Third-party digital evidence and untested statements were insufficient to sustain an unexplained investment addition under section 69.

Addition for alleged cash on-money payment on purchase of shops could not be sustained where the Revenue relied only on a third-party statement and an Excel sheet recovered from a pen drive in another person's possession. The material was not confronted to the assessee, no opportunity of cross-examination was provided, and no independent corroborative evidence showed actual unexplained investment. The assessee's claim that the purchases were made through account payee cheques remained unrebutted, and the third-party digital data by itself did not conclusively prove unexplained expenditure or investment. The addition under section 69 was therefore deleted.

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Issues: Whether the addition under section 69 of the Income-tax Act, 1961, made on account of alleged cash on-money payment for purchase of shops, could be sustained solely on the basis of a third-party statement and an Excel sheet recovered from a pen drive found in the possession of a third party, without independent corroboration and without furnishing the material or opportunity of cross-examination to the assessee.

Analysis: The Revenue relied on the statement of an employee of the developer group and data from a pen drive recovered during search proceedings. The assessee denied any cash payment and maintained that the purchases were made entirely through account payee cheques. The material relied upon by the Revenue was not confronted to the assessee, and no independent evidence was brought on record to establish actual payment of on-money by the assessee. The Tribunal noted that identical material and the same search-related evidence had been considered in earlier co-ordinate bench decisions, where additions were deleted for want of corroboration and for breach of natural justice. It was also observed that no diary or other direct evidence was recovered from the assessee, and the data from the third party's pen drive, by itself, did not conclusively prove unexplained investment.

Conclusion: The addition under section 69 could not be sustained and was deleted in favour of the assessee.

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