On-money addition cannot survive on a retracted third-party statement and seized material without corroboration or cross-examination.

An addition for alleged on-money payment could not stand where it was founded only on a seized pendrive and a retracted third-party statement, without independent corroboration. Denial of cross-examination of the builder's employee was treated as a serious procedural defect because the impugned material was the sole basis of the addition. The absence of any DVO reference also weakened the Revenue's case, especially where the rate implied for the alleged on-money appeared unrealistic against surrounding market indicators. The deletion of the addition was upheld because the record did not prove payment beyond the amount already admitted and accepted in the assessee's company assessment.

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Issues: Whether the addition made towards alleged on-money payment could be sustained when it was based only on a seized pendrive and a retracted third-party statement, without corroborative material and without providing cross-examination, and whether the absence of a DVO reference further affected the addition.

Analysis: The addition was held to rest entirely on the statement of the builder's employee and the pendrive material, but the statement had been retracted and no independent corroborative evidence was brought on record to prove payment beyond the amount already admitted by the assessee. The assessee had been allowed to explain the admitted cash payment, and that amount had already been offered and accepted in the assessment of the assessee's company. The reasoning also noted that the rate implied by the Assessing Officer for the alleged on-money was unrealistic when compared with surrounding market indicators, and no valuation exercise was undertaken through the DVO. The denial of cross-examination was treated as a serious infirmity because the impugned addition was founded on a third-party statement.

Conclusion: The addition was not sustainable in law and its deletion was upheld.

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