Section 65B admissibility of electronic evidence failed, so the cash interest addition was deleted for lack of corroboration.

Addition based on a pen drive, its printouts and vouchers seized from a third party was held unsustainable where the digital evidence had already been found inadmissible for failure to satisfy the mandatory certificate requirements under Section 65B(2) and Section 65B(4) of the Indian Evidence Act, 1872. The Tribunal also found that no independent or corroborative material was produced to show that the assessee had actually paid the alleged cash interest. In the absence of admissible electronic evidence and supporting proof, the alleged cash interest payment could not be the basis of the addition, and the addition was deleted.

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Issues: Whether the addition of Rs. 11,17,507 as alleged cash interest payment was sustainable when it was based on electronic material held to be inadmissible under Section 65B of the Indian Evidence Act, 1872 and there was no corroborative evidence.

Analysis: The addition was founded on a pen drive and the printouts generated from it, together with vouchers seized in the search of a third party concern. The Tribunal noted that in the connected proceedings the same digital material had already been held to be inadmissible because the certificate required for electronic evidence did not satisfy the mandatory conditions under Section 65B(2) and Section 65B(4) of the Indian Evidence Act, 1872. It further noted that the Revenue had not produced any independent or corroborative material to establish that the assessee had in fact paid the alleged interest in cash. In these circumstances, the electronic material could not form a valid basis for the addition.

Conclusion: The addition of Rs. 11,17,507 was not sustainable and was deleted.

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