ITAT deleted addition towards unexplained money u/s 69A made on the basis of whatsapp chat retrieved from mobile during search operation
ABCAUS Case Law Citation:
ABCAUS 3834 (2024) (01) ITAT
Important Case Laws relied upon by parties:
Ashwini Kumar v. ITO (1991) 39 ITD 183
Mr. A. Johnkumar vs. DCIT
Atul Tantia vs. DCIT
ACIT vs. Shri Manchukonda Shyam
Anvar P.V. v. P.K. Basheer [2014[ SSC Online SC 732 (SC)
K.P. Verghese vs. ITO, 131 ITR 597 (SC)
CIT vs. D.K. Gupta (2008) 174 taxman 476
CIT vs. Katrina Rosemary Turcotte
Principal CIT vs. Hasan Ali Khan(2021) 124 taxmann.com 209 (SC)
Commissioner of Income-tax vs. Jeet Construction Company (2021) 124 taxmann.com 527 (SC)
In the instant batch of appeals, the assessee had challenged the order passed by the CIT(A) in confirming addition u/s 69A of the Income Tax Act, 1961 (the Act) and confirming finding recorded by the Assessing Officer (AO) that whatsapp messages contained in the mobile phone found from the appellant during the course of search was related to alleged transactions undertaken carried by him.
A search and seizure action u/s 132 of the Act and/or survey action u/s 133A of the Act was carried out by the Income Tax Department on the members of a Jewellers Group of which the Assessee was one of the members.
Notice under section 153A of the Act was issued and served upon the Assessee requiring it to file a true and correct return of income as prescribed under Rule 12 of the Income Tax Rules,1961. In response, the assessee filed the return declaring the same income as declared in the original return of income. The source of income of the assessee was salary and income from other sources.
During the course of search operation, whatsapp chat message from a Mobile Number were retrieved. The chat referred to some dollars and some cash. The assessee was issued a show cause notice (SCN) to explain the nature and source of such transactions found in whatsapp.
In response to the said SCN, the assessee submitted that whatsapp message in the mobile no. of a person does not mean that the said message pertains to the assessee as phone may be used by other person in the absence of owner. The assessee further contended that noting found in the message were deaf and dumb.
The AO was not satisfied with the reply and after summarily rejecting the submissions, made the impugned addition based on the Whatsapp messages contained in the Mobile phone.
The assessee did not find any favour from the appeal filed with the CIT(A).
The assessee challeneged the order of the CIT(A) before the ITAT and relied upon number of judgments of Hon’ble Supreme Court, Hon’ble High Court and ITATs supporing his contentions.
The Tribunal observed that as per the assessee neither this chat pertained to him nor to his business concerns. There was no expenditure or investment from the side of the assessee. It was contended that it may a case that cash mentioned was the rupee price of the dollar exchanged to some of the group relative travelers. The AO did and that of the CIT(A) did not appreciate that which there were not two figure first of all and other part was that it neither the investment nor expenditure it was not seems to be the helping the guest in getting the foreign currency exchanged.
The Tribunal observed that the AO contended that in the chat message the recipient confirmed to have that transaction saying “ok dear” based on that AO considered as unexplained money
The Tribunal further observed that in fact, the assessee in the search was not found any of the foreign currency or alleged cash in Indian rupee therefore, adding the same in hands of the assessee as unexplained cash was not only incorrect and but duplicate. Even at the time of search neither foreign currency nor the cash found in possession of the assessee and the revenue did not challenge these basic facts.
The Tribunal further observed that the CIT(A) noted that the WhatsApp message was found in the mobile of the assessee. When questioned in the statement u/s. 132(4), the assessee had accepted that details of his conversation recorded in WhatsApp chat if unable to explain satisfactory then in that case that amount can be added to his income. Since the assessee has given statement and he had not denied the notings in his WhatsApp messages but had imply stated that he does not remember anything at the moment and would get it verified in due course. Considering that aspect of the matter the CIT(A) hold that this noting is not deaf and dumb and he confirmed the action of the ld. AO.
The Tribunal observed that the provision of section 69A of the Act empowers AO to make addition of any money, bullion, jewellery or other valuable articles and such money, bullion, jewellery or valuable article is not recorded in the books of accounts maintained. However, in this case, the money so recorded in the Whatsapp not found at the time of search in the possession of the assessee. Not only that the contention of the assessee that there was a double addition for one transaction i.e. one for Indian Rupee and another on account dollar and thus the addition of the double the amount.
The Tribunal agreed with the argument advanced that there was no investment or expenditure on the part of the assessee to have been found and recorded in the search proceeding. It was also found that cash in Indian rupee or dollar have been found physically at the time of search.
The Tribunal opined that there was no merits in the reasoning advanced by the revenue and therefore, deleted the impugned addition.
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