TaxTMI 
TaxTMI 
2026 (6) TMI 1518
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....ssessee failed to provide a satisfactory explanation regarding the source and receipt of such income. 2. The Ld. CIT(A) erred in holding that WhatsApp chat messages found during the course of search are "dumb documents" and cannot form the basis of addition under Section 69A, despite the said messages clearly establishing a pattern of financial dealings and unaccounted cash receipt by the assessee in F.Y. 2022-23. 3. The Ld. CIT(A) failed to appreciate that the WhatsApp chats were contemporary, specifically pertained to the sale of immovable property in Dubai, and clearly indicated receipt of AED 6,30,392 (Rs. 1,30,90,415) by the assessee which was never disclosed in his return of income. 4. The Ld. CIT(A) has erred in law and on facts in holding that Section 69A is inapplicable in the absence of physical recovery of cash or property, whereas the law only requires proof of ownership and unexplained nature of the asset, which was established based on digital evidence and statements. Reliance is placed on the following decision of Hon'ble Delhi High Court: "CIT v. Daya Chand (2001) 250 ITR 327 (Delhi HC) Held that it is sufficient if the assess....
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....any credible documentary evidence exists which could establish that the alleged property situated in Dubai was in fact owned by the Appellant. However, in response, the AO vide remand report dated 28.05.2025 has merely reiterated the reliance on certain WhatsApp chat extracts, which remain uncorroborated and devoid of any evidentiary support. 13. It is an admitted and unrebutted fact that the subject property was legally owned by SSID, whose sole shareholder was Mr. Anand Maheshwari. The sale of the said property was executed by SSID to a third-party purchaser, Mr. Dharmendra Mutha and the same is evident from the perusal of party details, the screenshot of which is reproduced by the AO on page 28 of the assessment order. 14. The attempt to establish a connection between the Appellant and the transaction through the employment of Mr. Rajendra Maheshwari (father of Mr. Anand Maheshwari) with M/s Victoria Foods Private Limited (VFPL) is wholly tenuous and inconsequential. Such remote and incidental association, without any corroborative material, cannot be relied upon to attribute ownership or receipt of income to the Appellant under charging provisions of Section 6....
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.... explanation offered by him is not, in the opinion of the [Assessing) Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. 18. Thus, the primary condition for invoking the provisions of section 69A is that; 1. The assessee should be found to be owner of any money. 2. Such money is not recorded in the books of accounts. 3. The assessee does not offer any explanation about the nature or source of acquisition of money. 4. The explanation is not a plausible explanation. 5. Such unaccounted money can be treated as deemed income for the year. 19. Thus, this section is basically to tax any money found from the possession of the assessee at the time of search. The use of word 'owner' and 'acquisition' in the section 69A makes it clear that there should be some element of physical ownership. Similarly, the use of the word 'acquisition' after owner clarifies that ownership has to be physical. The section typically construes a situation wherein some money, bullion, jewellery or other valuabl....
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....ed. But that is not the case, 24. Hon'ble Punjab and Haryana High Court in the case of CIT vs Ravi Kumar reported in 294 ITR 78 had an occasion to deal with the similar case. The brief fact is as under: "The assessee was a jeweller. During a search carried out at his premises, certain gold omaments, cash and five slips/loose papers containing some calculations written in assessee's hand writing were found and seized. The assessee surrendered certain sum for tax on account of the unexplained cash and jewellery. The Assessing Officer completed the assessment by applying the provisions of section 69A and including the amount appearing on the said loose slips. On appeal, the Commissioner (Appeals) upheld the additions. However, on second appeal, the Tribunal deleted the additions, holding that the assessee had discharged the onus by explaining that slips contained the rough calculations and it was for the revenue to prove that the same represented the transaction of sale of stock-in-hand." 25. Based on such facts, the Hon'ble High Court has held as under :- 7. A Division Bench of the Calcutta High Court in Kantilal Chandulal & Co. v. CIT ....
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....time corroboration or actual recovery of unexplained assets. 30. The appellant stated that despite the conduct of a full-fledged search and seizure operation under Section 132 of the Act on 21.01.2023, no cash or foreign currency was recovered from the premises of the Appellant, this fact completely demolishes the hypothesis that the Appellant received unaccounted cash on sale of the alleged Dubai property. 31. The Appellant relied on the following authority of the Ld. Jaipur ITAT in case of Virendra Singh Ratnawat v. ACIT., ITA Nos. 179 to 181/JP/2022: "10 ..... The Id. AO contended that in the chat message the recipient confirmed to have that transaction saying "ok dear" based on that id. AO considered as unexplained money. In fact, the assessee in the search was not found any of the foreign currency or alleged cash in Indian rupee therefore, adding the same in hands of the assessee as unexplained cash is not only incorrect and but duplicate. Even at the time of search neither foreign currency nor the cash found in possession of the assessee and the revenue did not challenge these basic facts in this case. The Id. CIT(A) noted that the WhatsApp message ....
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....e Appellant and the receipt of sale consideration of the Dubai property. The alleged movement of funds through various bank accounts or third parties remains unsubstantiated and rests purely on conjecture and suspicion, which is legally impermissible. The absence of any tangible recovery or third-party confirmation of cash movement to the Appellant's possession seriously impairs the assessment and renders the invocation of Section 69A unsustainable. 33. The Hon'ble Supreme Court in ITO v. LakhmaniMewal Das [1976] 103 ITR 437 (SC) held that there must be a direct nexus between the material found and the formation of belief; vague or remote material cannot justify any adverse conclusion against an Assessee. 34. The allegation, in the absence of any cogent evidence establishing the flow of unaccounted consideration or the involvement of the Appellant in any undisclosed transaction, rests on mere conjecture and lacks evidentiary foundation. Accordingly, the addition made solely on speculative reasoning is not sustainable in law or on facts. 35. In the result the appeal is allowed." 4. Aggrieved against the order of the Ld. CIT(A) in deleting the im....
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....nership of Respondent of the alleged Dubai property; (iii) no corroborative material attributing ownership or receipt of alleged cash amounting to AED 6,30,392 (Rs. 1,30,90,415/-) by the Respondent; (iv) notings in diary/ any other document cannot partake the character of unexplained money u/s 69A of the Act; (v) whatsapp chats uncorroborated by independent evidence are non- speaking, dumb documents and cannot be sole basis of addition and; (vi) alleged moverment of funds through various bank accounts or third parties remains unsubstantiated and rests purely on conjectures and suspicion which is legal impermissible rendering invocation of section 69A unsustainable. 6. Against the aforesaid, Appellant-Revenue has preferred the present appeal before this Hon'ble Tribunal. REBUTTAL TO APPEAL: Re: Failure to establish "Ownership" in property for addition of sale proceeds as unexplained money u/s 69A of the Act 7. It is an undisputed and admitted fact that the subject property was legally owned by a third-party entity, namely San & San International DMCC (SSID), a company incorporated in Dubai, UAE. This fact stands accepted/ admitted vide assessm....
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....rejected by the Ld. AO in total disregard of all the facts, circumstances and the evidence in the cuse as ordained by the CBDT in its Circular (supra). To apply the provisions of section 69A by the Ld. AO without satisfying the conditions precedent is not sustainable." 13. The above facts and legal position clearly provide that the Ld. AO failed to establish any direct, proximate, or legally sustainable nexus between the Respondent and the subject property or proceeds thereof. In the absence of ownership, receipt, control, or beneficial interest, no tax liability can be fastened upon the Respondent in respect of a transaction entered between independent third parties. Re: No physical recovery of cash, foreign currency, money "found" in the possession of Respondent at the time of search 14. It is settled law that for invoking provisions of Section 69A of the Act in respect of cash, money etc., the Assessee has to be found in possession of the same and further, the ownership of such asset is to be established by the Revenue. 15. It is an undisputed fact that there was no physical recovery of cash, foreign currency etc., from the Respondent during t....
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....which have been relied upon vide assessment order to allege ownership of the Respondent over sale proceeds of Dubai property which: i. Nowhere substantiate legal ownership of Respondent over the Dubai property; ii. Nowhere states that the sale proceeds belong to the Respondent: iii. No record of any receipt of cash by the Respondent: iv. No evidence establishing purported cash trail. 20. The jurisprudence is well-settled that uncorroborated WhatsApp chats are "dumb documents", incapable of sustaining an addition in the absence of independent direct evidence establishing nexus, ownership, or receipt of income. 21. Reliance is placed on the decision of this Tribunal in case of Raghav Kumar v. ACIT: ITA No.3214/DEL/2025, where further corroboration for digital data/mobile phone data in the form of Whatsapp chats was required, to constitute credible incriminating material for valid action against the Assessee. 22. In case of Designers Point (India) P. Ltd. v. ACIT: ITA No.2517/Del/2022, this Tribunal held Whatsapp chats on a standalone basis to not constitute as valid evidence in making addition u/s. 69C of the Act, by the ....
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....s or ownership of the Respondent over the alleged Dubai property. 26. The WhatsApp chats, at best, show that the Assessee rendered guidance in the process of sale to the relative of one of his past employees, Cherry-picked or uncorroborated WhatsApp conversations, in the absence of any supporting documentary or statutory evidence, cannot substitute legal proof of ownership, receipt, or beneficial interest. It is further respectfully submitted that nowhere under the provisions of the Act, it contemplated that rendering advice or guidance, by itself, can render a person the owner or deemed/beneficial owner of any property or income. Ownership or beneficial ownership under the Act arises only through legal title or specific deeming provisions, and cannot be inferred merely from advisory or professional interaction, a principle rightly appreciated by the Ld. CIT(A). 27. It is a settled law that addition u/s 69A of the Act cannot be based on mere suspicion and extrapolation that the said money might have been received by the Respondent and requires credible material, vide CIT v. Jawahar Lal Oswal [2016] 67 taxmann.com 168 (Punjab & Haryana). PRAYER In view ....
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....eipt of the said amount by the assessee, the addition u/s 69A of the Act is not sustainable, rather, the same is nothing, but, a product of surmises and conjectures. 8. Before the first appellate authority, a remand report was called for and the Ld. AO reiterated the reliance on WhatsApp chat extracts which were already part of the assessment order which remained uncorroborated and, according to the Ld. CIT(A), found to be devoid of any evidentiary support. Further, that without any corroborative material, the ownership of receipt of income, i.e., sale proceeds to the appellant under the charging provision of section 69A of the Act is not satisfied. In fact, there is no material brought by the Ld. AO on record establishing the fact that the assessee was the owner or recipient of the alleged cash amounting to AED 6,30,392 (Rs.1,30,90,415/-). Considering this aspect of the matter, the decision taken by the Ld. CIT(A) relying upon the judgement passed by different judicial authorities appearing at page 12 of the Ld. CIT(A)'s order that unless corroborated by independence evidence, the WhatsApp chat is non-speaking, dump document and cannot be the sole basis of an addition and, ....