Third-party seized material cannot support an addition without disclosure and a fair chance to rebut it.

An addition under section 69 based solely on material seized from a third party could not be sustained because the relied-upon material was not furnished to the assessee and no effective opportunity was given to rebut it. The analysis notes that the information came from a hard disk seized in another group's search, yet the assessee was denied disclosure, meaningful objection, and cross-examination. An adverse addition founded on undisclosed material collected behind the assessee's back violates audi alteram partem and is invalid in law. The addition was therefore held unsustainable, and the assessee succeeded.

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Issues: Whether the addition made under section 69 on the basis of material seized from a third party, without furnishing the relied-upon material to the assessee and without affording an effective opportunity to rebut it, was sustainable in law.

Analysis: The addition rested solely on information retrieved from a hard disk seized in the search of another group. The relied-upon material was not supplied to the assessee, despite objection, and no effective opportunity was given to challenge the contents or test them by rebuttal or cross-examination. An adverse addition founded on material collected behind the back of the assessee, without disclosure and opportunity of contest, offends the rule of audi alteram partem and cannot be sustained.

Conclusion: The addition was invalid and unsustainable in law, and the assessee succeeded.

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