Uncorroborated third-party records cannot establish cash liabilities; addition deleted for lack of independent corroboration.

Challenge to an addition under the income tax law turned on whether an unsigned Excel sheet recovered from a third party and related post-search material constituted sufficient evidence. The analysis applied the standard that entries in uncorroborated third-party records, absent the assessee's signature, independent documentary or testimonial corroboration (bank records, receipts, confirmations) and without opportunity to cross-examine third-party statements, cannot establish cash payment on the balance of probabilities. Applying the positive-evidence requirement, the disputed addition was found unsustainable and deleted.

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Issues: Whether the addition of Rs. 56,60,500/- made under section 69 of the Income-tax Act, 1961, based solely on an unsigned Excel sheet recovered from a third party and related post-search material, is sustainable in the absence of independent corroborative evidence and where statements/records were not fully furnished for cross-examination.

Analysis: The disputed addition rested entirely on an unsigned Excel sheet seized from a third party which did not bear the assessee's name or signature and contained no direct acknowledgement of cash payment by the assessee. There was no independent documentary or testimonial evidence such as bank withdrawals, receipts, confirmations of cash receipt, or other material linking the assessee to the alleged cash payment. The evidence relied upon included third-party admissions and search statements that were not furnished in full to the assessee nor was an opportunity of cross-examination provided. Precedential authorities addressing identical facts arising from the same search action were considered, holding that mere entries in an unsigned third-party Excel sheet without corroboration cannot by themselves establish payment by the assessee. The balance of probabilities and requirement of positive evidence to fasten liability on a taxpayer were applied to the material on record.

Conclusion: The addition of Rs. 56,60,500/- under section 69 of the Income-tax Act, 1961 is unsustainable and is deleted; the appeal is allowed in favour of the assessee.

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