Section 68 additions need corroborative evidence; third-party pen drive entries alone were insufficient here.

An addition under section 68 could not be sustained when it was based only on entries in a pen drive recovered from a third party's accountant. The recorded entry was unsupported by corroborative material: the accountant did not know the assessee personally, the entry was said to be based on information from others, and no effective verification was made by issuing summons or conducting independent inquiry from the concern's directors, cashier, or any other source. In the absence of independent evidence showing that the assessee advanced the alleged loan or earned the alleged interest, the third-party notings were insufficient to justify the addition, which was deleted.

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Issues: Whether the addition under section 68 of the Income-tax Act, 1961 could be sustained solely on the basis of a pen drive recovered from a third party, without corroborative evidence or effective verification of the alleged transaction.

Analysis: The addition rested on entries found in a pen drive seized from the accountant of a third party concern, not from the assessee. The accountant stated that he did not personally know the assessee and that the entry was made on information received from others. No summons were issued to the directors of the concern, no independent enquiry was made from the cashier or other source, and no other incriminating material was found to establish that the assessee had advanced the alleged loan or earned the alleged interest. The conclusion drawn by the Assessing Officer was therefore unsupported by corroborative material and could not be sustained merely on the basis of third-party notings.

Conclusion: The deletion of the addition was and the addition under section 68 was not sustainable; the issue is decided in favour of the assessee.

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