Uncorroborated seized entries cannot sustain interest addition where ownership is denied and no independent evidence links them to the assessee.

Seized excel sheets and loose papers referencing "TNJ Mr. Natarajan Interest" and "Madras Interest" were examined to determine whether the latter entries could be attributed to the assessee. The assessee accepted and offered the "TNJ interest" amounts in returns filed under search-linked proceedings, but specifically denied ownership of the "Madras interest" entries. The Tribunal found that the Assessing Officer and CIT(A) relied on inference from the seized material and statements without independent corroboration linking those entries to the assessee. On that basis, the addition for "Madras interest" was deleted and the impugned amount was directed to be removed.

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Issues: Whether the addition of undisclosed "Madras interest" reflected in seized materials can be sustained in the hands of the assessee where the assessee has (a) offered and filed specific interest amounts in returns arising from seized material and (b) denied ownership of the "Madras interest" entries, and whether the Assessing Officer/CIT(A) suitably recorded adequate evidence to attribute the "Madras interest" to the assessee.

Analysis: The dispute arose from excel sheets and loose papers seized in independent search operations showing entries labelled "TNJ Mr. Natarajan Interest" and "Madras Interest". Extracts of sworn statements recorded in search proceedings and the assessee's subsequent sworn statement and submissions show that (i) amounts under the head identified as "TNJ interest" were admitted by the assessee and offered to tax for relevant years; (ii) the assessee specifically denied that the amounts grouped as "Madras interest" belonged to him; and (iii) the assessee filed returns under search-linked proceedings offering quantifiable interest income which was accepted in part. The Assessing Officer made an addition by attributing a portion of the "Madras interest" to the assessee without further corroborative documentary evidence linking those particular entries to the assessee. The appellate authority below sustained the addition on inference from the seized sheets and statements. The Tribunal examined the seized materials, the respective sworn statements, and the returns filed under the search-linked proceedings and concluded that the "Madras interest" entries were not satisfactorily proved to belong to the assessee and that the AO did not produce independent corroboration to attribute those payments to the assessee.

Conclusion: The addition of Rs. 66,50,000 made by the Assessing Officer on account of "Madras interest" is deleted and the appeals are allowed. The Assessing Officer is directed to delete the impugned addition in respect of the said amount.

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