Third party seized evidence without cross examination cannot discharge the revenue's burden, leading to deletion of the addition.

Addition under section 69B based solely on seized third party documents and a third party statement without producing the adverse material to the assessee or permitting cross examination is unsustainable; such third party information, absent independent corroboration and without an opportunity to test veracity by cross examination, only raises suspicion and does not discharge the revenue's burden of proof, therefore the disputed addition was deleted and the appeal allowed in favour of the assessee.

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Issues: Whether the addition of Rs.21,99,000 under section 69B on account of alleged on-money paid for purchase of a shop, based solely on third-party seized material and the statement of a third party without providing the assessee the adverse material or an opportunity to cross-examine, is sustainable.

Analysis: The Tribunal examined the material relied upon by the Assessing Officer and found that the addition was founded on seized documents from a third party (the builder) and on the statement recorded under section 132(4) of the Income-tax Act, 1961 of one Shri Kulin Shantilal Vora. The assessee consistently denied any cash payment and repeatedly requested production of the specific evidence and an opportunity to cross-examine the person whose statement was relied upon. The authorities below did not confront the assessee with the adverse seized material nor permit cross-examination, treating the third-party statement as a general admission applicable to multiple buyers. The Tribunal held that third-party information of this nature, without corroboration and without affording the assessee the opportunity to test the veracity of the statement by cross-examination, can at best raise suspicion and does not discharge the revenue's onus to prove the payment. Reliance was placed on settled principles that the burden to establish taxability lies on the revenue and that denial of the opportunity to cross-examine a witness whose statement forms the basis of an adverse finding breaches principles of natural justice.

Conclusion: Addition of Rs.21,99,000 under section 69B is deleted and the appeal is allowed in favour of the assessee.

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