Third-party seized material and retracted statements cannot alone sustain on-money additions without corroborative evidence.

Additions for alleged on-money payments on purchase of commercial space were unsustainable where the Revenue relied only on loose sheets, a diary and digital material seized from a third party. The seized material was not shown to be in the assessee's handwriting, was unsupported by signed receipts, independent enquiry or other corroborative evidence, and the statements relied on were later retracted. Third-party material and generalized statements, without confrontation and corroboration, could not by themselves establish undisclosed cash transactions or extend the search presumption against the assessee. The additions under section 69 and section 69B were therefore deleted.

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Issues: Whether additions made towards alleged on-money payments for purchase of commercial space could be sustained solely on the basis of loose sheets, diary and digital material seized from a third party, in the absence of corroborative evidence and in view of retracted statements.

Analysis: The additions rested on material seized from the premises of a third party and not from the assessee. The seized papers were neither shown to be in the handwriting of the assessee nor supported by signed receipts, independent enquiries, or any corroborative documentary evidence linking the assessee to actual cash payments. The evidentiary presumption under the search provisions could not be extended against the assessee for third-party material without supporting proof. The statements relied upon by the Revenue were subsequently retracted, and generalized third-party statements, without confrontation and corroboration, were insufficient to establish undisclosed cash transactions. In the absence of material showing that the notings had translated into real payments by the assessee, the additions lacked evidentiary foundation.

Conclusion: The additions made under section 69 and section 69B could not be sustained and were deleted in favour of the assessee.

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