Third-party search material needs corroboration; addition under section 69A deleted for lack of evidence and cross-examination.

Addition under section 69A based only on notings in seized papers found from a third party could not be sustained where no independent evidence showed actual receipt by the assessee, the assessee denied the transaction, and effective cross-examination was not afforded. The Tribunal held that search presumptions apply against the person searched and cannot be extended to fasten liability on a third party without corroboration. Reliance on third-party statements and material, without meaningful opportunity to test them by cross-examination, weakened the evidentiary basis for the addition. The addition was deleted.

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Issues: Whether the addition made under section 69A could be sustained solely on the basis of notings in seized papers found from a third party, in the absence of corroborative evidence, where the assessee denied receipt of the amount and was denied effective cross-examination of the person whose statement was relied upon.

Analysis: The seized papers were recovered from the premises of a third party and contained entries against the assessee's name. The assessment was made only on the strength of those notings and the statement of the searched person. No independent material was brought on record to show actual receipt of money by the assessee. The assessee consistently denied the transaction. The Tribunal noted that presumptions arising from search material operate against the person searched and cannot, by themselves, be extended to fasten liability on a third party without corroboration. It also found that reliance on third-party material without granting meaningful opportunity of cross-examination weakened the evidentiary value of the material relied upon for the addition.

Conclusion: The addition under section 69A was not sustainable and was deleted. The issue was decided in favour of the assessee.

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