No addition could be made on the basis of ‘Mobile data or loose paper in the absence of corroborative evidence: ITAT Chandigarh
ITAT Chandigarh in the case of Smt. Harvinder Kaur vs. ACIT, Central Circle-1, Ludhiana, ITA Nos. 691 & 692/Chd/2023, dated 01.04.2025:
Assessment Years: 2017-18 & 2018-19 has held that No addition could be made on account of such ‘Mobile data’ or loose paper in the absence of corroborative evidence.
The appeals arise out of assessments framed under Section 153C read with Section 143(3) of the Income Tax Act, 1961.
The proceedings were initiated post a search and seizure under Section 132 on 01.11.2017 at the premises of Sh. Surinder Singh Bindra, a third party.
Based on the materials found during the search, including cloned mobile phone data allegedly containing handwritten noting, the Assessing Officer (AO) concluded that undisclosed investment had been made by the assessee in a property located in Village Aayali, Ludhiana.
The AO extrapolated figures from these digital images to conclude that an additional unaccounted purchase consideration of ₹2,28,57,080/- had been paid over and above the registered sale deed.
2. Additions by AO and CIT(A) Findings:
AY 2017–18: ₹1,56,25,000/- (alleged unaccounted investment)
AY 2018–19: ₹50,32,068/- (alleged subsequent payment)
Cash Seizure: ₹4,10,000/- (claimed as unexplained)
Total: ₹2,10,67,068/-
The CIT(A) partly allowed the appeal, holding that 50% of the investment pertained to the assessee’s father, Sh. Manjeet Singh, based on ownership and contribution in the transaction. Accordingly, the net addition confirmed was ₹1,06,28,534/-.
3. Assessee’s Contentions:
i) Violation of Natural Justice:
No statement of the assessee was recorded during the search, assessment, or post-search proceedings.
The cloned mobile images were never confronted to the assessee.
ii) Genuine Transaction via Banking Channels:
The land was purchased via a registered sale deed.
Consideration of ₹22,00,000/- (₹11,00,000/- each by assessee and her father) was paid through banking channels.
The transaction was done at circle rate, indicating no underreporting.
iii) Lack of Inquiry & Independent Evidence:
AO failed to summon or examine the seller or Sh. Manjeet Singh.
No independent verification was made to substantiate the extrapolated figures.
iv) Reliability of Digital Evidence:
The alleged digital evidence consisted of handwritten notings in mobile images, without date, context, or identification.
Reliance on extrapolation from such data, without corroboration, was arbitrary and legally untenable.
v) PBPT Act Proceedings:
Proceedings under the Prohibition of Benami Property Transactions Act, 1988 were initiated but no adverse findings were recorded.
The seller, assessee, her father, and a Sub-Registrar official confirmed that no excess cash was paid beyond the registered value.
1. K.P. Varghese v. ITO [131 ITR 597 (SC)]
2. PCIT v. Umesh Ishrani [2019] 108 taxmann.com 437 (Bom HC)
3. ACIT v. Layer Exports (P) Ltd. [88 taxmann.com 620 (ITAT Mumbai)]
4. ACIT v. Shanker Nebhumal Uttamchandani [161 taxmann.com 536] – Mobile images without verification inadmissible.
5. Common Cause Case [394 ITR 220 (SC)
The Copy Of the order is as under:
