TaxTMI 
TaxTMI 
2026 (6) TMI 142
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....company engaged in the business of manufacturing of multi-layer polythene films and flexible packaging products, filed its return of income for the year under appeal on 21.10.2022, declaring total income of INR 39,12,61,920/-. Thereafter a survey was carried out at the business premises of the assessee on 21.02.2023 and during the course of survey at its Haridwar Plant, certain loose papers and documents were impounded. Despite this, certain data were retrieved from the mobile phone of Shri Pankaj Singh who is working as a Deputy Manager, HR in the assessee company. Based on the WhatsApp chat found from his mobile and further statement of other employees recorded, the AO alleged that certain images related to cash payment of salary to staff was found. Accordingly, AO observed that assessee has incurred unexplained expenditure towards of payment of salary and made the addition of INR 12,74,330/- u/s 69C of the Act. 4. Aggrieved by the said order, the assessee preferred appeal before Ld. CIT(A) who vide order dated 17.11.2025 has allowed part relief to the assessee whereby confirming the addition of INR 8,67,636/- as related to the assessee and deleted the balance addition of INR ....
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.... the Ld. CIT(A) has erred in law and on facts in sustaining the addition despite the salary recorded in the duly audited books being substantially higher than the figures appearing in the impugned documents, thereby rendering the alleged notings unreliable and devoid of evidentiary value. 8. That the appellant craves leave to add, alter, amend, modify or withdraw any of the above grounds at or before the time of hearing. 6. The ground of appeal No. 2 is related to the approval granted u/s 148B and since this ground is not pressed during the course of hearing thus, the same is dismissed. 7. All the other Grounds of appeal taken are with respect to upholding the addition of INR 8,67,636/- towards alleged cash payment of salary to the employees of the assessee, therefore, all the other Grounds of appeal were taken together for consideration. 8. Before us. Ld.AR for the assessee filed a detailed written submissions in this regard and argued that the entire addition has been made on the basis of the WhatsApp chat image taken from the mobile phone of Shri Pankaj Singh, an employee. The said document is as under:- 9. Ld. AR submits that during the course of survey, st....
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....om 750 (Uttarakhand High Court) 10.1. He thus, prayed that the additions sustained by Ld.CIT(A) be deleted. 11. On the other hand, Ld. CIT DR for the Revenue vehemently supported the orders of the lower authorities and submits that Ld. CIT(A) has already allowed the desired relief to the appellant and was very reasonable in holding that the additions to the extent of documents pertained to the assessee should only be made. Ld. CIT DR further submits that the additions were made on the basis of the material found and seized as a result of search in the shape of WhatsApp images found from the mobile phone of one of the key employee and this fact has not been denied therefore, he requested for the confirmation of the addition so made. 12. Heard the contentions of both the parties at length and perused the material available on record. From the perusal of Page 4 of Annexure A which is a WhatsApp image and made the sole basis for making additions in the hands of the assessee company as reproduced herein above, it is observed that the contained some figures with the title "month of December, 2021". In the statement of Shri Pankaj Singh recorded during the course of search, an em....
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....ad with sections 132 and 158BB, of the Income-tax Act, 1961 - Unexplained moneys (Seized documents) - Block assessment years 2001-02 to 2007-08 - A search was carried out at assessee's premises in course of which Assessing Officer seized certain letters/e-mail - On basis of said documents, Assessing Officer made addition to assessee's income on account of undisclosed salary - Commissioner (Appeals) as well as Tribunal deleted addition holding that in absence of any corroborative material to link such e-mail letter or its contents with assessee, inference that some additional income was earned by him by way of salary, was incorrectly drawn - Whether since document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of Assessing Officer, impugned order of Tribunal deleting addition was to be confirmed - Held, yes [Para 13] [In favour of assessee] Para13. Given the above state of law - and this Court has no hesitation in so concluding, since the document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of the AO, the ITAT's view which endorsed the fin....
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....delines for Compulsory Selection of Returns for Complete Scrutiny for F.Y. 2024-25, which specifically mandate that cases involving survey under section 133A be selected for scrutiny only with the prior administrative approval of the Pr. CIT/Pr. DIT/CIT/DIT concerned. 3. That the Ld. CIT(A) has erred in law in sustaining an assessment order which is not digitally signed, in violation of CBDT Instruction No. 1/2018, mandating digital signature for orders passed through e-Proceedings, rendering the impugned assessment order invalid and unenforceable in law. 4. That the Ld. CIT(A) has erred in law and on facts in sustaining the addition of Rs.62,38,930/- on account of alleged profit from short stock and outside wages, despite the fact that no actual shortage of stock existed and the alleged discrepancy arose solely due to non-consideration of raw material lying in silos duly stated in the statement of Mr. Pradeep Bhatt during the survey proceedings. The incurrence of wages and bonus having been inferred merely on the basis of uncorroborated WhatsApp chats, which do not constitute admissible evidence in law, and without appreciating that no separate addition was warra....
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....and outside wages, despite the fact that no actual shortage of stock existed and the alleged discrepancy arose solely due to non-consideration of raw material merely on the basis of uncorroborated WhatsApp chats, which do not constitute admissible evidence in law, and without appreciating that no separate addition was warranted, renders the impugned addition unsustainable. 5. That the learned CIT(A) erred in law and on facts in sustaining the addition on account of bonus, without appreciating that the bonus amounting to Rs. 48,50,000/-, forming part of total bonus of Rs. 63,79,227/-, was paid through banking channels. The assumption of cash payment by the learned AO is without any corroborative evidence and solely based on a WhatsApp chat, which is contrary to the record and unsustainable in law. 6. That the learned CIT(A) has grossly erred in law and on facts in confirming the addition that solely on the basis of WhatsApp chats and a statement recorded during survey proceedings, despite the settled position that such a statement has no evidentiary value. The learned CIT(A) further erred in drawing presumptions in the absence of any reference to, or evidence of, c....
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....ey. 25. Before us, Ld. AR for the assessee submits that AO has made the addition of INR 7,33,12,930/- on account of shortage of stock however, Ld. PCIT has treated such shortage of stock as undisclosed sales and applied G.P. rate @ 8.51 % resulting into the confirmation of addition of INR 62,38,930/-. Ld.AR submits that the assessee is engaged in the business of manufacturing and supplying of multilayer polythene films and flexible packaging products and the assessee has regularly maintained day to inventory which comprises of details of items, item codes, item names, units, quantities thereof and also approximate value and all the stock records were produced before the survey authorities during the course of survey. The survey authorities have physically quantified the stock and value the same at INR 14,00,00,688/- as against the stock as per the books of accounts of INR 21,33,13,618/- and treated the difference of INR 7,33,12,930/- as shortage of stock. During the course of survey when the stock inventory was in progress, it was informed to the survey team by factory Supervisor Shri Pradeep Kumar Bhat, present at the time of survey that stock lying in silos remained to be veri....
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....iming that stock in silos was not taken into consideration could not be accepted. As per ld. CIT DR the stock taken by survey team was correct. Ld. CIT DR further submits that the ld. CIT(A) has made an error of making the addition of profit on such short stock only despite of the fact that the stock was found short. He therefore, requested for the confirmation of the additions made by the AO. 28. Heard the contentions of both the parties at length and perused the material available on record. The inventory sheets so prepared during the course of survey are placed at pages 34 to 87 of the Paper Book. It is observed that Annexure S-3 contained total value of raw material of INR 14,00,00,688/- dated 23.03.2022 quantified. Further from the perusal of the inventory sheets, it is observed that entire exercise of physical verification and quantification of raw material as available in the plant at Haridwar was carried out on 21.02.2023. As per the list, total 98 + 17 different items of plastic granules having gross weight of more than 9,20,000 KGs kept in more than 3200 bags was physically verified and quantified in few hours on a single day. Besides this, as per page 37 of Paper Book....
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....ced before the authorities below however, no effort was made by the AO below to verify the contentions of the assessee. The assessee also filed details of stock available in each Silos which are placed at page 192 to 223 of the Paper Book. 30. All these facts established that during the course of survey, survey team had physically verified and quantified the stock available in a very casual manner where the stock inventory as per the books of accounts was taken from the assessee and made basis for computing the stock as per physical verification. This is support from the fact that items available thousands in numbers were verified and counted in few hours on 21.02.2023 when physical verification of stock was carried out. Further, on the same day, thousands of items of finished goods were also physically verified and quantified as could be seen from the perusal of the inventory sheet placed at page 34 to 87 of PB. It appears that print out of the assessee's stock inventory was taken and made part of the inventory physically verified where the raw material available in Silos was ignored. 31. It is further observed that Shri P. K. Bhat in his statement recorded during the course....
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....nsideration in assessee's appeal in AY 2022-23 in ITA No.644/Del/2026 wherein based on the same WhatsApp images found from the mobile phone of Shri Pankaj Singh, an employee of assessee company, addition was made for alleged unexplained cash payment of salary and bonus. While deciding the aforesaid appeal of the assessee in ITA No. 644/Del/2026, we have hold that WhatsApp images found solely cannot be made the sole basis for making addition without bringing on record any corroborative material more particularly when the expenses recorded in the books of account towards salary and bonus are much more than the alleged amounts noted in the WhatsApp images and deleted the additions made. 36. Since the facts are identical and the additions are made based on same WhatsApp images and the statement of Shri Pankaj Singh, therefore, by following the observations made therein which are mutatis mutandis applicable to the fact of present case also, we delete the additions made on this account. Accordingly, the grounds of appeal Nos. 5 & 6 of the assessee are allowed and of the revenue are dismissed. 37. In the result, appeal of the assessee is partly allowed and appeal of the Revenue is d....