Third-party data needs corroboration before an addition for alleged undisclosed purchases or investment can stand.

An addition for alleged unaccounted purchases and unexplained investment could not be sustained where it was based mainly on third-party software data and statements without independent corroboration. The assessee's denial, supplier declaration stating no sales were made, GST registration details, ledger accounts, and bank statements did not support the Revenue's allegation, and the record contained no independent evidence specifically linking the assessee to the disputed transactions. On that material, the alleged undisclosed purchases and investment were not established, so the addition failed in favour of the assessee.

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Issues: Whether the addition made towards alleged unaccounted purchases and unexplained investment could be sustained on the basis of third-party software data and statements without corroborative evidence, and whether the assessee's denial, declaration from the supplier, GST records, and bank statements displaced the addition.

Analysis: The assessee produced a declaration from the concerned party stating that no sales had been made to the assessee, along with GST registration details, ledger accounts, and bank statements. These materials did not support the Revenue's case that the assessee had made the alleged purchases. The addition rested primarily on third-party material and statements, but those statements did not specifically identify the assessee's transactions and no independent linking evidence was brought on record. The material relied upon by the Revenue was therefore insufficient to establish the alleged undisclosed purchases or investment.

Conclusion: The addition was not sustainable and the issue is decided in favour of the assessee.

Ratio Decidendi: An addition cannot be sustained merely on third-party data or statements unless they are corroborated by independent evidence linking the assessee to the alleged undisclosed transactions.

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