Statutory presumption against third party cannot be applied to taxpayer without independent corroboration; addition deleted and reinvestment claim remanded.

Claim for reinvestment deduction was remanded because the determinative issue was the factual nature of other properties; admitted tenant affidavits and identity proofs, not previously considered, are material and the assessing officer must examine them afresh, so entitlement is to be reconsidered. The asserted addition as unexplained on money was deleted because the impugned draft papers and cash were in a third party's possession, there was no corroborative material linking them to the taxpayer, and the statutory presumption arising from seizure applies only against the possessor; therefore the addition cannot stand.

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Issues: (i) Whether the assessee is entitled to deduction for reinvestment in a new residential property where other properties owned by the assessee are alleged to be residential (disallowance under entitlement test of section 54F); (ii) Whether addition of INR 50,00,000 as unexplained 'on-money' for purchase of property can be sustained against the assessee.

Issue (i): Entitlement to deduction for reinvestment where assessee owns multiple properties and lower authorities treated those properties as residential, disqualifying deduction.

Analysis: The question turns on the factual nature of the other properties as residential or commercial and whether evidence exists on record to show commercial use. The assessee produced tenant affidavits and identity proofs before the Tribunal asserting commercial use, but these documents were not placed before or examined by the lower authorities. The additional evidence bears directly on the core factual condition for claiming the deduction and is material to determine the nature of the properties and thus eligibility under the entitlement criteria for reinvestment relief.

Conclusion: Allowed for statistical purposes and remanded to the assessing officer to examine the admitted additional evidence and decide the claim as per law; outcome in favour of the assessee on the remandable factual issue.

Issue (ii): Sustenance of addition of INR 50,00,000 as alleged undisclosed 'on-money' in purchase transaction.

Analysis: The addition was based on draft documents and a loose paper found in the possession of a third party and cash of INR 37,00,000 seized from that third party. There was no direct or corroborative evidence connecting the seized cash or the loose paper to the assessee; the draft documents were unsigned by the assessee, no inquiry was made of the seller, and the statutory presumption arising from seizure is applicable against the person from whom possession was taken, not against the assessee. Absent corroborative material linking the seized cash or writings to the assessee, the revenue failed to discharge the burden required to make the addition.

Conclusion: Addition of INR 50,00,000 deleted; decision in favour of the assessee on this issue.

Final Conclusion: The appeal is partly allowed: the claim for deduction is remanded for fresh examination of newly admitted evidence, and the addition of INR 50,00,000 is deleted; overall relief is partly in favour of the assessee.

Ratio Decidendi: Where seizure and documents are in the possession of a third party, the statutory presumption arising from search applies to that person and cannot be drawn against the assessee absent independent corroborative evidence linking the seized material to the assessee.

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