Adverse third-party digital evidence cannot sustain an on-money addition without full disclosure and cross-examination.

Alleged cash on-money addition for shop purchase cannot be sustained solely on third-party digital records and a supporting statement when the assessee is not furnished the complete adverse material and is denied effective cross-examination. Where no independent evidence such as a receipt, diary, acknowledgment, or other contemporaneous document links the assessee to the alleged cash payment, and the disputed third-party material is not properly confronted, fair procedure requires that the basis of the addition be tested. The addition was therefore deleted in favour of the assessee.

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Issues: Whether the addition of alleged cash on-money payment for purchase of a shop could be sustained solely on the basis of third-party digital records and statements, without furnishing the assessee the complete adverse material and an effective opportunity to cross-examine the person whose statement was relied upon.

Analysis: The addition rested on Excel sheets recovered from a third party's pen drive and on that person's statement that cash components were collected from buyers. No independent material was brought from the assessee to show actual cash payment, and no receipt, diary, acknowledgment, or other contemporaneous document linked the assessee to the alleged payment. The material relied upon was not adequately confronted in full, and the request for cross-examination was declined even though the third-party statement and the electronic record formed the foundation of the addition. In income-tax proceedings, while strict rules of evidence do not apply, adverse third-party material used against an assessee must still be tested through fair procedure where its correctness is disputed.

Conclusion: The addition could not be sustained and was deleted in favour of the assessee.

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