Electronic evidence and section 65B safeguards failed to support an addition where authenticity and chain of custody were unproven.

Electronic evidence cannot support an addition unless its authenticity, integrity, and chain of custody are satisfactorily established, including proper compliance with section 65B safeguards. Here, the digital image was the sole basis of the addition, but the record did not adequately show how it was retrieved, analysed, or reliably linked to the assessee's transaction, and no proper forensic trail was demonstrated. In the absence of dependable surrounding material and evidentiary sanctity, the electronic record was insufficient to sustain an inference of undisclosed investment, and the addition was deleted in favour of the assessee.

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Issues: Whether the addition could be sustained on the basis of a digital image relied upon as electronic evidence when the safeguards governing electronic records, including compliance with section 65B, were not satisfactorily established.

Analysis: The digital material was the foundation of the addition, but the record did not satisfactorily show a reliable chain of custody from seizure to extraction and use in assessment. The assessment material did not adequately explain how the image was retrieved, analysed, and linked to the assessee's transaction, nor did it demonstrate that the electronic evidence was handled in a manner that preserved its authenticity and integrity. In the absence of a properly demonstrated forensic trail and reliable surrounding material, the electronic record could not be treated as having the necessary evidentiary sanctity to support a conclusive inference of undisclosed investment.

Conclusion: The addition based on the impugned electronic evidence could not be sustained and the issue was decided in favour of the assessee.

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