Uncorroborated WhatsApp message, in the absence of any independent supporting evidence, cannot constitute a valid basis for initiating proceedings under section 153C of the Act – ITAT
In a recent judgment, ITAT Mumbai deleted addition under section 69A of the Act on account of alleged cash received over and above the agreement value for sale of flats and addition under section 69C of the Act towards alleged brokerage payment, solely based on the loose paper, without conducting any independent inquiry or bringing any corroborative evidence on record.
ABCAUS Case Law Citation:
4671 (2025) (07) abcaus.in ITAT
Important Case Laws relied upon by Parties:
Common Cause v. Union of India
The instant appeal was filed by the revenue against the appellate order passed by the Commissioner of Income Tax (Appeals) in deleting the addition made by the AO u/s 69A as alleged on money received on sale of flats.
The assessee was a Limited Liability Partnership and engaged in the business of development of residential units under a redevelopment scheme. A search and seizure action u/s 132 of the Act was conducted in the case of a builder and other Groupsand on a person who in turn was 50% partner in the assessee LLP.
During search and seizure action u/s 132 of the Act in the case of said partner certain loose papers and extracts of Whatsapp chat were recovered and seized. On verification of the seized documents, information regarding financial transactions pertained to the assessee were noticed.
Thereafter, the case of the assessee was selected for scrutiny u/s 153C r.w.s. 153A of the Act. The assessment u/s 153C of the Act was finalized and total income was assessed after making addition u/s 69A of the Act on the ground that assessee had received cash over and above the agreement value on sale of flats.
The AO observed that assessee had failed to explain the contents of the Excel sheet or produce documentary evidence of payment not received in cash. The AO further stated that on verification of the WhatsApp message in the form of an Excel sheet it was found that the Actual sale value of the flats was different from Agreement Value and the differential amount was received as cash.
The CIT(A) allowed the appeal of the assessee and deleted the addition.
The Tribunal observed that the addition in question was solely based on an unverified WhatsApp message extracted from a mobile phone number that is not directly associated with the operational team of the assessee. The individual concernedhad categorically denied any knowledge of the document and clarified that the references to cash therein pertained merely to token booking amounts.
The Tribunal further observed that the assessee had duly furnished comprehensive documentary evidence substantiating its claim, including sale agreements, cancellation deeds, and corresponding banking transactions. It was also pertinent to note that all transactions were executed at values exceeding the stamp duty valuation and were fully compliant with the provisions of section 43CA of the Act.
The Tribunal observe that the WhatsApp message relied upon by the Assessing Officer was retrieved from the mobile device of said partner, who was subjected to a search. However, the revenue failed to bring on record any corroborative material to substantiate the contents of the said message. The impugned document had neither been affirmed by any independent inquiry nor confirmed by any of the parties named therein. In the absence of any supporting material or confirmation, such a WhatsApp message cannot be regarded as a reliable or admissible piece of evidence to warrant an addition under section 69A of the Act.
The Tribunal observed that the assessee had placed reliance on judgment of Hon’ble Supreme Court wherein it had been held that that loose sheets of papers are wholly irrelevant as evidence being not admissible under Section 34 so as to constitute evidence with respect to the transactions mentioned therein being of no evidentiary value.
The Tribunal further observed that the appellant also placed reliance on the decision of the Coordinate Bench wherein it was held that the AO could not have made the addition as the impugned transactions were related to uncorroborated whatsapp chat, which have been denied by the assessee and the AO did not bring any material to corroborate the transactions.
Further the assessee also placed reliance on decision of the Coordinate bench of ITAT-Surat wherein it was held that in absence of any corroborative evidence, there was no justification for making such addition as the Assessing Officer had not recorded in the assessment order whether such image/photo was received by assessee in WhatsApp image or it was sent. The source of image was not investigated by Assessing Officer. Assessing Officer nowhere mentioned whether such image was confronted to the assessee during the search action or his statement was recorded for such image.
The Tribunal stated it is a settled position that an uncorroborated WhatsApp message, in the absence of any independent supporting evidence, cannot constitute a valid basis for initiating proceedings under section 153C of the Act.
Accordingly, the addition made under section 69A of the Act pursuant to the assessment framed under section 153C was quashed.
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