Uncorroborated third-party material and denied cross-examination cannot sustain an addition for alleged on-money payment.

Addition for alleged cash component in the purchase of a shop was not sustained where the Revenue relied on a third party pen drive, Excel sheets and statements, but found no cash voucher, receipt, ledger entry or document signed by the assessee linking it directly to any on-money payment. The assessee denied making cash payment, and the Tribunal noted the absence of independent corroborative material and the denial of cross-examination of the witnesses whose statements were used against the assessee. On this basis, third-party material and untested statements were held insufficient to justify the addition, and the addition was deleted in favour of the assessee.

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Issues: Whether the addition made towards alleged cash component in the purchase of a shop, based on a pen drive, Excel sheets and third-party statements, could be sustained in the absence of incriminating material directly linking the assessee and without providing cross-examination of the witnesses relied upon.

Analysis: The addition was founded on material recovered in a search from a third party and on statements of persons connected with the group, but no cash voucher, receipt, ledger or document signed by the assessee was found. The assessee denied having made any cash payment. The Tribunal noted that the Revenue did not produce any independent corroborative material to connect the assessee with the alleged on-money payment and also did not afford an opportunity to cross-examine the witnesses whose statements formed the basis of the addition. In such a situation, reliance only on third-party material and statements, without corroboration and confrontation, was held to be insufficient to justify the addition.

Conclusion: The addition was not sustainable and was deleted in favour of the assessee.

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