2024 (6) TMI 541 - AT - Income Tax

Addition based on electronic data obtained during a search operation u/s 132 - one seized document was obtained in the form of printout from WhatsApp messages in the mobile in one of the employees - HELD THAT - There is no dispute on the fact that the Revenue authorities have not filed the certificate u/s 65B of the Indian Evidence Act. However as per the decision of the Hon'ble Madras High Court ( 2024 (2) TMI 1283 - MADRAS HIGH COURT as cited by the Ld. DR held under Para No.77 (iii) of the order that, the Digital Evidence Investigation Manual has been issued by the CBDT by virtue of powers available u/s 119 of the I.T. Act and hence, the Income Tax Authorities and all the other persons employed in the execution of this Act are bound to observe and follow such orders, Instructions and directions issued by CBDT . The Hon'ble High Court also held that if the procedure as specified under the CBDT Manual have not been followed while relying on the electronic record, the said record must be supported by corroborative evidence. As abundantly clear from the decision of the Hon'ble Madras High Court (Supra) that in the absence of such E-certificate, (65B Certificate) the electronic data must be supported by corroborative evidences. The sale deed on which the Ld. DR is relying as corroborative evidence does not confirm that whether any interest was to be payable or paid to the assessee. There is no reference of paying of on money or cash amount or interest by the assessee in the said sale deed. Hence, under such circumstances, the sale deed cannot be taken as corroborative evidence. Hence, in our considered opinion, the Revenue Authorities has made the addition without obtaining any E-certificate and without any corroborative evidence with regard to the electronic data. Hence, we delete the addition made by the Revenue authorities, thereby allowing the appeal of the assessee.

Summary

Issues involved: Appeal against addition of Rs. 60,26,040/- made by the Assessing Officer and sustained by the Commissioner of Income Tax (Appeals) based on electronic data obtained during a search operation u/s 132 of the Income Tax Act, 1961.

Facts: The assessee, an individual and M.D. of a company, filed his income tax return u/s 139(4) declaring total income. A search operation u/s 132 was conducted, leading to an assessment u/s 153A with an addition of Rs. 6,98,19,600. The present appeal concerns an addition of Rs. 60,26,040 based on electronic data related to interest payment on advances given by the assessee for a land deal.

Contentions: The assessee argued that the addition was made solely on electronic data without proper certification or corroborative evidence, relying on legal precedents. The Revenue authorities contended that the Indian Evidence Act does not apply to them and cited relevant court decisions supporting their position.

Decision: The Tribunal noted that no certificate u/s 65B of the Indian Evidence Act was filed by the Revenue authorities. Referring to a decision of the Madras High Court, it emphasized the need for corroborative evidence when relying on electronic data without proper certification. The Tribunal found that the sale deed cited by the Revenue authorities did not confirm any interest payment to the assessee, thus lacking as corroborative evidence. Consequently, the addition made by the Revenue authorities was deemed unjustified, and the appeal of the assessee was allowed.

Conclusion: The Tribunal ruled in favor of the assessee, deleting the addition of Rs. 60,26,040 made by the Revenue authorities based on electronic data lacking proper certification and corroborative evidence.