Third-party material in reassessment cannot sustain additions without disclosure, corroboration, and an opportunity to rebut the evidence.

Reassessment additions based only on third-party books and information cannot be sustained where the assessee is not furnished the underlying material and is denied an opportunity to rebut it or cross-examine the persons concerned. The text states that, in the absence of independent corroboration and fair disclosure of the relied-upon material, reliance on third-party records gathered behind the assessee's back offends fair procedure. On that basis, such additions are not supportable and the matter is resolved in favour of the assessee and against the Revenue.

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Issues: Whether additions in reassessment could be sustained solely on the basis of third-party information and materials collected from third parties without furnishing those materials to the assessee or affording an opportunity of cross-examination.

Analysis: The reassessment additions were made only on the basis of books of account and information recovered from third parties, which allegedly reflected transactions with the assessee. The assessee had specifically denied the purchases. No corroborative evidence was brought on record by the Assessing Officer to independently support the alleged unaccounted purchases. The assessee was not supplied the material relied upon and was denied an opportunity to confront the same or cross-examine the persons from whose records the information was drawn. In such circumstances, reliance solely on third-party material behind the back of the assessee offended fair procedure and could not sustain the addition.

Conclusion: The additions could not be upheld, and the question was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: A reassessment addition cannot be sustained merely on third-party statements or third-party records unless the material is disclosed to the assessee and supported by independent corroboration, with a fair opportunity to rebut it.

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