Third-party search material cannot sustain an on-money addition unless confronted, corroborated, and tested through cross-examination.

An addition for alleged on-money cannot be sustained where it is based only on third-party search material and statements, without confronting the adverse material to the assessee or allowing cross-examination of the persons relied upon. The record consisted of a pendrive, Excel data and search statements from the builder group, but the material was not found in the assessee's possession, was not furnished in full, and was unsupported by independent corroboration linking the assessee to unaccounted cash payment. The electronic material was also not shown to have been properly proved for admissibility. On this basis, the addition was deleted in favour of the assessee.

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Issues: Whether the addition of alleged on-money was sustainable when it was based on material found in a third party search, without confronting the adverse material to the assessee and without providing cross-examination of the persons whose statements were relied upon.

Analysis: The addition rested on a pendrive, Excel data and statements recorded during the search in the case of the builder group. The assessee denied any cash payment and maintained that the entire consideration was paid through banking channels. The material relied upon was not found from the assessee's possession, the assessee was not furnished the adverse documents or full statements, and the persons whose statements were relied upon were not produced for cross-examination. In the absence of corroborative evidence linking the assessee to any unaccounted cash payment, the third-party material could not be treated as credible evidence against the assessee. The electronic material was also not shown to have been duly proved in the manner required for admissibility of electronic evidence.

Conclusion: The addition on account of alleged on-money was not sustainable and was deleted in favour of the assessee.

Ratio Decidendi: An addition based solely on third-party search material and statements cannot be sustained unless the material is confronted to the assessee, corroborated by independent evidence, and tested by allowing cross-examination where relied upon.

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