Facts of the Case

A search and seizure action under Section 132 was conducted on the assessee. During post-search analysis, a WhatsApp chat between the partner of the assessee firm and a representative of M/s Omaxe Ltd. was found.

The chat referred to payment of ₹85.40 lakhs (interest) and ₹30 lakhs allegedly in cash. While ₹85.40 lakhs was duly recorded in the books, ₹30 lakhs was not reflected.

The Assessing Officer presumed that ₹30 lakhs was received in cash and made an addition under Section 69A read with Section 115BBE. The addition was confirmed by the CIT(A).

Issues Involved

  • Whether addition of ₹30 lakhs under Section 69A based solely on WhatsApp chat is justified.
  • Whether absence of entry in books automatically leads to presumption of cash receipt.
  • Whether the assessee can be treated as owner of unexplained money without conclusive evidence.

Petitioner’s Arguments (Assessee)

  • The assessee contended that ₹30 lakhs mentioned in the WhatsApp chat represented TDS amount not deposited by Omaxe Ltd.
  • It was argued that no actual cash was received by the assessee.
  • The assessee demonstrated that TDS of ₹30 lakhs was later deposited and credit was granted.
  • It was submitted that Section 69A applies only when ownership of money is established, which was not the case.

Respondent’s Arguments (Department)

  • The Department argued that WhatsApp chat constitutes valid digital evidence.
  • Since ₹85.40 lakhs was received as per chat, ₹30 lakhs mentioned alongside should also be treated as received.
  • The absence of ₹30 lakhs in books indicated unaccounted cash receipt.

Court Order / Findings (ITAT Delhi)

  • The Tribunal held that no evidence existed to prove actual receipt of ₹30 lakhs.
  • WhatsApp chat only indicated a follow-up for payment and not actual receipt.
  • The assessee’s explanation that ₹30 lakhs represented TDS was supported by records and credit allowed by the department.
  • It was observed that ownership of money is a pre-condition for invoking Section 69A, which was not satisfied.
  • The addition was based purely on assumption and presumption without corroborative evidence.
  • Accordingly, the ITAT deleted the addition of ₹30 lakhs and allowed the appeal.

Important Clarification

  • Section 69A cannot be invoked without proving actual ownership and receipt of money.
  • Digital evidence like WhatsApp chats must be corroborated with tangible evidence.
  • Additions cannot be sustained on mere assumptions or inference.
  • TDS-related entries cannot be treated as income or cash receipt.

Sections Involved

  • Section 69A – Unexplained Money
  • Section 115BBE – Tax on Unexplained Income
  • Section 132 – Search and Seizure
  • Section 143(3) – Assessment
  • Section 131 – Statement on Oat 

Link to download the order -  https://itat.gov.in/public/files/upload/1735627140-MGt9aq-1-TO.pdf

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