Third-party WhatsApp evidence alone cannot sustain an unexplained expenditure addition without corroboration and proper electronic proof.

Third-party WhatsApp chats and a retracted third-party statement, without independent corroboration, cannot by themselves sustain an addition for unexplained expenditure under section 69C. The ITAT Mumbai noted that the assessee was not the source of the electronic record, the alleged message did not name the assessee or show that the cash receipt was on the assessee's behalf, no live link was established through enquiry, and no material emerged from the assessee's search. The electronic record also lacked the section 65B certificate. On that basis, the material was treated only as a trigger for investigation, not proof, and the addition was held unsustainable.

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Issues: Whether the addition under section 69C on account of alleged cash payment could be sustained solely on the basis of third-party WhatsApp chats and a retracted third-party statement, without independent corroborative evidence linking the assessee to the alleged transaction.

Analysis: The addition rested on WhatsApp images found from a third party's mobile phone and on that third party's statement recorded during search. The assessee was not the source of the electronic record, and the alleged message did not name the assessee or establish that the cash receipt was on the assessee's behalf. The statement of the third party was retracted, no corroborative material was found in the assessee's search, and no enquiry established any live link between the assessee and the alleged payment. The electronic record was also unsupported by the requisite certificate under section 65B of the Indian Evidence Act, 1872. In these circumstances, the material was at best a basis for investigation and not proof of unexplained expenditure in the assessee's hands.

Conclusion: The addition under section 69C was unsustainable and its deletion was correctly upheld, in favour of the assessee.

Final Conclusion: A third-party digital record and a retracted third-party statement, without independent corroboration linking the assessee to the alleged transaction, cannot justify an addition for unexplained expenditure.

Ratio Decidendi: Uncorroborated third-party material, including electronic evidence lacking the mandatory evidentiary foundation, cannot by itself sustain an addition unless independent evidence establishes a direct nexus with the assessee.

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