Uncorroborated third-party statement cannot sustain alleged on-money addition for land purchase without cross-examination or independent evidence.

An addition for alleged undisclosed investment in land cannot be sustained merely on seized papers and a third party's statement when the transaction is supported by a registered sale deed, the declared consideration is accepted by the registering authority, and no independent corroboration shows payment over and above the recorded price. Where such a statement is relied on against the assessee, cross-examination must be afforded; otherwise, it cannot conclusively establish on-money payment. On these facts, the addition was deleted and the revenue's challenge failed.

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Issues: Whether the addition of Rs. 92,00,000 as alleged on-money payment for purchase of land could be sustained on the basis of seized papers and the statement of a third party, without corroborative evidence and without cross-examination.

Analysis: The addition rested on materials seized from a third party and on a statement recorded from that person. The land transaction was evidenced by a registered document, the declared value had been accepted by the registering authority, and no independent material was brought on record to prove payment over and above the recorded consideration. The statement used against the assessee was not tested by cross-examination and, by itself, could not conclusively establish undisclosed investment. In the absence of corroborative evidence, the presumption of on-money payment was not justified.

Conclusion: The addition was rightly deleted and the revenue's challenge failed.

Final Conclusion: The assessment addition based on alleged unaccounted investment in land was not sustainable on the evidence relied upon, and the appellate relief granted to the assessee was upheld.

Ratio Decidendi: An addition for undisclosed investment cannot be sustained merely on the basis of a third party's statement or seized loose papers unless supported by corroborative evidence, and such material cannot be used against the assessee without affording cross-examination where it is relied upon as evidence.

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