Income addition cannot rest on FIR-stage suspicion alone when no trial, charge, or conviction exists.

An income addition based on an assessee's alleged involvement in a scam cannot be sustained where the assessee was named only at the FIR/investigation stage, was not sent up for trial, was not arraigned as an accused, and was neither tried nor convicted. The criminal record, including the Special Judge's certificate and judgment, confirmed that no criminal proceeding was pursued against the assessee. In the absence of any independent corroborative material showing actual involvement or receipt of undisclosed benefit, the basis for the estimated addition failed and the addition was deleted.

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Issues: Whether the addition made on the basis of the assessee's alleged involvement in the scam could be sustained when the assessee was not sent up for trial, was not charged, and was not convicted.

Analysis: The addition was founded on the assessee's name appearing in the FIR and on the Assessing Officer's inference from the charge-sheeted investigation material. The record showed that the assessee was not sent up for trial by the investigating agency, was not arraigned as an accused before the Special Court, and did not face trial or conviction. The certificate issued by the Special Judge and the judgment in the criminal case supported the finding that the assessee had not been proceeded against in the criminal trial. In these circumstances, the original basis for the addition disappeared and no independent material remained to justify the estimated income addition.

Conclusion: The addition was not sustainable and was deleted in favour of the assessee.

Ratio Decidendi: An income addition cannot be sustained merely on the basis of unproved FIR-stage allegations or investigation suspicion when the assessee was not sent up for trial and no corroborative material establishes actual involvement or receipt of undisclosed benefit.

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