diff --git a/pkg/handlers/handlers_test.go b/pkg/handlers/handlers_test.go
index a336965be..d2e7b81a1 100644
--- a/pkg/handlers/handlers_test.go
+++ b/pkg/handlers/handlers_test.go
@@ -4,6 +4,7 @@ import (
 	"archive/zip"
 	"bytes"
 	stdctx "context"
+	"errors"
 	"fmt"
 	"io"
 	"net/http"
@@ -12,6 +13,7 @@ import (
 	"path/filepath"
 	"strings"
 	"testing"
+	"testing/iotest"
 	"time"
 
 	"github.com/stretchr/testify/assert"
@@ -518,13 +520,10 @@ func TestHandleGitCatFile(t *testing.T) {
 			}
 			defer os.RemoveAll(gitDir)
 
-			cmd := exec.Command("git", "-C", gitDir, "rev-parse", "HEAD")
-			hashBytes, err := cmd.Output()
-			assert.NoError(t, err, "Failed to get commit hash")
-			commitHash := strings.TrimSpace(string(hashBytes))
+			commitHash := getGitCommitHash(t, gitDir)
 
 			// Create a pipe to simulate the git cat-file stdout.
-			cmd = exec.Command("git", "-C", gitDir, "cat-file", "blob", fmt.Sprintf("%s:%s", commitHash, tt.fileName))
+			cmd := exec.Command("git", "-C", gitDir, "cat-file", "blob", fmt.Sprintf("%s:%s", commitHash, tt.fileName))
 
 			var stderr bytes.Buffer
 			cmd.Stderr = &stderr
@@ -686,6 +685,102 @@ func setupTempGitRepoCommon(t *testing.T, fileName string, fileSize int, isUnsup
 	return tempDir
 }
 
+func TestHandleFileNewFileReaderFailure(t *testing.T) {
+	customReader := iotest.ErrReader(errors.New("simulated newFileReader error"))
+
+	chunkSkel := &sources.Chunk{}
+	chunkCh := make(chan *sources.Chunk)
+	reporter := sources.ChanReporter{Ch: chunkCh}
+
+	ctx, cancel := context.WithTimeout(context.Background(), 5*time.Second)
+	defer cancel()
+
+	err := HandleFile(ctx, customReader, chunkSkel, reporter)
+
+	assert.Error(t, err, "HandleFile should return an error when newFileReader fails")
+}
+
+// errorInjectingReader is a custom io.Reader that injects an error after reading a certain number of bytes.
+type errorInjectingReader struct {
+	reader        io.Reader
+	injectAfter   int64 // Number of bytes after which to inject the error
+	injected      bool
+	bytesRead     int64
+	errorToInject error
+}
+
+func (eir *errorInjectingReader) Read(p []byte) (int, error) {
+	if eir.injectAfter > 0 && eir.bytesRead >= eir.injectAfter && !eir.injected {
+		eir.injected = true
+		return 0, eir.errorToInject
+	}
+
+	n, err := eir.reader.Read(p)
+	eir.bytesRead += int64(n)
+	return n, err
+}
+
+// TestHandleGitCatFileWithPipeError tests that when an error is injected during the HandleFile processing,
+// the error is reported and the git cat-file command completes successfully.
+func TestHandleGitCatFileWithPipeError(t *testing.T) {
+	fileName := "largefile_with_error.bin"
+	fileSize := 100 * 1024               // 100 KB
+	injectErrorAfter := int64(50 * 1024) // Inject error after 50 KB
+	simulatedError := errors.New("simulated error during newFileReader")
+
+	gitDir := setupTempGitRepo(t, fileName, fileSize)
+	defer os.RemoveAll(gitDir)
+
+	commitHash := getGitCommitHash(t, gitDir)
+
+	cmd := exec.Command("git", "-C", gitDir, "cat-file", "blob", fmt.Sprintf("%s:%s", commitHash, fileName))
+
+	var stderr bytes.Buffer
+	cmd.Stderr = &stderr
+
+	stdout, err := cmd.StdoutPipe()
+	assert.NoError(t, err, "Failed to create stdout pipe")
+
+	err = cmd.Start()
+	assert.NoError(t, err, "Failed to start git cat-file command")
+
+	// Wrap the stdout with errorInjectingReader to simulate an error after reading injectErrorAfter bytes.
+	wrappedReader := &errorInjectingReader{
+		reader:        stdout,
+		injectAfter:   injectErrorAfter,
+		injected:      false,
+		bytesRead:     0,
+		errorToInject: simulatedError,
+	}
+
+	ctx, cancel := context.WithTimeout(context.Background(), 5*time.Second)
+	defer cancel()
+
+	chunkCh := make(chan *sources.Chunk, 1000)
+
+	go func() {
+		defer close(chunkCh)
+		err = HandleFile(ctx, wrappedReader, &sources.Chunk{}, sources.ChanReporter{Ch: chunkCh}, WithSkipArchives(false))
+		assert.NoError(t, err, "HandleFile should not return an error")
+	}()
+
+	for range chunkCh {
+	}
+
+	err = cmd.Wait()
+	assert.NoError(t, err, "git cat-file command should complete without error")
+}
+
+// getGitCommitHash retrieves the current commit hash of the Git repository.
+func getGitCommitHash(t *testing.T, gitDir string) string {
+	t.Helper()
+	cmd := exec.Command("git", "-C", gitDir, "rev-parse", "HEAD")
+	hashBytes, err := cmd.Output()
+	assert.NoError(t, err, "Failed to get commit hash")
+	commitHash := strings.TrimSpace(string(hashBytes))
+	return commitHash
+}
+
 type mockReporter struct{ reportedChunks int }
 
 func (m *mockReporter) ChunkOk(logContext.Context, sources.Chunk) error {