Assessee, a sitting MLA and Minister, was subjected to proceedings under Section 153C based on materials seized in a search of another entity, indicating an alleged payment of Rs. 7 crores to a third party (K. Srinivasulu) for distribution during State Assembly elections. Assessee sought cross-examination of said third party, but the Assessing Officer completed the assessment relying only on seized loose sheets, not on the third party’s statement. Since the Department had not relied on the statement of said third party in either the Section 153C notice or the assessment order, but had proceeded solely on the basis of seized loose sheets, the assessee could not claim violation of principles of natural justice on the ground of denial of cross-examination of said third party. Therefore, assessment under Section 153C and penalty under Section 271AAC were not vitiated for violation of principles of natural justice.  (AY. 2017-18)