On-money addition on land sale deleted where seized paper and third-party statement failed without cross-examination and full disclosure.

An addition for alleged on-money receipt on sale of land was deleted because the revenue relied on a seized loose paper and a third-party statement without proving the assessee's receipt of cash. The Tribunal found that the assessee had denied any undisclosed receipt, was not supplied the full adverse material, and was denied cross-examination of the statement maker. It held that a document not naming the assessee, without proof of the mode, date and manner of payment, was insufficient to sustain the addition and that procedural fairness required confrontation of the relied-upon material.

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Issues: Whether the addition of Rs. 4.07 crore as alleged on-money / undisclosed receipt on sale of land was sustainable, and whether the revenue could rely on the seized loose paper and third-party statement without furnishing full material and cross-examination.

Analysis: The addition was founded on a seized fund-flow sheet and the statement of a third party said to have paid cash over and above the registered sale consideration. The Tribunal found that the assessee had consistently denied receipt of any cash amount, had sought the full statement and cross-examination of the maker of the statement, and had not been supplied all the material used against her. It held that the impugned paper, though relied upon by the revenue, was not sufficient by itself to establish receipt by the assessee, particularly when the name of the assessee did not appear on the document and the revenue failed to prove the mode, date, and manner of payment. The Tribunal also held that the assessee could not be denied the procedural safeguard of confronting adverse material and cross-examining the witness whose statement was used to make the addition.

Conclusion: The addition of Rs. 4.07 crore was not justified, and the assessee succeeded.

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