Uncorroborated loose papers and third-party statements cannot sustain an addition without a direct link to the land sale transaction.

An addition for undisclosed long-term capital gain on alleged cash component in the sale of agricultural land cannot be sustained on the basis of loose papers and a third-party statement unless the material shows a direct, contemporaneous, and corroborated link with the assessee's transaction. Here, the seized entries were not contemporaneous with the registered sale deeds, the statement relied upon was later retracted or denied in assessment proceedings, and no independent evidence showed receipt of cash through the sale consideration. The ITAT therefore held that the material was insufficient to support the addition and deleted it in favour of the assessees.

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Issues: Whether the addition made as undisclosed long-term capital gain on the alleged cash component of the sale consideration for agricultural land was sustainable on the basis of seized loose papers and the statement of a third party.

Analysis: The seized papers contained entries against abbreviations and were not contemporaneous with the registered sale deeds, creating no reliable nexus with the impugned transaction. The statement recorded during search was later not supported in the assessment proceedings when the same person denied making cash payment to the assessees. The assessee was not shown to have received any cash through the registered sale deeds, and the record did not contain independent corroboration that the alleged on-money formed part of the sale consideration. The material relied upon was therefore insufficient to sustain an addition in the hands of the assessees.

Conclusion: The addition was deleted and the issue was decided in favour of the assessees.

Ratio Decidendi: An addition cannot be sustained merely on the basis of an uncorroborated third-party statement and loose papers that do not establish a direct and contemporaneous link with the assessee's transaction.

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