2025 (1) TMI 98 - AT - Income Tax

ITAT deletes Rs 30 lakh addition under section 69A after finding WhatsApp evidence misinterpreted by authorities

M/s. Atma Ram Amart Nath Versus DCIT, Central Circle-6, Delhi

ITAT Delhi allowed the assessee's appeal and deleted the addition of Rs 30 lakhs made under section 69A read with section 115BBE. The tribunal found that ... Addition u/s 69A r.w.s.115BBE - Reliance on WhatsApp chat - HELD THAT:- We find the assessee in the statement recorded u/s 131(1) on 17-06-2021 while replying to question no. 9 when the very same WhatsApp chat was confronted to him, had clearly stated that Omaxe Limited was not paying the installments and interest due to it. Accordingly, the assessee had merely stated in that WhatsApp chat that Rs 85.40 lakhs is due towards installment and since the TDS portion of Rs 30 lakhs was not deposited by Omaxe Limited, due credit for the same was not given to the assessee by the income tax department and accordingly the assessee insisted for TDS portion of Rs 30 lakhs to be deposited to the account of the Central Government. After constant follow up, the same was duly done by Omaxe Limited and due credit of TDS was indeed given to the assessee. There is no dispute that credit of TDS of Rs 30 lakhs was given to the assessee by the income tax department and hence the statement of the assessee in Question No. 9 and the reply given by the assessee vide letter dated 25-3- 2022 assumes greater importance and had to be accepted as correct because the deductor (i.e. Omaxe Limited) having paid Rs 30 lakhs to income tax department would not come forward to pay the same Rs 30 lakhs to assessee again. Hence it could be safely concluded that the alleged sum was never paid by Omaxe Limited to the assessee and the said sum was never received by the assessee from Omaxe Limited or from any other party. Accordingly the assessee cannot be held to be the owner of such money of Rs 30 lakhs and hence the provisions of section 69A of the Act per se cannot be pressed into service. Accordingly, we have no hesitation to delete the addition made in the sum of Rs 30 lakhs in the hands of the assessee. The grounds raised by the assessee in this regard are hereby allowed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal question addressed in this judgment is whether the addition of Rs 30,00,000/- under section 69A read with section 115BBE of the Income-tax Act, 1961 was justified in the context of the evidence and circumstances presented in the case.2. ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and Precedents:The central legal provisions under consideration are Section 69A and Section 115BBE of the Income-tax Act, 1961. Section 69A deals with unexplained money, bullion, jewelry, etc., found in the possession of the assessee, which is not recorded in the books of account. Section 115BBE prescribes the tax treatment for income referred to in Section 69A.Court's Interpretation and Reasoning:The court analyzed the applicability of Section 69A, emphasizing that it requires the assessee to be the owner of any unexplained money. The court scrutinized the WhatsApp conversation between the assessee and M/s Omaxe Ltd., which was pivotal in the AO's decision to make the addition.Key Evidence and Findings:The key evidence was a WhatsApp chat between Mr. Mayank Khemka, a partner in the assessee firm, and Mr. Mohit Omaxe. The chat suggested a payment of Rs 85.40 lakhs and an additional Rs 30 lakhs. The AO interpreted this as evidence of cash receipt, but the assessee contended that the Rs 30 lakhs referred to a TDS amount not deposited by Omaxe Ltd.Application of Law to Facts:The court applied Section 69A, examining whether the Rs 30 lakhs could be considered unexplained money owned by the assessee. The court found that the WhatsApp chat did not conclusively prove the receipt of Rs 30 lakhs in cash by the assessee and noted that the assessee had received credit for the TDS amount, supporting the assessee's explanation.Treatment of Competing Arguments:The assessee argued that the Rs 30 lakhs was not received in cash but was a TDS amount. The Revenue contended that digital evidence, such as the WhatsApp chat, should be treated as documentary evidence of cash receipt. The court favored the assessee's interpretation, finding no evidence of cash receipt.Conclusions:The court concluded that the addition of Rs 30 lakhs under Section 69A was not justified, as the evidence did not support the claim that the assessee was the owner of such unexplained money.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning:'Accordingly, we have no hesitation to delete the addition made in the sum of Rs 30 lakhs in the hands of the assessee.'Core Principles Established:The judgment reinforces the principle that for Section 69A to apply, there must be conclusive evidence that the assessee is the owner of unexplained money. Mere assumptions or interpretations of digital communications without corroborative evidence do not suffice.Final Determinations on Each Issue:The court determined that the addition of Rs 30 lakhs was unwarranted and ordered its deletion, thereby allowing the appeal of the assessee.