New Delhi, June 28 -- Can the Income Tax Department add undisclosed income to a taxpayer's return merely because documents recovered during a search on a real estate developer suggest an "on-money" payment? The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has ruled that it cannot. Unless the department can independently establish that the buyer actually paid unaccounted cash, additions based solely on third-party documents are unsustainable.

In a recent order, the tribunal deleted a Rs.90 lakh addition made against a property buyer, holding that loose papers and electronic records recovered from the developer, without any corroborative evidence linking the taxpayer to the alleged payment, were insufficient to justify the addi...