Addition under section 69A and 115BBE challenged on lack of corroborative evidence; appellate deletion upheld on facts

Addition under section 69A read with section 115BBE was deleted by the appellate authority and the Revenue appeal dismissed where the assessing officer relied solely on Investigation Wing information and a third party statement without providing transaction dates, places, bank details or any link to the assessee. The tribunal affirmed that additions based on unverified third party information or suspicion are unsustainable, the burden rests on the AO to produce cogent corroborative evidence of unexplained money, and denial of opportunity to cross examine vitiated the addition; therefore restoring the addition for further roving enquiry was unwarranted.

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Issues: Whether the Commissioner of Income-tax (Appeals) was justified in deleting the addition of Rs.20,00,130/- made by the Assessing Officer under Section 69A read with Section 115BBE of the Income-tax Act, 1961.

Analysis: The addition was founded solely on information from the Investigation Wing and a statement of a third party recorded during search proceedings, without independent corroborative material such as bank statements, transaction dates, places or modes of receipt linking the assessee to the alleged accommodation entries. The assessee consistently denied the transactions and filed an affidavit which the Assessing Officer did not rebut or investigate further. The name in the investigation annexure was a different entity and no nexus was established between that entity and the assessee. An addition under Section 69A cannot be sustained on unverified third-party information or mere suspicion; the Assessing Officer bears the burden to produce cogent evidence of possession of unexplained money. The absence of opportunity for cross-examination of the third party further undermined the reliability of the material. Given the lack of basic enquiries and corroboration, the appellate deletion was an appropriate exercise of fact-finding rather than a direction for a roving inquiry.

Conclusion: The deletion of the addition of Rs.20,00,130/- is upheld in favour of the assessee.

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