Bogus purchase additions fail where third-party statements lack effective cross-examination and documentary records support the assessee.

Additions for alleged bogus purchases could not rest solely on a third-party statement where the assessee filed invoices, e-way bills, bank statements, gate entries and stock registers supporting the purchases. The decisive point was evidentiary value: the oral statement of the alleged accommodation entry provider was not tested through effective cross-examination, while the assessee's documentary and quantitative records were not shown to be infirm. Reliance on that statement alone could not displace the documentary evidence, and the first appellate finding that cross-examination had been offered and declined was factually incorrect. The impugned additions were deleted.

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Issues: Whether additions made on account of alleged bogus purchases could be sustained solely on the basis of the statement of a third party / searched person without effective cross-examination, despite documentary evidence and quantitative records filed by the assessee.

Analysis: The assessee had produced invoices, e-way bills, bank statements, gate entries, stock registers and other records to support the purchases. The additions were nevertheless made primarily by relying on the statement of the alleged accommodation entry provider. The decisive question was the evidentiary value of that oral statement vis-a -vis the assessee's documentary material. The record showed that the assessee's evidence was not shown to be infirm, while the statement relied upon was not tested through meaningful cross-examination. In such circumstances, reliance on the third-party statement alone could not displace the documentary evidence. The finding recorded by the first appellate authority that cross-examination had been offered and declined was found to be factually incorrect.

Conclusion: The additions could not be sustained. The impugned additions were deleted and the assessee succeeded.

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