TaxTMI 
TaxTMI 
2024 (5) TMI 533
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....the outset, the ld. AR has submitted that the matter in ITA No. 179/JP/2022 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are identical except the difference in the amount in other assessment year. The ld. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. ITA No. 179/JP/2022 is taken as a lead case. Based on the above arguments we have also seen that for both the appeals grounds are similar, facts are similar and arguments were similar and therefore, were heard together and are disposed by taking lead case facts, grounds, and arguments from the folder in ITA No. 179/JP/2022. 4. Before moving towards the facts of the case we would like to mention that the assessee has assailed the appeal in ITA No. 179/JP/2022 on the following grounds; "1. That on the facts and in the circumstances of the case the Ld. CIT(A) is wrong, unjust and has erred in law in confirming finding recorded by the Ld. AO that whatsapp messages contained ....
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.... used by other person in the absence of owner. The assessee further contended that noting in the message are deaf and dump. The ld. AO considered the reply of the assessee but as the same was considered as general and no specific explanation was offered and therefore, the same was not found tenable and made the addition of Rs. 24,20,366/- under section 69 of the IT Act, 1961 based on the Whatsapp messages contained in the Mobile No. 99502 00007. 6. Aggrieved with the order of the ld. AO passed u/s 143(3) r.w.s 153A of the Act, assessee preferred an appeal before ld. CIT(A). Apropos to the grounds so raised by the assessee, the relevant finding of the ld. CIT(A) is as under:- "(vii) As regards the addition of Rs. 24,20,366/- made by the AO, it is observed that the whatsapp chat refers to total dollar 21051 cash Rs. 10,31,000/-. Since the value of one US Dollar was equivalent to Indian Rs. 66/- on the date of search, therefore the total value was worked out at Rs. 13,89,366/- by the AO. Apart from the above as per the whatsapp chat there is a noting of Rs. 10,31,000/- and therefore the contention of the appellant that the value of total US Dollar mentioned in the chat was....
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....ome is assessable under sections 68, 69, 69A, 69B, 69C or 69D of the Act whether the income is offered by the assessee itself in its return under any of these six sections or the assessment is made by the AO under these sections. (iii) Further, as per the provisions of section 115BBE, the income in nature of incomes prescribed u/s 68 to 69D shall be subject to higher tax rate @ 30% u/s 115BBE upto the AY 2016-17 and would be subject to higher tax rate @ 60% u/s 115BBE from 01.04.2017 onwards, In fact under the IT Act, when omission to record any entry has itself been defined to be deemed as an attempt to evade tax/penalty/interest, then non-recording or incorrect recording of any entry in books of accounts, for the purposes of section 68 to 69D, also needs to be understood in the same manner, as attempt to evade tax/penalty/ interest etc. Therefore, a conjoint reading of section 115BBE with section 68/69A and explanation to section 276C, would reveal that even in case where assessee discloses some unrecorded incomes subsequently in statements u/s 132(4)/ 131(1) or in ROI u/s 139/148/153A or application filed before ITSC u/s 245C(1), which otherwise was assessable under the....
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.... Brief facts of the case: A search and seizure action was carried out by the Income Tax Department under section 132 of the I.T. Act, 1961 on 28.08.2017. During the course of search no incriminating documents were found or seized by the Department except Whatsapp chattings and images of the same were taken by the search party during the course of search. The ld. AO made the addition of Rs. 24,20,366/- under section 69 of the IT Act, 1961 on account of Whatsapp messages contained in the Mobile No. 99502 00007. During the course of assessment proceedings, the appellant challenged the said addition legally as well as factual on merits. But the ld. AO after summarily rejecting the submissions and facts of the case, made the addition of Rs. 24,20,366/- without bringing on record any corroborative supporting evidence and making any enquiry. 2. Action of the ld. CIT (Appeals): The appellant challenged the said addition made by the ld. AO legally as well as on facts and merits before the Ld. CIT(A) but the Ld. CIT (A) vide para 4.2 of her impugned order relying on the judgment of the Hon'ble Supreme Court in the case of Amba Lal Sarabhai Enterprises Ltd. vs. KS I....
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....on giving rise to the income of the assessee had not been disclosed to the department by such assessee has to be disregarded for the purpose of assessment to be framed pursuant to search and seizure action. From the search and seizure perspective such non speaking documents are referred to as the dumb document. In this connection it is also submitted that a fictional receipt cannot be deemed to be a receipt in the absence of any cogent material to support the factum of actual receipt. Refer K.P. Verghese vs. ITO, 131 ITR 597 (SC). Further, the Hon'ble Delhi High Court in case of CIT vs. D.K. Gupta (2008) 174 taxman 476 held as under :- "4. Consequently, the tribunal upheld the findings of the Commissioner of Income-tax (Appeals) and agreed with the view taken by the latter that the assessee was liable to tax only on those receipts which had been proved to be income in the hands of the recipient. As a result thereof, the Tribunal found no reason to interfere with the findings recorded by the Commissioner of Income- tax (Appeals) on the ground that the same were based on valid and cogent materials placed on record and also produced before the Assessing Officer during the cou....
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....d that the Section starts with a non obstante clause. Thus, notwithstanding anything contained in the Evidence Act, any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned Under Sub-section (2) are satisfied, without further proof or production of the original. The very admissibility of such a document, i.e. electronic record which is called as computer output, depends on the satisfaction of the four conditions Under Section 65B(2). " [Emphasis Supplied]. Hon'ble Apex Court held that these safeguards are taken to ensure the 'source and authenticity', which are "the two hallmarks pertaining to electronic record sought to be used as evidence;. The importance of following this procedure was emphasized by the fact that electronic records are more susceptible to tampering, alteration, transposition, excision, etc. and in absence of these safeguards, the whole trial based on proof of electronic records can lead to "travesty of justice'. "Only if the electronic record is duly produced in terms of ....
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....ngs, regarding the whatsapp chattings submitted as follows:- A. It is a well known fact regarding whatsapp messages that the messages in the mobile phone of a person does not mean that the said message(s) pertains to him and no adverse inference can legally be drawn against the owner of the mobile phone. This is because of the facts that sometimes messages are being forwarded/shared in a group and the phone may be used by some known person(s), friend(s) and/or some other person in the absence of the owner of mobile phone. Thus generally only on the basis of messages in the mobile phone or a whatsapp call know adverse inference legally can be drawn against the owner of the phone without any supporting corroborative evidence tenable in the eyes of law. In assessee's case the above submitted basic principal/theory is applicable as it is. The submissions are driving support from the alleged print out of the whatsapp message, copy of which supplied by the I.T. department to assessee that the noting in the messages are deaf and dumb. As now it is a settled position of law on the issue that tax can be levied on the basis of document found and seized during the course of search on....
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....ct. The AO has considered every message as a separate message and interpreted the chattings as favourable to him without considering the fact that some messages are co-related (duplicate of each other). For ready reference, sake of convenience and better understanding and explaining the issue involved, the said messages and finding of the ld. AO are reproduced herein below :- "1.5. Annexure AS, Exhibit-3 Page No. 11. The Page contains whatsapp chat wherein assessee replied "Total dollar 27051 cash Rs. 10.31", perusal of this message and previous message shows that assessee has made payment of US $ 21051 and Rs. 10,31,000 to someone at Orchard Park Suites, Orchard Turn Behind Takasimaya. The recipient also affirmed to the above message by replying "Ok dear". Since, 1 USD was equivalent to INR 66, total US $ 21051 will be INR 13,89,366. Apart from dollar there is reference of Rs. 10,31,000. Thus total of cash transaction comes to Rs. 24,20,366/-. Further, the source of Rs. 24,30,366/- transferred was not found recorded in books of account furnished by the assessee. From the entirety of circumstances and factual matrix of the case it is clearly evident that ....
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....m 527 (SC) "Section 69A, read with sections 158BC and 158BD, of the Income-tax Act, 1961 - Unexplained money (Search) - Block period 1997-98 to 2003-04 - Assessee was a partnership firm engaged in business of civil construction - Pursuant to search at residential premises of working partner of firm and at business premises of firm Assessing Officer made additions to income of assessee - Tribunal had recorded a finding in regard to additions made by Assessing Officer which was confirmed by Commissioner (Appeals), which was based only on mere assumption and not on any material recovered during search and seizure - High Court by impugned order held that in absence of supporting evidence, additions based merely on presumption that asse4ssee had earned undisclosed income and incurred expenses outside books of account would not be sustainable - Whether Special Leave Petition against said impugned order was to be dismissed - Held, yes (para 2) (in favour of assessee)." c. 278 Taxman 293 (SC) It is evident that the assessee's case is completely covered by the issue decided by the Hon'ble Apex Court in the above said cases. The assessee further submits that he mad....
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....h at Kiran Fine Jeweler group the assessee was covered. The ld. AR submitted that in the search no incriminating material or cash found only the whatsapp chat recovered from the mobile phone no. 99502 00007 belonging to him. The decision relied upon by the ld. CIT(A) in the case of Ambalal Sarabhai in fact used against the assessee but it is in fact favours the assessee. The ld. AR of the assessee submitted the page wise explanation furnished to the ld. AO and requested to consider the same so as to decide the issue. The page wise explanation furnished is also reiterated here in below: 9. The ld DR is heard who has relied on the findings of the lower authorities. The ld.DR further submitted that the records are the electronic records and there cannot be watertight evidence then the evidence found from the persona mobile whatsapp chat. It is not under dispute that the print out were taken from the whatsapp image and that was confronted before the assessee. The case law cited are on difference facts and are not directly applicable to the facts of the case on hand. Considering the provision of the Information Technology Act the evidence are incriminating in nature and the assessee ....
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....d the reply of the assessee partly and to the extent where no specific explanation was offered were considered as unexplained and thus made an addition of Rs. 24,20,366/- under section 69 of the IT Act, 1961 based on the Whatsapp messages contained in the Mobile No. 99502 00007. The amount of 24,20,366/- consist of 21051 dollar [ 21051 * 66=13,89,366 ] plus Rs. 10,31,000/- written as cash thus become Rs. 24,20,366/- [ 13,89,366 plus 10,31,000/- ]. The ld. AR of the assessee submitted that neither this chat pertain to the assessee nor to his business concerns. There is no expenditure or investment from the side of the assessee. The ld. AR of the assessee contended that it may a case that 10,31,000 is the rupee price of the dollar exchanged to some of the group relative travelers. The ld. AO did and that of the ld. CIT(A) did not appreciate that which there are not two figure first of all and other part is that it neither the investment nor expenditure it is not seems to be the helping the guest in getting the foreign currency exchanged. The ld. AO contended that in the chat message the recipient confirmed to have that transaction saying "ok dear" based on that ld. AO considered as u....
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....easoning advanced by the revenue and therefore, we vacate the addition of Rs. 24,20,366/-. In terms of these observations the ground no. 1 & 2 raised by the assessee is allowed. Ground no. 3 being general in nature does not require any adjudication. In terms of these observations, the appeal of the assessee in ITA no. 179/JP/2022 is allowed. 11. The fact of the case in ITA Nos. 180 & 181-JP-2022 is similar to the case in ITA No. 179-JP-2022 and we have heard both the parties and persuaded the materials available on record. The bench has noticed that the issues raised by the assessee in this appeal No. ITA Nos. 180 & 181- JP-2022 is equally similar on set of facts and grounds. Therefore, it is not imperative to repeat the facts and various grounds raised by both the parties. Hence, the bench feels that the decision taken by us in ITA No. 179/JP/2022 for the Assessment Year 2016-17 shall apply mutatis mutandis in the case of Virendra Singh Ratnawat in ITA Nos. 180 & 181-JP-2022 for the Assessment Years 2017-18 & 2018-19. In the result, three appeals of the assessee are allowed. Order pronounced in the open court on 01/01/2024. ============= Document 1 Page S.No ....