Issues: (i) Whether the entire addition for alleged bogus purchases for AY 2018-19 under Section 68 was sustainable; (ii) Whether the estimated commission addition for arranging alleged accommodation entries for AY 2018-19 was sustainable; (iii) Whether the addition for alleged accommodation entries for AY 2019-20 under Section 69C was sustainable; (iv) Whether the estimated commission addition for alleged accommodation entries for AY 2019-20 was sustainable.
Issue (i): Whether the entire addition for alleged bogus purchases for AY 2018-19 under Section 68 was sustainable.
Analysis: Banking-channel payments and GST registration of the counterparties did not by themselves establish genuineness where the entities were non-filers, summons issued to them remained unserved, and the ledgers and account details claimed to have been furnished were not uploaded before the Assessing Officer. These circumstances warranted only a limited addition rather than disallowance of the entire alleged purchases.
Conclusion: Addition to the extent of 3% of the allegedly dubious purchases was sustained, with deletion of the balance; the issue was partly in favour of the Revenue.
Issue (ii): Whether the estimated commission addition for arranging alleged accommodation entries for AY 2018-19 was sustainable.
Analysis: The commission addition rested on estimation without evidentiary support and was based on surmises and conjectures.
Conclusion: The estimated commission addition was deleted in favour of the assessee.
Issue (iii): Whether the addition for alleged accommodation entries for AY 2019-20 under Section 69C was sustainable.
Analysis: Section 69C requires proof that the assessee actually incurred expenditure. The alleged transactions were not reflected in the books, purchase register, GSTR-2A, or audited financial statements. No invoices, payment trail, movement of goods, or other independent evidence linked the assessee to the alleged entry provider. A generic third-party statement and unilateral GST reporting, without corroboration or independent verification, did not establish actual expenditure.
Conclusion: The addition under Section 69C was deleted in favour of the assessee.
Issue (iv): Whether the estimated commission addition for alleged accommodation entries for AY 2019-20 was sustainable.
Analysis: No statement, document, or financial trail established payment of any commission; the addition was founded solely on presumption and estimation.
Conclusion: The estimated commission addition was deleted in favour of the assessee.
Final Conclusion: Only 3% of the alleged dubious purchases for AY 2018-19 remains subject to addition, while the remaining purchase-related and commission additions do not survive.
Ratio Decidendi: An addition for unexplained expenditure cannot rest solely on uncorroborated third-party information where actual expenditure and its nexus with the assessee are not established by independent evidence.