TaxTMI 
TaxTMI 
2025 (11) TMI 903
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....ssee, despite the circumstantial and corroborative evidence available on record? 2. Whether the Ld. CIT(A) was justified in holding that the WhatsApp communication recovered during search on a connected person has no evidentiary value, ignoring the fact that such digital evidence was supported by market rate data from a government source? 3. Whether the Ld. CIT(A) failed to appreciate that in the absence of a plausible explanation from the assessee for the undervaluation of the property, the Assessing Officer rightly invoked the provisions of section 69A based on preponderance of probability and circumstantial evidence? 4. Whether, under the facts and circumstances of the case, the Ld. CIT(A) was justified in deleting the addition without considering the broader evidentiary framework applicable to income-tax proceedings, particularly with respect to digital and circumstantial evidence recovered during search? 3. Brief facts of the case are that the assessee filed return of income declaring total income of Rs. 30,50,500/-. A search u/s 132 of the Act was conducted on the assessee on 27.10.2021 along with the search conducted on M/s Amhara Construction P....
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....ission of the assessee, the AO held that the market value of the property as per the current market price was Rs. 6,55,24,709/-, which was corroborated by the Excel sheet in the chat. Therefore, amount of Rs. 3,16,65,485/- (difference between market value of Rs. 6,55,24,709/- and the sale price of Rs. 3,38,59,224/-) representing unaccounted cash receipts by the assessee was added as unexplained money u/s 69A of the Act in the hands of the assessee. 4. During the appeal proceedings before the ld.CIT(A), it was contended that the addition made by the AO was merely on the presumption that the assessee had received cash over and above the sale price as per the sale deed. The AO had solely relied on the chat between Shri Rounak Kumar and his accountant, Shri Prashant Somnath. The chat between third parties had no evidentiary value and hence, could not be used as evidence against the assessee. She further contended that in the chat, neither the name of the assessee nor details of the property sold by her were mentioned. Therefore, no addition could be made only on the basis of this chat. Further, provisions of section 69A of the Act were not applicable, as no such cash was found from ....
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....ctum of cash payment to said two employees. It is also pertinent to note that under identical facts and circumstances the ld. CIT(A) has deleted part addition pertaining to other two employees Shri Dhananjay Singh & Ms Yamini Singh in absence of any sustainable and reliable evidence but confirmed the addition on account of alleged cash payment to said two employees. We are also in agreement with the contention of ld. AR that in absence of providing cross examination on the said two employees whose statements have been relied by the Assessing Officer, such statements cannot be used against the assessee for making addition on account of part payment of salary in cash to the said two employees only on the basis whatsapp chats which has no evidentiary value in absence of other collaborative adverse material against the assessee showing part payment of salary in cash to the said two employees. 7. This is also pertinent to mention that the Assessing Officer has proceeded to make addition on the basis of whatsapp chats between Ms. Seema Dutta and Mr. Aman Sheghal and their statements only and no other documentary evidence or adverse positive material has been found and searched d....
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....ld that tax authorities must apply the test of human probabilities. Digital evidence recovered during search has inherent evidentiary value, especially when corroborated. The ld.CIT(A) erred in deeming it valueless merely because it was from a "connected person" (buyer's son), overlooking section 132(4A) presumption that seized documents belonged to the transaction's context. Rebutting the assessee's claim that the chat was "unauthorized" and not binding, it was submitted that whatsApp chats qualify as electronic records under section 2(1)(t) of the Information Technology Act, 2000, and are admissible if compliant with Section 65B of the Indian Evidence Act, 1872. Here, the chat was forensically recovered, and its contents align with official market rates, providing corroboration. The assessee's failure to rebut this with evidence strengthens the AO's case. Hon'ble Supreme Court in Arjun Panditrao Khotkar v. Kailash Kushanrau Gorantyal [2020] 7 SCC 1 clarified that electronic evidence (including chats) is admissible without original device if certified under section 65B, emphasizing reliability in civil proceedings like tax assessments. Hon'ble Bombay High Court in SBI Cards & Paym....
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....ized to support the view of the AO during search operations. As regard the decision in the case of Giriraj Pugalia (supra),it is stated that in the said case, the proceedings were upheld as the incriminating material comprised specific, corroborated, and directly connected evidence. The Court held that WhatsApp chats, if specific, transaction-related, and duly corroborated by other material, would qualify as "documents" under Section 153C of the Act, thereby justifying initiation of proceedings against a non-searched person. The legislative scheme under Section 153C contemplates such action where incriminating material belonging to a non-searched person is discovered in the course of search on another. In this case, neither the Chat was found in the course of the search of the assessee nor any incriminating material was found during the search. The issue is whether chats between third parties when no reference of the assessee was made can be used against the assessee, without following the due process of law as required by the Act. Hence, the ratio cannot be applicable to the facts of the respondent. It is submitted that in the case of Arjun Panditrao Khotkar v. Kailash Kushanrao G....