No addition can be made only on basis of Whatsapp Chats between director & employee

No addition can be made only on basis of Whatsapp Chats between director and employee of the company as apart from the Whatsapp Chat there was no evidence on record.

In a recent judgment, ITAT Kolkata has deleted addition made only on the basis of Whatsapp Chats between the director and employee of the company as apart from the Whatsapp Chat there was no evidence on record.

ABCAUS Case Law Citation:
4925 (2025) (12) abcaus.in ITAT

In the instant case, the appellant assessee had inter alia challenged the order passed by the CIT(A) in part confirmation of addition made by the AO u/s 69A of the Income Tax Act, 1961 (the Act).

The case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act and accordingly, the assessment was framed u/s 147/ 143(3) of the Act.

After more than five years, a search action u/s 132 of the Act was conducted on a business group. The assessee being a group entity was also covered under the said search.

The AO noted that during the course of search mobile handset of the directors and the employees were examined and data retrieved wherein several chats showing cash transactions were found. Accordingly, the same was added to the income of the assessee as unexplained money u/s 69A of the Act.

The CIT (A) partly allowed the appeal of the assessee by treating the amount found in the Whatsapp Chats as suppressed turnover/ unaccounted transaction and by applying profit rate of 6% calculated the taxable income by deleting the remaining addition.

The Tribunal noted that the addition was made only on the basis of Whatsapp Chats between the director and employee of the company and apart from the Whatsapp Chat there was no evidence on record nor any substantive evidences had  been brought by the AO or CIT(A) on records.

The Tribunal further observed that AO added the entire money as unexplained money u/s 69A of the Act, whereas as a matter of fact, there was no money which could be added u/s 69A of the act and therefore the Provisions of Section 69A were not applicable.

The Tribunal opined that unless there is a corroborative material found to support the transactions mentioned in the the WhatsApp Chats, no addition could be made in the hands of the assessee, even on account of profits as done by the CIT(A).

The Tribunal also noted that the assessee had also made a submission without prejudice that Provisions of Section 292C of the Act, the presumption is to be drawn in respect of WhatsApp transactions in the hands of the person from whose possession or control the books of accounts/ documents, etc. are found. The Tribunal noted that the Hon’ble Delhi High Court has held that even the presumption u/s 292C of the Act is rebuttable when the assessee proved that he had not done any such transactions even in respect of such transaction as were contained in the loose paper which were found during the course of search.

The Tribunal further noted that in the present case the WhatsApp Chats of one of the directors of the group companies and as such if any adverse view, it  should be taken in his hand and not in the hands of the assessee specially on the ground that there was nothing on record to substantiate the transactions belonged to the assessee. Also, it was not mentioned in the WhatsApp Chat whether the amounts involved were receipt or payments.

Accordingly, the Tribunal set aside the order of CIT(A) and direct the AO to delete the addition as sustained by the CIT(A).

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