Unverified third-party records cannot support an income-tax addition without independent verification and a fair chance to rebut them.

An income-tax addition cannot be sustained on the basis of unverified third-party material unless the department independently verifies the truth of the entries and gives the assessee a fair opportunity to rebut them. Here, the addition rested only on a copied extract from an unproduced and untested book, while the other concern's partner denied ownership and the entries themselves. With no independent enquiry and no material linking the assessee to the alleged cash payments, the copied Uchanti Bahi was held not to be legal and admissible evidence, and the addition was deleted in favour of the assessee.

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Issues: Whether the copy of the Uchanti Bahi supplied by the sales tax department constituted legal and admissible evidence to sustain the addition of Rs. 13,955 as income from undisclosed sources.

Analysis: The addition was founded only on a copied extract from an unproduced and unverified book. The partner of the other concern categorically denied that the book belonged to his firm and denied the entries. No independent enquiry was made to verify the truth or reliability of the entries, and no other material connected the assessee with the alleged unexplained cash payments. In these circumstances, the information remained untested suspicion and could not safely be used as the basis of assessment.

Conclusion: The copy of the Uchanti Bahi was not legal and admissible evidence, and the addition of Rs. 13,955 was rightly deleted; the answer is in favour of the assessee.

Final Conclusion: The reference was answered against the revenue, and the assessment addition could not be sustained on the basis of the unverified copied entries alone.

Ratio Decidendi: An income-tax addition cannot rest on unverified third-party material unless the department independently satisfies itself of its truth and gives the assessee a fair opportunity to meet it.

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