Incriminating third-party digital evidence is required for 153C jurisdiction; uncorroborated WhatsApp data cannot sustain additions.

In an unabated search-related assessment, jurisdiction under section 153C could be assumed only on the basis of specific, credible and incriminating material pertaining to the assessee; unverified digital data, unsigned calculations and third-party statements that did not specifically link transactions to the assessee were insufficient, so the notice was quashed. Additions under sections 69 and 69A could not rest on the same uncorroborated mobile-phone data and WhatsApp chats, or on assumed return calculations without loan documents, receipts, payment trail or other independent proof; the additions were therefore deleted.

---

---

Issues: (i) Whether the assumption of jurisdiction under section 153C of the Income-tax Act, 1961 was valid in the absence of incriminating material found in the third-party search; (ii) Whether the additions made under sections 69 and 69A of the Income-tax Act, 1961 on the basis of uncorroborated mobile-phone data and WhatsApp chats were sustainable.

Issue (i): Whether the assumption of jurisdiction under section 153C of the Income-tax Act, 1961 was valid in the absence of incriminating material found in the third-party search.

Analysis: The assessment year concerned was an unabated assessment, so the jurisdiction under section 153C could be sustained only if the material received from the searched person constituted cogent and incriminating material pertaining to the assessee. The envelopes depicted in the digital material did not bear the assessee's name, the sheet said to contain interest calculations was unsigned and unauthenticated, and the statements recorded from the searched persons did not specifically attribute any transaction to the assessee. The material was therefore treated as uncorroborated digital data lacking independent verification and evidentiary value for the purpose of initiating proceedings under section 153C.

Conclusion: The assumption of jurisdiction under section 153C was invalid and the notice was quashed.

Issue (ii): Whether the additions made under sections 69 and 69A of the Income-tax Act, 1961 on the basis of uncorroborated mobile-phone data and WhatsApp chats were sustainable.

Analysis: The additions were founded substantially on the same unverified third-party digital material and on reverse working from an assumed rate of assured return. There was no loan agreement, receipt, signed document, payment trail, or other independent corroboration to establish unexplained investment or receipt of cash interest. The investee company had denied any transaction with the assessee, and the assessment framed in its case on the same search did not make any such addition. On these facts, the additions rested on conjecture rather than proved material.

Conclusion: The additions under sections 69 and 69A were not sustainable and were deleted.

Final Conclusion: The proceedings under section 153C could not be sustained on the material relied upon, and the consequential additions also failed for want of corroborative evidence.

Ratio Decidendi: In an unabated search-related assessment, jurisdiction under section 153C can be assumed only on the basis of specific, credible and incriminating material pertaining to the assessee, and additions under sections 69 and 69A cannot be made on the basis of uncorroborated third-party digital data, dumb documents or mere suspicion.

---