Summary: The ITAT Delhi in DCIT vs. Balar Marketing Pvt. Ltd. held that additions in search assessments cannot be sustained solely on unauthenticated electronic evidence such as WhatsApp chats, SMS messages, and screenshots of alleged parallel accounts without strict adherence to evidentiary principles. In this case, the Revenue relied entirely on digital data extracted from seized devices and statements recorded during search, without any corroborative material like stock discrepancies or third-party confirmations. The Tribunal emphasized that even though strict rules of the Indian Evidence Act may not apply, fundamental requirements of authenticity, reliability, and probative value remain essential, especially for electronic evidence, which must comply with section 65B and established forensic protocols. It found serious lapses including absence of chain of custody, incomplete certification, and lack of independent verification. The Tribunal also held that statements alone cannot justify additions without corroboration and that suspicion cannot replace proof. Further, mechanical approval under section 153D invalidates assessments. Consequently, the additions were deleted.
Core Issue:- The primary issue before the Tribunal was whether additions in search assessments could be sustained solely on the basis of electronic evidence such as WhatsApp chats, SMS messages and images of “Sambhav Software”, without proper authentication and compliance with section 65B and digital evidence protocols. A further issue was whether approval granted under section 153D was mechanical, thereby invalidating the assessment.
