2024 (5) TMI 533 - AT - Income Tax

Addition u/s 69A on the basis of whatsapp messages - whatsapp messages contained in the mobile phone found from the appellant during the course of search relates to alleged transactions undertaken and that those transactions relates to and or carried by him - AO contended that in the chat message the recipient confirmed to have that transaction saying ok dear based on that ld. AO considered as unexplained money. HELD THAT - The provision of section 69A of the Act empowers the ld. AO make addition of any money bullion jewellery or other valuable articles and such money bullion jewellery or valuable article is not recorded in the books of accounts maintained. Here the issue is that the money so recorded in the Whatsapp not found at the time of search in the possession of the assessee. Not only that the contention of the assessee that there is a double addition for one transaction i.e. one for Indian Rupee and another on account dollar and thus the addition of the double the amount. We found force in the argument advanced that there is no investment or expenditure on the part of the assessee found have been recorded in the search proceeding. It is also found that cash in Indian rupee or dollar have been found physically at the time of search. Based on these non-disputed facts before us we are of the considered view that there is no merits in the reasoning advanced by the revenue and therefore we vacate the addition - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of additions based on WhatsApp messages.
2. Applicability of Section 69A of the Income Tax Act, 1961.
3. Application of higher tax rate under Section 115BBE of the Income Tax Act, 1961.

Summary:

Issue 1: Legality of Additions Based on WhatsApp Messages
The assessee challenged the addition of Rs. 24,20,366 based on WhatsApp messages found during a search. The assessee argued that WhatsApp messages are not conclusive evidence and can be considered "dumb documents" without corroborative evidence. The Tribunal noted that the WhatsApp messages alone, without any physical cash or foreign currency found during the search, do not substantiate the addition. The Tribunal sided with the assessee, stating that the addition based solely on WhatsApp messages is not tenable.

Issue 2: Applicability of Section 69A of the Income Tax Act, 1961
The assessee contended that Section 69A, which pertains to unexplained money, is not applicable as no physical cash or foreign currency was found during the search. The Tribunal agreed, noting that the provision requires the actual possession of unexplained money, bullion, or valuable articles, which was not the case here. The Tribunal found the addition under Section 69A to be incorrect and vacated the addition of Rs. 24,20,366.

Issue 3: Application of Higher Tax Rate under Section 115BBE of the Income Tax Act, 1961
The assessee argued that the higher tax rate under Section 115BBE was not applicable as no income assessable under Section 69A was established. The Tribunal, having vacated the addition under Section 69A, found no grounds for applying the higher tax rate under Section 115BBE. The Tribunal thus dismissed the application of the higher tax rate.

Conclusion:
The Tribunal allowed the appeals, vacating the addition of Rs. 24,20,366 and dismissing the application of the higher tax rate under Section 115BBE. The Tribunal found that WhatsApp messages alone do not constitute sufficient evidence for such additions and that the conditions for invoking Section 69A were not met.