Uncorroborated search material and denied cross-examination cannot sustain an addition based on alleged on-money payment.

Addition based solely on seized electronic data and a statement under section 132(4) could not be sustained where the record showed no specific admission by the assessee, the sale agreement did not support the alleged cash payment, and the assessee's explanation was not rebutted by independent material. Reliance on investigation material collected behind the assessee's back, without furnishing it for rebuttal or allowing cross-examination, violated audi alteram partem. The ITAT Delhi deleted the addition and granted relief to the assessee.

---

---

Issues: Whether the addition made on the basis of seized electronic data and recorded statement could be sustained in the absence of corroborative evidence and an opportunity for cross-examination.

Analysis: The addition was founded on an Excel sheet allegedly recovered in search, along with a statement recorded under section 132(4), but the assessment record did not show any specific admission by the assessee relating to the alleged on-money payment. The agreement for sale reproduced in the assessment order did not contain particulars supporting the alleged cash transaction, and the assessee's explanation of the earlier allotment and subsequent shift of unit was not rebutted by independent material. In these circumstances, reliance placed only on investigation material collected behind the assessee's back, without furnishing the material for rebuttal or cross-examination, offended the rule of audi alteram partem.

Conclusion: The addition was unsustainable and was deleted, resulting in relief to the assessee.

---