Uncorroborated third-party seized material cannot sustain an income-tax addition without independent evidence linking the assessee to the transaction.

ITAT Indore held that an income-tax addition cannot be sustained solely on a pencilled entry in loose papers seized from a third party during survey. Because the assessee denied the alleged cash donation and the material contained no independent corroboration linking the assessee to the transaction, the reassessment addition was based only on unverified third-party material and conjecture. The Tribunal applied the settled principle that admissions or references involving other persons cannot fasten liability on the assessee without plausible, independent evidence. The addition was therefore deleted.

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Issues: Whether the addition of Rs. 3,50,000 made on the basis of loose papers impounded from a third party during survey, without independent corroboration, was sustainable in reassessment.

Analysis: The addition rested on a note found during survey from another person's premises showing the assessee's son's name against an alleged cash donation. The assessee denied any such payment. The Tribunal held that a pencilled entry in material seized from a third party, by itself, was not sufficient to fasten liability on the assessee. Mere references to admissions by other donors could not substitute for evidence against the assessee unless supported by plausible and independent material. Following earlier co-ordinate bench decisions, the Tribunal applied the settled principle that an addition cannot stand on conjectures, surmises, or uncorroborated third-party material.

Conclusion: The addition was unsustainable and was deleted.

Final Conclusion: The assessee succeeded because the impugned sum was not proved by reliable evidence and the reassessment addition failed for want of corroboration.

Ratio Decidendi: An income-tax addition cannot be sustained solely on the basis of an uncorroborated entry in third-party seized material; independent evidence linking the assessee to the alleged transaction is necessary.

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