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[2009] 311 ITR 175 (DELHI) HIGH COURT OF DELHI Commissioner of Income-tax v. Lubtec India Ltd. MADAN B. LOKUR AND V.B. GUPTA, JJ. I.T. Appeal. NO. 86 OF 2007 JULY 12, 2007 Section 69C of the Income-tax Act, 1961 - Unexplained Expenditure Where there was nothing to show that expenditure in question was in fact incurred by assessee and assessee had denied having incurred expenditure and had contended that it did not have that kind of money, no addition on account of such expenditure could be made to assessee's income [Block period 1-4-1988 to 21-4-1998] [In favour of assessee] CIT v. Lubtec India Ltd. [2009] 311 ITR 175 (Delhi) It is quite clear that what is postulated in section 69C is that first of all the assessee must have incurred that expenditure and thereafter if the explanation offered by the assessee about the source of such expenditure is not found satisfactory by the Assessing Officer, the amount may be added to his income. During the course of search and seizure operations in the premises of the assessee, the revenue recovered two sheets of paper in which certain items were jotted down in pencil such as dinner, gift, projector, slide projector, etc., and some figures were noted against of each item. Some of the items in those two sheets related to advertisements in newspapers, magazines and hoardings, etc. According to the revenue, the assessee had incurred the expenditure as mentioned in those two pages, and was thereafter asked to explain the source of the amount. In response, the assessee denied having incurred the expenditure. It was submitted by the assessee that it did not have the amount of money reflected in those two sheets and was incapable of spending the amount, that is, Rs. 29,51,278 which was mentioned in the documents. However the Assessing Officer added the amount to the assessee's income under section 69C. Held that in the present case, there was nothing to show that the expenditure in question was in fact incurred by the assessee and the assessee had denied having incurred the expenditure and had contended that it did not have that kind of money. The Tribunal noted that the Assessing Officer had not made any enquiry whatsoever to…

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