TaxTMI 
TaxTMI 
2026 (10) TMI 31
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....n ad-hoc basis to the extent of 8 Percent of the total alleged non-genuine purchases merely on assumption, surmises and conjectures. 2. On the facts and in the circumstances of the case and in law, the Learned CIT(A) has grossly erred in confirming the addition of Rs. 60,45,707/- to the income of the Appellant being profit element at 8. Percent embedded in Purchases made from alleged non-genuine parties even after accepting the purchases and the parties as genuine. 3. On the facts and in the circumstances of the case, the Learned CIT (Appeals) has grossly erred in enhancing the addition of Rs. 13,50,000/- as made in assessment order to Rs. 22,00,000/- without issuing any show cause notice which is illegal and bad in law. 4. On the facts and in the circumstances of the case, the Learned CIT(A) has grossly erred in confirming the addition of Rs. 22,00,000/- under Section 69A of the Act on the basis of alleged WhatsApp messages, without proper authentication under section 65B of the Evidence Act and without independent corroborative evidence. 5. That the appellant craves leave to add, amend or alter all or any of grounds of appeal and relief claimed....
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....rise out of the same assessment proceedings and involve interconnected issues, they were heard together and are being disposed of by this consolidated order. 3. The assessee is an individual and proprietor of M/s. S R Artifact, engaged in the business of construction and fabrication. For the year under consideration, the assessee filed his return of income on 27.09.2023 declaring total income of Rs. 5,07,62,220/-. A search and seizure action under section 132 of the Act was conducted, pursuant to which the assessee's case was selected for compulsory scrutiny. Notices under sections 143(2) and 142(1), along with questionnaires, were issued and duly complied with by the assessee. 4. During the course of assessment proceedings, the Assessing Officer ("AO") noticed purchases aggregating to Rs. 7,64,21,334/- from 27 parties. Notices under section 133(6) of the Act were issued to the concerned parties. On the basis of non-response or incomplete responses from certain vendors, alleged deficiencies in supporting documents, non-filing of returns by some vendors and certain electronic communications/WhatsApp chats found during the search, the AO treated the purchases as non-genuine....
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....d that section 69C could not be invoked merely because the genuineness of certain purchases was questioned. 11. Reliance was placed, inter alia, on the judgment of the Hon'ble Bombay High Court in PCIT v. Vaman International Pvt. Ltd. [(2020) 422 ITR 520] and the decision of the Delhi Bench of the Tribunal in Vayam Technologies Ltd. v. DCIT (ITA No. 1477/Del/2023). It was also submitted that in proceedings for Assessment Years 2021-22 and 2022-23 arising from the same search, purchases from the same vendors had been accepted after verification. 12. The learned DR, on the other hand, supported the assessment order and submitted that the vendors had either not responded to notices issued under section 133(6) or had failed to furnish complete supporting material. It was contended that the surrounding circumstances justified treating the purchases as non-genuine and making the entire addition under section 69C. Reliance was placed on CIT v. P. Mohankala [(2007) 291 ITR 278 (SC)] and Sumati Dayal v. CIT [(1995) 214 ITR 801 (SC)]. 13. In this regard, we have heard the counsels for both the parties, perused the material placed on record, the judgments cited before us, and the....
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....erial has been brought on record by the Revenue to establish that the assessee earned an additional profit of 8% on the purchases in question. 19. In view of the foregoing, the addition of Rs. 60,45,707/- sustained by the Ld. CIT(A) is deleted. Consequently, Ground Nos. 1 and 2 of the assessee are allowed, whereas Ground Nos. 1 to 5 of the Revenue are dismissed. 20. Ground Nos. 3 and 4 of the assessee's appeal relate to the addition of Rs. 22,00,000/- sustained/enhanced by the Ld. CIT(A) under section 69A of the Act. 21. The learned counsel for the assessee submitted that the original addition made by the AO was Rs. 13,50,000/-, which was enhanced by the Ld. CIT(A) to Rs. 22,00,000/- without issuing a notice under section 251(2) of the Act. It was further submitted that no cash or other valuable article representing the alleged undisclosed amount was found or seized during the search. According to the assessee, the addition was based substantially on WhatsApp communications retrieved from the mobile phone of an employee and statements recorded under section 132(4), without independent corroboration. 22. It was also submitted that the electronic material relied upon ....
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....e assessee. 29. The reliance placed upon WhatsApp communications also requires appropriate authentication and proof of the electronic record. The Hon'ble Supreme Court in Anvar P.V. v. P.K. Basheer [(2014) 10 SCC 473] and Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal [(2020) 7 SCC 1] has laid down the principles governing admissibility and proof of electronic records under section 65B of the Evidence Act. While the provisions of the Evidence Act are not mechanically applicable to every aspect of income-tax proceedings, where the Revenue seeks to rely upon electronic material as substantive evidence, its authenticity, integrity and evidentiary value cannot be assumed merely because screenshots or printouts have been produced. 30. In the present case, the alleged WhatsApp material has not been sufficiently corroborated by any independent evidence demonstrating actual receipt or possession of the alleged cash by the assessee. The statements recorded under section 132(4) also cannot, in the facts of the present case, substitute for such corroborative material, particularly when the alleged electronic material was found from the mobile phone of an employee and no corr....