Protective addition based on third-party WhatsApp evidence failed where no incriminating material or cross-examination was provided.

Protective addition under section 69C was found unsustainable where the Revenue relied only on a third party's WhatsApp communication and a retracted section 132(4) statement, while no incriminating material was found from the assessee. The assessee was not given cross-examination, the electronic communication did not show actual payment by the assessee, and no matching message from the assessee was traced. The addition was treated as resting on suspicion rather than proof, and the objection regarding section 65B compliance further weakened the evidentiary value of the electronic material. Deletion of the addition was therefore justified.

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Issues: Whether a protective addition under section 69C could be sustained on the basis of a third party's WhatsApp communication and statement, when no incriminating material was found from the assessee and no opportunity of cross-examination was given.

Analysis: The only material relied upon was a WhatsApp communication recovered from a third party and that person's statement under section 132(4) of the Income-tax Act, 1961. The assessee's premises yielded no incriminating material. The statement was later retracted, and the assessee was not afforded cross-examination. The communication itself did not establish actual payment by the assessee, and no corresponding message from the assessee was traced. The addition therefore rested on suspicion rather than proof. The objection regarding compliance with section 65B of the Indian Evidence Act, 1872 also reinforced the unreliability of the electronic material against the assessee.

Conclusion: The protective addition was unsustainable, and deletion of the addition was justified.

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