Digital evidence in search assessments must be authentic and duly corroborated; mechanical section 153D approval is invalid.

Search assessments based principally on screenshots, WhatsApp chats and images from seized mobile devices require reliable proof of authenticity, an unbroken chain of custody, and proper digital-evidence handling; absent such corroboration from books, documents or other physical evidence, the material may lack sufficient evidentiary credibility to sustain additions. Prior approval under section 153D must also show independent application of mind to each draft assessment and the material relied upon; a bare or mechanical sanction is inadequate and invalid. The note therefore emphasises that electronically driven additions and approvals must satisfy both evidentiary reliability and statutory scrutiny.

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Issues: (i) Whether additions based mainly on electronic material retrieved from seized mobile devices could be sustained in the absence of reliable proof of authenticity, continuity of custody, and proper compliance with the prescribed digital-evidence procedure; (ii) Whether approvals granted under section 153D were vitiated for want of independent application of mind to the draft assessments and the material relied upon.

Issue (i): Whether additions based mainly on electronic material retrieved from seized mobile devices could be sustained in the absence of reliable proof of authenticity, continuity of custody, and proper compliance with the prescribed digital-evidence procedure.

Analysis: The additions rested substantially on screenshots, WhatsApp chats, and images said to have been extracted from mobile devices and linked to alleged unaccounted transactions. The record did not establish a complete and reliable chain of custody from seizure to extraction and use in assessment, and the material placed before the Tribunal did not satisfactorily show how the working copies were handled or how the relied-upon outputs were produced for assessment purposes. The Tribunal also found that the electronic material was secondary in nature and lacked adequate corroboration from independent books, documents, or other physical evidence. In these circumstances, the Tribunal held that the digital material did not possess sufficient evidentiary credibility to sustain the disputed additions.

Conclusion: The issue was decided in favour of the assessee and against the Revenue.

Issue (ii): Whether approvals granted under section 153D were vitiated for want of independent application of mind to the draft assessments and the material relied upon.

Analysis: The approval was examined in the context of long, electronically driven search assessments involving multiple years and substantial additions. The approval letters did not show any real engagement with the specific issues, the digital-evidence concerns, or the manner in which the Assessing Officer had used the material. The Tribunal held that section 153D requires a meaningful prior approval for each assessment year, and that a bare or ritualistic sanction does not satisfy the statutory requirement. Since the approval reflected no discernible application of mind to the critical aspects of the draft assessments, it was held to be mechanical and invalid.

Conclusion: The issue was decided in favour of the assessee and against the Revenue.

Final Conclusion: The assessments could not survive because the core additions were founded on unreliable electronic material and the statutory prior approval was vitiated. The assessee's appeals succeeded and the Revenue's appeals failed, with the impugned assessments set aside.

Ratio Decidendi: Where search assessments rest principally on digital material, the Revenue must establish authenticity, continuity of custody, and reliable admissibility of the electronic evidence, and prior approval under section 153D must reflect independent application of mind to the draft order and the material on record.

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