Case Law Details
Anil Kumar Gupta Vs ACIT (ITAT Delhi)
In the case of Anil Kumar Gupta Vs ACIT, the Income Tax Appellate Tribunal (ITAT), Delhi, allowed the assessee’s appeal relating to Assessment Year 2018-19 and held that proceedings initiated under Section 153C of the Income Tax Act were unsustainable due to defects in the satisfaction note and absence of mandatory certification under Section 65B of the Evidence Act for electronic evidence.
The assessee had originally filed a return declaring income of Rs.19.46 lakh. A search under Section 132 was conducted on 03.05.2018 in the case of Seven Seas Hospitality Pvt. Ltd. group. During the search, certain documents and electronic records allegedly relating to the assessee were found and seized from the searched entity. Based on this material, the Assessing Officer (AO) initiated proceedings under Section 153C against the assessee.
The dispute arose from the marriage function of the assessee’s daughter, which had been organized through Seven Seas Hospitality Pvt. Ltd. According to the AO, a seized electronic document contained details of estimated expenses for a marriage function allegedly held on 30.06.2017. The document reflected total estimated expenses of Rs.46.15 lakh, out of which Rs.12.15 lakh was shown as received through cheque and the balance allegedly settled in cash.
The AO relied on statements and replies obtained from Seven Seas Hospitality Pvt. Ltd., wherein it was stated that cash advances of Rs.10 lakh each had been received on two dates along with cheque payments of Rs.12.15 lakh. Since the assessee admitted only the cheque payments and denied any cash transactions, the AO treated the balance amount as unexplained expenditure and made an addition of Rs.31.85 lakh under Section 69C read with Section 115BBE.
The Commissioner of Income Tax (Appeals) [CIT(A)] upheld both the validity of proceedings under Section 153C and the addition made by the AO. The assessee challenged the order before the Tribunal on several grounds, including invalid assumption of jurisdiction under Section 153C, defective satisfaction notes, lack of nexus between seized material and assessment years, non-compliance with Section 65B of the Evidence Act, and denial of cross-examination.
Before the Tribunal, the assessee pointed out that the actual marriage had taken place on 19.06.2017 and not on 30.06.2017 as recorded in the satisfaction note. To support this contention, the assessee produced the marriage certificate and invitation card. The assessee argued that the seized document related to a function held on a different date and therefore could not automatically be linked to the assessee’s marriage function.
The assessee further contended that the satisfaction notes supplied by the department were undated and appeared to have been prepared after issuance of notice under Section 153C. It was also argued that the AO mechanically initiated proceedings for the entire block period from AY 2013-14 to AY 2019-20 despite the alleged incriminating material pertaining only to AY 2018-19. The assessee relied on several judicial precedents including PCIT Vs Sinhgad Technical Education Society and Saksham Commodities Ltd. v. CIT to argue that proceedings under Section 153C require a specific nexus between seized material and the relevant assessment year.
A major issue before the Tribunal concerned admissibility of electronic evidence. The assessee argued that the department relied entirely on electronic records recovered from a hard disk, but no certificate under Section 65B of the Evidence Act, 1872 had been obtained to establish authenticity and admissibility of the electronic evidence. Reliance was placed on the Supreme Court decision in Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal and the Mumbai Tribunal decision in ACIT vs Anand Jaikumar Jain.
The Tribunal examined the seized document and observed that the AO himself had relied on flawed facts while recording satisfaction. The Tribunal noted two major defects: first, the satisfaction note mentioned an incorrect marriage date, and second, the AO relied upon the initial estimated amount instead of the finalized settlement amount recorded in the seized material. The Tribunal observed that the estimate initially stood at Rs.44.15 lakh but the actual finalized settlement reflected in the document was Rs.32.15 lakh, out of which Rs.12.15 lakh had already been paid through cheque.
The Tribunal further held that the entire proceedings were based on electronic evidence, and therefore compliance with Section 65B of the Evidence Act was mandatory. On enquiry, the departmental representative admitted that no such certificate was available on record. The Tribunal held that obtaining a Section 65B certificate verifying the authenticity and reliability of electronic records was a basic requirement before initiating proceedings under Section 153C. In absence of such compliance, reliance on the electronic material was improper.
Relying on the principles laid down in the decision of Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal and the Mumbai Tribunal ruling in ACIT vs Anand Jaikumar Jain, the Tribunal held that electronic evidence without a valid Section 65B certificate was inadmissible. Consequently, the Tribunal allowed the assessee’s appeal and held that initiation of proceedings under Section 153C based on such defective electronic evidence was not proper.
The Tribunal clarified that the issue regarding approval under Section 153D was left open. Accordingly, the assessee’s appeal was partly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. This appeal has been filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)-30, New Delhi (hereinafter referred to as ‘ld. CIT (A)’) dated 12.01.2023 for the Assessment Year 2018-19.
2. Brief facts of the case are, assessee filed its original return of income on 30.08.2018 declaring income of Rs.19,46,090/- and the same was processed under section 143 (1) of the Income-tax Act, 1961 (for short ‘the Act’) at returned income. A search and seizure operation u/s 132 of the Act was carried out in Seven Seas Hospitality Pvt. Ltd. group of cases on 03.05.2018. During the course of search, various documents/books of account were found and seized. The case of the assessee was centralized with Ward 58 (3), Delhi. The Assessing Officer observed that while examining the seized documents of the group, certain documents pertaining to Shri Anil Kumar Gupta, the assessee were found. The Assessing Officer of the searched person recorded his satisfaction on 05.02.2021 that these documents did not belong to the searched person and belongs to the assessee, the person other than searched person. The Assessing Officer of the assessee also recorded his satisfaction on 05.02.2024 that action u/s 153C is attracted. Subsequently, the case was transferred to Central Circle 30. Accordingly, notice u/s 153C r.w.s. 153A was issued on 05.02.2021. In response, the assessee filed its original return of income. Notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee. In response, ld. AR for the assessee attended the proceedings and submitted relevant information as called for.
3. The Assessing Officer, during assessment proceedings, observed that the assessee organised marriage function of his daughter and it was contracted to Seven Seas Hospitality Pvt. Ltd.. During the course of search, at the premises of Seven Seas Hospitality Pvt. Ltd., Annexure A-25 was found and seized. As per one of the images found from the Hard Disk, there is estimate of function organised by the assessee on 30.06.2017 and the same was contracted to the searched entity. The same was reproduced at page 3 of the assessment order. The Assessing Officer observed that the document found during the search contains carefully prepared details of all the transactions and it clearly states that cheque as well as cash was received as advance by Seven Seas Hospitality Pvt. Ltd. for the function of the assessee. From the document, it was observed that estimate of function was Rs.46,15,000/- and out of this, payment of Rs.12,15,000/- was made by cheque and rest were in cash. During the post search investigation, it was submitted by Seven Seas Hospitality Pvt. Ltd. that function was organised on 30.06.2017 by the assessee and bill of Rs.12,15,000/- was raised and the settlement of Rs.12,15,000/- was explained.
4. Further in para 8 of the assessment order, the Assessing Officer observed that during the course of assessment proceedings in the case of Seven Seas Hospitality Pvt. Ltd., they submitted reply regarding payment received on 03.04.2021. The following was submitted by them with regard to receipts from the assessee, for the sake of clarity the same are reproduced below :-
“Advance in cash of Rs.10 lacs was received on 02.04.2016 and Rs.10 lacs on 25.05.2016, and with regard to various payments made to other persons making a total of Rs.12 lacs it is submitted that this was directly paid by the customer to the respective parties. And the balance amount was received through two cheques/RTGS of Rs.8,00,000 on 12.07.2017 and Rs.4,15,000/- on 13.07.2017. Bill No.6141 dated 30.06.2017 of Rs.12,15,000/- was also raised.”
5. On enquiry with the assessee, the assessee submitted vide letter dated 18.04.2021 in which the assessee has denied the same.
6. After considering the submissions of the assessee, the Assessing Officer found it not acceptable and observed that Seven Seas Hospitality Pvt. Ltd. has confirmed that they received advance of Rs.20,00,000/- from the assessee and he stated that the findings are not on statement as mentioned by the assessee and the assessee made a submission that it only paid Rs.12,15,000/- which is not acceptable considering the fact that the payment of the assessee through RTGS/Cheque were verified from the bank account of Seven Seas Hospitality Pvt. Ltd.. Therefore, the seized document cannot be partly genuine. Therefore, the amount of cash mentioned in the seized document is also true. Accordingly, he proceeded to make the addition of Rs.31,85,000/- i.e. the difference of amount mentioned in the said slip less the payment made by cheque (Rs.46,15,000/- – Tax – Cheque payment).
7. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT(A)-30, New Delhi and filed detailed submissions before the ld. CIT (A). After considering the submissions of the assessee, ld. CIT (A) dismissed the grounds challenging the proceedings u/s 153C of the Act, challenging the validity of the assessment order completed in violation of provisions of section 153D and sustained the additions made by the Assessing Officer.
8. Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal :-
“1. The impugned order of Ld. CIT (A) and the assessment order by the Ld. AO both are unsustainable in law as the same are outcome of assessment proceedings initiated u/s 153C of IT Act without complying with mandatory requirement u/s 153A r.w.s. 153C of IT Act.
2. The Ld. CIT (A) has erred both in law and in facts of the case in upholding the assessment order passed u/s 153C of IT Act ignoring the fact that the same has been passed based on mechanical approval obtained u/s 153D of IT Act as the Ld. CIT (A) failed to verify the above fact as the above information is within the domain of the department and it is not in the knowledge of the appellant.
3. The Ld. CIT (A) has erred both in law and in facts of the case in upholding the addition of Rs.31,85,000/- u/s 69C rws 115BBE of IT Act and also enhancing the addition by Rs.2,15,000/- on the basis of evidences found in the case of search on third party without verifying the fact that the evidences found were in the nature of rough estimates and same are in the category of dumb documents and no opportunity of cross examination of the person from whom the evidences were seized was allowed either by the AO or by Ld. CIT (A).”
9. At the time of hearing, ld. AR for the assessee brought to our notice that notice issued u/s 153C of the Act wherein it is mentioned that function organised by the assessee on 30.06.2017 was recorded and he submitted that in fact the marriage was actually conducted on 19.06.2017 not on 30.06.2017. In this regard, he filed certificate of marriage in support of his submission which is placed on record. As per the marriage certificate under Compulsory Marriage Act, it is mentioned that marriage was conducted at Ritz Ambience Golf Drive on 19.06.2017 and he also submitted copy of the invitation card to bring on record that the marriage was actually conducted on 19.06.2017. With regard to satisfaction note and attachment of certificate under section 65B of the Evidence Act, 1872, he submitted as under :-
“Ground Nos 1 and 2: Non-Compliance of the requirements of the provisions of section 153C of the Act.
The undisputed facts of the case are that the impugned assessment was necessitated due to search on the premises of Seven Seas Hospitality Pvt Ltd& Seven Seas Hotel on 03.05.2018. Copies of the undated satisfaction notes, framed by the AO both in the capacity as the Ld AO of the searched person and as that of the other person i.e. the appellant, are placed in the paper book at pages 9-12.
The first objection regarding the satisfaction notes is that the both the satisfaction notes are undated which fact does not support the case of the department that the before issue of notice u/s 153C that, as per the requirement of section 153C(1) of the Act, necessary satisfaction has been recorded. The Ld CIT(A) has on the basis of the enquiry conducted with the AO held that both the satisfaction notes were framed on 05.02.2021 and this factual finding is based on the records submitted by the Ld AO during appeal proceedings.
It is not in dispute that satisfaction notes provided to the Ld AO during assessment proceedings are the same which were provided through email by the Ld AO to the counsel on email id suresh_associates@rediffmail.comon 27.02.2021 and none of the documents had any date mentioned thereon. On the basis of communication on 27.02.2021, the undated document could not be treated to have been framed on the date earlier than the date of communication i.e. 27.02.2021. If that be the case, the same may be treated as executed post issue of notice u/s 153C dated 05.02.2021. The Ld CIT(A) was not entitled to the date put up by the office of Ld AO post sharing of the same to the appellant through email on 27.02.2021. The Ld CIT(A) has allowed the department an opportunity to fiddle with the records by making them aware that the satisfaction provided to the appellant was undated. Merely putting the date subsequently shows that an attempt has been made to unscrupulously manipulate the records maintained in the ordinary course of business. In such circumstances, the presumption that the acts are done on the date given on the respective communications is not available and the notice u/s 153C issued may be treated as issued without necessary satisfaction as per requirement of sec 153C(1) of IT Act.
Without prejudice to above, the satisfaction note read together with annexure indicates that the Ld AO has recorded satisfaction based on the Annexure A -25 of Punchnama (Hard Disk).The said hard disk contained details of the expenses/payments made for a marriage function organized on 30.06.2017 and interalia the said disk also contained cash payments of Rs.34,00,000/- which were considered as income to be assessed in hands of appellant.
From the satisfaction note, it is evident that the proceedings u/s 153C rws 153A for AY’s 2013-14 to AY 2019-20 were initiated for the entire block of assessment years available in view of above provisions. The Ld AO has not identified which income need be assessed under above special provisions of the Act for which assessment year. Here, it is important to note that the Ld AO was under obligation to identify which incriminating material seized from the search has bearing on income for which AY and on that basis he was mandated to decide the question as to the specific assessment years or years he needs to proceed u/s 153C instead of initiating action for all the years forming block period as per proviso to section 153A(1) read with section 153C. Looking to the satisfaction note it may kindly be appreciated that the satisfaction note deals with the transactions pertaining to AY 2018-19 only and despite that peculiar fact, the Ld AO has initiated reassessment proceedings u/s 153C of the Act for all the six years. Hon’ble Supreme Court in the case of PCIT-3, Pune Vs Sinhgad Technical Education Society (2017) 397 ITR 344 (SC) has held that the nexus between issue of notice u/s 153C and the incriminating material found as a result of search must exist. Hon’ble Supreme Court in para 13 of the order has observed that one of the jurisdictional conditions precedent to the issue of a notice u/s 153C of the Act is that “money, bullion, jewellery or other valuable article or thing” or any “books of account or document must be seized or requisitioned for the relevant assessment year for issue of notice u/s 153C of the Act.”Further, Hon’ble Delhi High Court in para 31 has held in the case of Index Security Pvt. Ltd 86 taxmann.com 84 (Del) as follows:,
“As regards the section jurisdictional requirement viz., that the seized documents must be incriminating and must relate to the A.Ys. whose assessments are sought to be reopened, the decision of the Supreme Court in Commissioner of Income Tax-III, Pune Vs. Sinhgad Technical Education Society (supra) settles the issue and holds this to be an essential requirement. The decision of this Court in CIT -7 Vs RRJ Securities (2016) 380 ITR 612 (Del) and ARN Infrastructure India Ltd. Vs ACIT [2017] 394 ITR 569 (Del) also held that, in order to justify the assumption of jurisdiction under section 153C of the Act the documents seized must be incriminating and must relate to each of the AYs whose assessments are sought to be reopened.”
The Hon’ble Delhi High Court in Saksham Commodities Ltd. v. CIT, 2024 SCC OnLine Del 2551, decided on 9-4-2024 held that mere existence of a power to assess or reassess the six AYs’ immediately preceding the AY corresponding to the year of search or the “relevant assessment year” would not justify a sweeping or indiscriminate invocation of Section 153C of the Act. The jurisdictional AO would have to firstly be satisfied that the material received was likely to have a bearing on or impact the total income of years or years which may form part of the block of six or ten AYs’ and thereafter proceed to place the assessee on notice under Section 153C of the Act. The power to undertake such an assessment would be confined to those years to which the material might relate or was likely to influence. The Court opined that if there was not any material which would cast a doubt on the estimation of total income for a particular year or years, the AO would not be justified in invoking its powers conferred by Section 153C of the Act. In view of above the Ld AO was not justified in invoking jurisdiction u/s 153C of the Act for all the AY’ from AY 2013-14 to AY 2019-20 just because he had power under the Act to do so without correlating the material found in search on other assessee with the particular AY or AY’s falling in the block period.
The perusal of the satisfaction note will also show that a combined satisfaction notes for all the assessment years i.e. AY 2013-14 to AY 2019-20 covered by section 153C has been made by the Ld AO. The satisfaction note is vague, incoherent and non-communicative in the sense that the Ld AO does not identify the additional income to be assessed u/s 153 for each assessment year and does not also demonstrate how the amount of additional income has been arrived at for each of the AY’s involved and assessment proceedings initiated in the case. Such satisfaction note falls short of the requirement of section 153C(1) of the Act which requires the satisfaction of the AO’s of both the person searched as well as that of the other person that the documents/ assets pertaining such other person found in the course of search. The Hon’ble Karnataka High Court in Dy CIT vs Sunil Kumar Sharma vide decision dated 22.01.2024 in WP Nos 830-834 of 2022 quashed the assessment order framed in pursuance of 153C of the Act on the ground of the assessment proceedings initiated through a combined satisfaction note. The Hon’ble Apex Court has dismissed the SLP of the Department in SLP (Civil)Diary Nos 21526/2024 vide order dated 20.08.2024. The appellant therefore prays that the assessment order u/s 153C impugned in the present appeal need be quashed in view of the acceptance of the order of Karnataka High Court in Dy CIT vs Sunil Kumar Sharma(supra) .
The validity of the satisfaction note can also be judged on the basis of the fact incorporated therein. The perusal of the satisfaction note will show that significantly important date which is the sole premise on which the satisfaction has been framed is the date of function. As per the satisfaction note, the marriage function on behalf of the appellant was on 30.06.2017 and there was detail of the actual expenditure in the hard disk pertaining to the function allegedly held on behalf of the appellant on that date. But from the fact available on record, i.e. the invoice of the organizer(PB 28), the searched person M/s Seven Seas Hospitality P Ltd, the marriage function in the appellant’s family took place on 19.06.2017 not on 30.06.2017 as claimed in the satisfaction note and therefore, the estimate of the expenses related to function dated 30.06.2017 does not relate to the function held for the daughter of the appellant. This fact has been ignored by the Ld AO while recording satisfaction and the Ld AO was not justified in placing reliance on the expenses incurred in a different function in the same venue and replicating the same to the marriage function in the appellant’s family ignoring the fact that each marriage function has its own requirement in terms of level of the function and attendance of the guests. It is therefore prayed that satisfaction u/s 153C recorded is based on irrelevant material not pertaining to the appellant. The issue of notice u/s 153C is therefore without jurisdiction. The Hon’ble Jurisdictional Delhi High Court in the case of N S Software 403 ITR 259, Pepsico India Holding P Ltd 370 ITR 295, Arn Infrastructure 394 ITR 569 and Canyon Financial Services Ltd vs ITO 399 ITR 202 places heavy onus on the assessing officer initiating action u/s 153C to satisfy that the seized material does not belong to searched person and also need to be demonstrate that the same pertains to other person which in the present case is appellant. The above judgments have been extensively relied by co-ordinate Bench in case of ACIT vs Rangoli Buildtech P Ltd ITA No.5015/Del/2014.
These mistaken facts and contradiction in the respective satisfaction notes indicate non application of mind by both the authorities involved in reaching satisfaction as required u/s 153C of the Act.
Ground No.3 Merits of addition of Rs.31,85,000/- and enhancement Rs.2,15,000/- u/s 69C rws 115BBE of IT Act
The addition has been made on account of alleged unexplained expenditure on account of marriage of the daughter at the venue offered by Seven Seas Hospitality P Ltd(“SSHPL”).The Ld AO came in possession of some estimate of expenses of Rs.46,15,000/- of a marriage solemnized in the venue of the above SSHPL on 30.06.2017 as per which the amount of Rs.12,15,000/- were received through cheques and the balance received through cash. The above addition is based on the presumption that the above estimate on marriage on 30.06.2017 also holds good for the marriage solemnized on 19.06.2017. The fact that the marriage of the appellant’s daughter took place on 19.06.2017 and not on 30.06.2017 gets supported by the retail invoice No.6141 (PB 28) where the date of function mentioned to be 19.06.2017. The Event Managers Bill (PB 27) also shows function of the daughter of appellant on 19.06.2017 only. It is therefore a case of misapplication of facts. This fact that the marriage took place on 19.06.2017 has been reiterated and taken note of by Ld CIT(A) on page 14 in para (v), page 17 in para (iv) and page 24 in para 1therein.
Without prejudice to above, the two amounts of Rs.10,00,000/- each have been stated to have been paid by the appellant on 02.04.2016 and 25.05.2016 which is the part of the amount of Rs.34,00,000/- added in hands of the appellant. If that is the case, the year of taxation of above payments should have been AY 2017-18 and not AY 2018-19. Kindly refer para 8 at page 4 of AO order and the same have been taken note of Ld CIT(A) in para 15 at page 29.
In addition to above, the appellant seeks to submit that the undisputed fact emerging from above facts is that the basis of assumption of jurisdiction is the date/image taken from the electronic source. The reliance of such a material requires mandatory compliance in terms of sec 65B of the Evidence Act, 1872. The provisions of Section 65B of the Evidence Act, 1872 avers the conditions subject to which the electronic record is admissible as evidence. The Section specifies that any information contained in electronic record which is printed on paper, stored, recorded or copied in optical or magnetic media produced by a computer is deemed to be a document admissible in evidence on satisfaction of the conditions as provided under this Section and a Certificate determining the veracity of the record is obtained. The satisfaction note does not bear the fact of the department having obtained any certificate to verify veracity and reliability of the record relied upon. In absence of such compliance, the action taken by the department to initiate action u/s 153C is not sustainable in law. To support the above proposition of law, reliance in placed in the decision of ACIT vs Anand Jaikumar Jain ITA No.3820 to 3823/Mum/2019 dated 22.04.2022 (authored by Hon’ble AM). The above ground was taken before the Ld CIT(A) which is reproduced in page 24 at para 24 therein but the Ld CIT(A) dismissed this argument without adversely commenting on them.”
10. On the other hand, ld. DR for the Revenue brought to our notice page 3 of the assessment order wherein the details of marriage expenses were clearly mentioned in the note found during the search. Accordingly, he relied on the findings of the Assessing Officer.
11. Considered the rival submissions and material placed on record. We observed from the record submitted before us that there is certain confusion on the date of marriage which was recorded by the Assessing Officer in the satisfaction note i.e. 30.06.2017 whereas actual marriage was conducted on 19.06.2017 which was established by the ld. AR by bringing on record the marriage certificate and relevant invitation card. Be that as may be, the assessee is not denying that assessee has made a payment of Rs.12,15,000/- whereas the note found during the search indicated that there is an estimate of Rs.46,15,000/- which includes Service Tax of Rs.2,15,000/- and the same sheet contains the details of cheque payment of Rs.12,15,000/- and balance by settlement of cash payment. From the sheet found during the search which was reproduced in assessment order, it shows that initial estimated expenses were Rs.46,15,000/- and the same was finalized at Rs.32,15,000/- and the break-up of settlement was clearly written for Rs.32,15,000/-. As per the above sheet, it shows that settlement of Rs.12,15,000/-by cheque and balance of Rs.20,00,000/- by cash. However, we noticed that in the satisfaction note, the Assessing Officer has proceeded to make the addition of Rs.32,15,000/- considering the total estimated cost of Rs.44,15,000/-. We observed that the satisfaction recorded by the Assessing Officer has got two flaws – one is date of marriage and the second is the finalized amount of marriage function hall. The initial estimate provided by Seven Seas Hospitality Pvt. Ltd. was Rs.44,15,000/- and the actual settlement was made at Rs.32,15,000/-. There is no reason for the Assessing Officer to record the satisfaction for Rs.44,15,000. The whole assessment was framed only on the abovesaid flawed recording of satisfaction. Further we observed that the emerging fact on record is that the basis of assumption of jurisdiction is the date/marriage taken from the electronic source. The reliance of such a material requires mandatory compliance in terms of section 65B of the Evidence Act, 1872. Whether the abovesaid evidence is admissible as evidence or not is the issue under consideration. On enquiry with the ld. DR of the Revenue, it was submitted that there is no certificate available on assessment record. These are basic requirement while recording the satisfaction note that the Assessing Officer should have obtained a certificate verifying the veracity and reliability of the record. In absence of such compliance, action of the Assessing Officer to initiate action u/s 153C is not proper. We observed that ld. CIT (A) also not commented on this crucial aspect. In the case of ACIT vs. Anand Jaikumar Jain in ITA No.3820 to 3823/Mum/2019 dated 22.04.2022, it was held as under :-
“24. Further, it is brought to our notice by the Ld AR that the Hon’ble Supreme Court in the case of Arjun Panditrao Khotkar v. Kailash Khushanrao Gorantyal And Ors (Civil Appeal Nos 2082520826 of 2017) dated 14.07.2020 has analyzed the provisions of 65B of The Indian Evidence Act, 1872 with regard to admissibility of electronic evidence. The Hon’ble Supreme Court held that certificate under Section 65B (4) of The Indian Evidence Act, 1872 is a condition precedent to the admissibility of evidence by way of electronic record as S. 65B (4) of The Indian Evidence Act, 1872 is a mandatory. In view of the same, it was submitted that the pen drive (an electronic record), being relied upon by the department, is not admissible as evidence as certificate u/s 65B (4) has not been produced. It was submitted, the data retrieved from the pen-drive have been relied upon without any such certificate. This action of the AO is completely improper, more particularly so when Dalmia Group have disputed the contents of the pen-drive. Further reliance is placed upon the decision of Mumbai Bench of the Tribunal in the case of Simtools P. Ltd. v. DOT in ITA No. 1574/Mum/2020 dated 09.02.2022 wherein following the above referred decision of the Supreme Court, it was held that the lectronic data cannot be relied upon in the absence of requisite certificate.”
12. Based on the above discussion, it is fact on record that there is no certificate under section 65B of the Evidence Act, 1872 which is mandatory to proceed in any proceedings. Accordingly, the relevant ground raised by the assessee is allowed in favour of the assessee and the appeal filed by the assessee is allowed.
13. At this stage, we are keeping the issue of approval granted u/s 153D of the Act open.
14. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on this 10TH day of January, 2025.
Author Bio
