Electronic evidence in search assessments must be authentic, corroborated and properly approved before additions can survive.

Additions based mainly on images, WhatsApp/SMS extracts and software data from seized devices require authentic electronic evidence, supported by a credible chain of custody, proper certification and demonstrable data integrity before they can sustain assessment. Where the electronic snippets are not corroborated by material linking them to actual unaccounted transactions, such additions cannot stand. Prior approval under section 153D is not a formality; the approving authority must independently examine the draft assessments year-wise and assessee-wise, the supporting material and the evidentiary defects. Mechanical approval without real application of mind renders the safeguard ineffective and vitiates the assessments.

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Issues: (i) Whether additions based substantially on electronic material extracted from seized devices were sustainable in the absence of legally reliable and properly authenticated electronic evidence; (ii) whether approval granted under section 153D was valid when the approving authority did not independently apply its mind to the draft assessments and the supporting material.

Issue (i): Whether additions based substantially on electronic material extracted from seized devices were sustainable in the absence of legally reliable and properly authenticated electronic evidence.

Analysis: The assessment was founded mainly on images of software data and WhatsApp/SMS extracts recovered from mobile devices. The electronic material was treated as secondary evidence and its reliability depended on proper collection, preservation, extraction and verification. The governing standards for digital evidence, as recognised in the departmental manual and the principles underlying section 65B of the Indian Evidence Act, required a credible chain of custody, appropriate certification, and demonstrable integrity of the data from seizure to use in assessment. The record did not satisfactorily show complete compliance with these safeguards at the stage when the relied-upon extracts were produced and used. In the absence of corroborative material connecting the electronic snippets with actual unaccounted transactions, the additions could not rest only on such material.

Conclusion: The additions founded on the impugned electronic evidence were unsustainable and were rightly set aside in favour of the assessee.

Issue (ii): Whether approval granted under section 153D was valid when the approving authority did not independently apply its mind to the draft assessments and the supporting material.

Analysis: Prior approval under section 153D is not an empty formality. It is meant to ensure that the superior authority examines the draft assessment year-wise and assessee-wise, and verifies whether the assessment has been framed in accordance with law. Where the assessment is driven by complex and primarily electronic evidence, the approving authority is expected to consider the nature of the material, the manner of its collection and admissibility, and the basis of the proposed additions. The approval in the present case was found to be mechanical and lacking any meaningful reflection of independent consideration of the core issues and the evidentiary infirmities.

Conclusion: The approval under section 153D was invalid and vitiated the assessments.

Final Conclusion: The assessments could not survive, as the foundation of the additions was legally infirm and the statutory safeguard of prior approval was not duly complied with.

Ratio Decidendi: In search assessments founded on digital material, electronic evidence must be shown to be authentic, properly preserved and corroborated before it can sustain additions, and approval under section 153D must reflect real application of mind to the draft assessment and supporting record.

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