Uncorroborated seized material and retracted statements cannot sustain additions; genuine labour expense disallowance also failed.

Addition for alleged unaccounted cash sales could not be sustained where it rested on discrepant seized material, a retracted third-party statement and incomplete WhatsApp chats, with no independent corroboration and no material contradicting the assessee's ledger extracts and confirmations; the deletion was upheld. Disallowance of labour charges also failed because the assessee produced documentary evidence and earlier year decisions in its own case had accepted the genuineness of the same payment pattern, while no contrary material was shown to establish fictitious or bogus expenditure. The appellate order deleting both additions was sustained and the Revenue's appeal failed.

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Issues: (i) whether the addition of alleged unaccounted cash sales based on seized material, WhatsApp messages and third-party statement was sustainable; and (ii) whether the disallowance of labour charges as non-genuine business expenditure was justified.

Issue (i): whether the addition of alleged unaccounted cash sales based on seized material, WhatsApp messages and third-party statement was sustainable.

Analysis: The additions rested on discrepant figures in the seized material, a retracted statement, and WhatsApp chats that were not supported by the complete conversation or any independent corroboration. The assessee produced ledger extracts and confirmations from the parties reflected in the recorded transactions, while no incriminating material was brought to contradict the explanation. The earlier appellate and coordinate bench findings in identical facts were followed, and the addition was held to have been made on an unreliable and uncorroborated basis.

Conclusion: The addition for alleged unaccounted cash sales was rightly deleted and the Revenue's challenge failed.

Issue (ii): whether the disallowance of labour charges as non-genuine business expenditure was justified.

Analysis: The disallowance was founded on statements and surrounding circumstances alleging that the labour contractors were accommodation concerns. However, the assessee had furnished documentary evidence and the issue had already been examined in the assessee's own cases for earlier years, where the genuineness of the labour payments had been accepted. The coordinate bench had upheld deletion of identical disallowances in respect of the same contractor pattern, and no contrary material was shown to disturb those findings. The expenditure was therefore not shown to be fictitious or bogus.

Conclusion: The disallowance of labour charges was not justified and the Revenue's challenge failed.

Final Conclusion: The appellate order deleting both additions was sustained, and the Revenue's appeal was dismissed.

Ratio Decidendi: An addition based on third-party statements, incomplete electronic chats, or surrounding suspicion cannot survive without cogent corroboration, and a disallowance of business expenditure cannot be sustained where the assessee establishes genuineness through consistent documentary evidence and no contrary material is brought on record.

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