TaxTMI 
TaxTMI 
2026 (1) TMI 883
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....ntifiable as Property No.52, Shankar Vihar, New Delhi which has been sold by Naresh Arora and purchased by Arti Garg vide sale deed dated 30.12.2020. Naresh Arora declared long term capital gain of Rs. 2 crores in the return filed on 25.12.2021 while Arti Garg in the return filed had declared income of Rs. 9,30,880/-. The Department's case is that a search was conducted on one Shri Praveen Kumar Jain, property dealer which led to recovery of electronic evidences in the form of digital image of slip allegedly showing consideration of Rs. 5.50 crores instead of Rs. 3.5 crores for which there is allegation that Rs. 2 crores were paid in cash. The Department relied on the admission of Arti Garg which was retracted on 31.08.2021. An addition of Rs. 2 crores was made by the AO on alleged cash component of Rs. 5.5 crores under section 69C of the Income-tax Act, 1961 (for short 'the Act') on alleged 1% commission income in the hands of Naresh Arora and Rs. 2 crores in the hands of Arti Garg u/s 69 of the Act alleging that an amount of Rs. 2 crores was paid in cash over and above Rs. 3.5 crores which was paid by banking channels for purchase of property under consideration. 4. Now what b....
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....rs - Civil Appeal No.11339-11342 of 2018 dated August 20, 2025 has been relied to contend that a certificate not given in the prescribed format per se will not make certificate invalid specially when authenticity of the document is not in dispute. 6. We find that both the appellants have raised Ground Nos.2 & 3 which are similar and for convenience, we reproduce ground nos.2 & 3 as under :- "2. That on facts and circumstances of the case, the Ld. CIT(A) has erred in relying on a digital image of a slip allegedly found from the mobile phone of a third party without ensuring that the safeguards for usage of digital evidence u/s 65B. of the Indian Evidence Act, 1872 were complied with thereby rendering the aforesaid evidence inadmissible, leaving no ground to sustain the addition. 3. That on facts and circumstances of the case the ld~ CIT(A) has erred on facts and in law in failing to appreciate that the digital image of the alleged slip, allegedly found from the mobile phone of a third party, without determining its veracity from the party concerned i.e. Parveen Kumar Jain or providing any opportunity to the Appellant to cross-examine him could not have been used....
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....s in the registered sale deed and records a total consideration of Rs. 30,00,000/- recorded in the sale deed on 25.08.2020, the two-day gap being attributable to standard banking clearance processes. The seller's signature (Sh. Naresh Arora) on the slip matches that on the sale deed, providing a direct link between the two documents. There is also clear mention of cash payment of Rs. 21 lakh on the said slip. As per image, entire consideration was to be paid by 30.12.2020. The payment schedule in registered sale deed states that the payment by banking Channel was made by 29.12. 2020. The appellant's demand for cross-examination of Shri Praveen Jain is misplaced, as the evidence is documentary and self-contained. Moreover, Praveen Jain made himself absent for cross- examination as per remand report of the AO which again indicates that whole transaction was not above board. 8.3 The appellant alleges that her statement, recorded on 08.01.2021 under Section 132(4) of the Income Tax Act, 1961, during a search operation, was coerced and argues that its retraction via an affidavit dated 31.08.2021 nullifies its' evidentiary value. This contention fails scrutiny on mul....
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....ankar Vihar, lending contextual plausibility to the inference of unrecorded funds. 8.6 The slip's specifics tie it directly to the transaction: the advance payment of Rs. 30,00,000/- dated 23.08.2020 matches the sale deed's payment timeline, and the seller's signature corroborates its authenticity. Under Section 69, the burden shifts to the appellant to explain the source of the additional Rs. 2,00,00,000/-. It is trite law that mere denial does not discharge this burden; the assessee must furnish tangible evidence. This evidentiary vacuum fortifies the AO's position. 8.7 Principle of "preponderance of probability" as endorsed by the Supreme Court in Sumati Dayal v. CIT (1995) 214 ITR 801, is apt in this context. Direct evidence of cash transactions is inherently rare, and tax authorities may draw inferences from circumstantial evidence when it converges to a compelling conclusion. Here, the digital slip, the valuation discrepancy, the appellant's partial admission of cash payments, and local market practices collectively establish a strong probability of an undisclosed investment of Rs. 2,00,00,000/-. The appellant's failure to counter thi....
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....nd electronic evidence from individuals, corporate bodies and/or from the public domain. By way of this enactment, amendments were also brought in other laws like Indian Penal Code, Indian Evidence Act and Criminal Procedure Code, (Cr.PC). The Income-tax Act, 1961 has also been amended thrice by way of Finance Act 2001, Finance Act 2002 and Finance Act 2009 thereby according recognition to electronic evidence, facilitating access to them and giving when need be, powers to impound and seize them. By Finance Act, 2001, Clause (22AA) was inserted in Section 2 to provide that the term "document" in Income Tax Act, 1961, includes an electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000. By Finance Act, 2002, Clause (iib) was inserted in Sub- Section (1) of Section 132 requiring any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other docu....
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....rver, mobile phone, i-Pod or any such device. The above amendment has thus specifically given recognition to electronic record as admissible evidence at par with a 'document'. Further, the powers to impound/copy a document during a survey action u/s 133A and power to seize a document during a search and seizure operation has also been automatically extended to electronic records as a result of the amendment. By way of second amendment, provisions of section 132 (l)(iib) were inserted facilitating access to the electronic devices including computer, containing document or books of accounts in the form of electronic records by making it obligatory for the person under control of such device to afford the necessary facility to inspect such records. By Finance Act, 2009, clause (c) was inserted in sub-section (1) of Section 282 providing that service of notice in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000) will constitute valid service. Under Indian Evidence Act there are several references to documents and records and entries in books of account and their recogniti....
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....f description of the case, details/description of the objects, date and time of collection of the objects, Status of the objects when collected (On or Off), Seized from - person, organization, location etc should be included in the Assessment Order. * Digital Evidence Collection Form, Mobile Phone Evidence Collection Form should be enclosed in the order to show the initial state of the Digital Evidence. * Digital Forensic Report( Given by Forensic Examiner) containing details of hash value and the details of all mahazar drawn to open the digital evidence at various times to gather further evidences should be included as an annexure to the assessment order. If the chain of custody form is present, the same can be annexed to the assessment order. This will establish the integrity of the data before any court of law. * The Key digital evidences retrieved if deleted along with the description of the same, in case of business application software, a note on how the business application software is and the technical details of all critical components. * Whether these digital evidences have been confronted to the assessee under any section of the law? T....
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....team. 15. More particularly with regard to phones of Pankaj Kumar Jain Iphone XS mentioned in the certificate MD5 hash value and SHA1 hash value have been reproduced but even IMEI of the device is not mentioned. 16. There is nothing in the assessment order as to how subsequently after the search and seizure operation leading to recovery of the mobile of Praveen Kumar Jain on 07.01.2021, the master copy and working copy were analysed by the investigation wing and how the same reached in the hands of the AO so as to have enabled the AO to take out and retrieve the image and use it as a part of evidence in the show cause notice issued on 23.11.2022 and so as to be further reproduced in the assessment order. 17. It also comes from the assertion of the AO in para 7.6 and findings of the ld. CIT(A) that they did not dispute the necessity of a certificate under section 65B of the Indian Evidence Act, 1872 and believing compliance of the same, the digital evidences have been relied. 18. However, we are of the considered view that none of the extensive provisions provided in the CBDT Manual providing instructions with regard to collection of digital evidences have been followed.....