Third-party material and denied cross-examination could not sustain alleged on-money additions in a shop purchase dispute.

Additions for alleged on-money in the purchase of a shop under section 153C were deleted because they rested mainly on a third-party employee's statement and an Excel sheet seized from another group, without supplying the assessee with the material or granting cross-examination. The Tribunal noted that the assessment order did not reproduce the relevant entries or show date-wise linkage, and no independent corroborative evidence established payment by the assessee. On those facts, untested third-party material and uncorroborated electronic records were insufficient to sustain the addition.

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Issues: Whether additions towards alleged on-money in the purchase of shop could be sustained under section 153C of the Income-tax Act, 1961 on the basis of a third-party statement and an Excel sheet seized in the search of another group, without providing the assessee a copy of the material or an opportunity of cross-examination.

Analysis: The additions were founded primarily on the statement of an employee of the searched group and the alleged Excel sheet. The assessee was not supplied with the Excel sheet, the assessment order did not reproduce the relevant entries or disclose date-wise linkage, and no independent corroborative material was brought on record to establish actual payment by the assessee. The Tribunal noted the consistent view of coordinate benches that where the assessee denies the payment, reliance is placed only on third-party material, and cross-examination is not afforded, the addition cannot be sustained. On the facts, the material remained uncorroborated and the assessee was not duly confronted with the specific evidence relied upon.

Conclusion: The additions towards alleged on-money were not sustainable and were deleted.

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