Uncorroborated third-party material cannot sustain section 69C additions where cross-examination is denied and no independent link is shown.

Additions under section 69C could not be sustained where they rested only on third-party Excel sheets, WhatsApp chats and statements, with no independent corroboration linking the assessee to the alleged cash payments. The assessee had denied the transactions and sought cross-examination of the persons whose statements were relied upon; denial of that opportunity breached natural justice. Uncorroborated third-party material, including retracted or uncertain statements, was insufficient to fasten liability. The additions for all the assessment years were therefore deleted in favour of the assessee.

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Issues: (i) Whether additions made under section 69C on the basis of third-party Excel sheets and statements, without independent corroboration and without granting cross-examination, were sustainable for AYs. 2018-19 and 2019-20; (ii) Whether additions made under section 69C on the basis of third-party WhatsApp chats and statements, without corroborative evidence, were sustainable for AY 2020-21.

Issue (i): Whether additions made under section 69C on the basis of third-party Excel sheets and statements, without independent corroboration and without granting cross-examination, were sustainable for AYs. 2018-19 and 2019-20.

Analysis: The additions rested on entries found in material recovered from third parties and on statements of third parties, one of which had been retracted. No independent evidence linked the assessee to the alleged cash payments. The assessee had specifically denied the transactions and sought cross-examination of the persons whose statements were relied upon. Since cross-examination was not afforded, the additions suffered from violation of natural justice. In the absence of corroboration, third-party material could not be used to fasten liability on the assessee.

Conclusion: The additions for AYs. 2018-19 and 2019-20 were not sustainable and were rightly deleted in favour of the assessee.

Issue (ii): Whether additions made under section 69C on the basis of third-party WhatsApp chats and statements, without corroborative evidence, were sustainable for AY 2020-21.

Analysis: The additions were founded only on WhatsApp chats and the statement of a third party, both of which were denied by the assessee. The record did not show any independent material connecting the assessee with the alleged transactions. One alleged transaction also suffered from uncertainty as to the date, and another amounted only to a request for payment, not proof of completion. Uncorroborated third-party electronic material could not justify the additions.

Conclusion: The additions for AY 2020-21 were not sustainable and were rightly deleted in favour of the assessee.

Final Conclusion: The Revenue failed on all three years because the impugned additions were based only on uncorroborated third-party material and statements, with no legally adequate linkage to the assessee.

Ratio Decidendi: An addition in the hands of an assessee cannot be sustained solely on the basis of uncorroborated third-party material or statements unless there is independent evidence linking the assessee, and reliance on such statements without granting requested cross-examination violates natural justice.

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