The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has held that the digital data recovered by the income tax department during the search proceedings has evidentiary value under the Income Tax Act, 1961.
The department approached the Tribunal challenging the order of the first appellate authority wherein the assessment was quashed on the ground of validity of digital evidence based on VC Shukla case rendered in 1998. The department contended that the ruling has been overridden by provisions of Information Technology Act 2000 and Section 2(22AA) of the I.T. Act and Section 292C of the IT Act.
On the other hand, the assessee contended that the Digital Data allegedly found in the residence of the person searched cannot be relied upon solely to make an addition to the income of the Assessee Company and that it is absolutely necessary to have corroborative evidence in order to make an addition.
The Tribunal bench comprising Shri Chandra Poojari, Accountant Member and Smt. Beena Pillai, Judicial Member observed that section 132(4) of the Income-tax Act, permits the authorized officer to seize books of accounts and other documents.
“The judgement relied upon by learned Counsel for petitioner in the case of V.C. Shukla case (supra), and others reported in 1998 (3) SCC 410, has no bearing for the case on hand, as that case was dealing with a criminal proceeding involving criminal conspiracy under section 120-B of IPC and further, it was dealing with “books of accounts”. Whereas, in the case on hand, it is an income tax proceeding before a quasi judicial authority. A Division Bench of the Madras High Court, in the case of Rangroopchand Chardia (241Taxman 221) and in the case of M.Vivek Vs. DCIT, relied upon by the ld. DR, while dealing with section 132 of the Income-tax of the Income tax, similar to the case on hand, has held that loose sheets picked up during search under section 132 of the Income-tax Act, falls within the definition of “document”, mentioned in section 132(4) of the Income Tax and therefore, it had got evidentiary value. Therefore, the contention raised by the learned Counsel for the assessee that digital evidence seized during the search under section 132 of the Income-tax Act does not have any evidentiary value, is rejected,” the Tribunal said.
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