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TMI Blog2024 (5) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... matter in ITA No. 179/JP/2022 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are identical except the difference in the amount in other assessment year. The ld. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. ITA No. 179/JP/2022 is taken as a lead case. Based on the above arguments we have also seen that for both the appeals grounds are similar, facts are similar and arguments were similar and therefore, were heard together and are disposed by taking lead case facts, grounds, and arguments from the folder in ITA No. 179/JP/2022. 4. Before moving towards the facts of the case we would like to mention that the assessee has assailed the appeal in ITA No. 179/JP/2022 on the following grounds; "1. That on the facts and in the circumstances of the case the Ld. CIT(A) is wrong, unjust and has erred in law in confirming finding recorded by the Ld. AO that whatsapp messages contained in the mobile phone found from the appellant during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended that noting in the message are deaf and dump. The ld. AO considered the reply of the assessee but as the same was considered as general and no specific explanation was offered and therefore, the same was not found tenable and made the addition of Rs. 24,20,366/- under section 69 of the IT Act, 1961 based on the Whatsapp messages contained in the Mobile No. 99502 00007. 6. Aggrieved with the order of the ld. AO passed u/s 143(3) r.w.s 153A of the Act, assessee preferred an appeal before ld. CIT(A). Apropos to the grounds so raised by the assessee, the relevant finding of the ld. CIT(A) is as under:- "(vii) As regards the addition of Rs. 24,20,366/- made by the AO, it is observed that the whatsapp chat refers to total dollar 21051 cash Rs. 10,31,000/-. Since the value of one US Dollar was equivalent to Indian Rs. 66/- on the date of search, therefore the total value was worked out at Rs. 13,89,366/- by the AO. Apart from the above as per the whatsapp chat there is a noting of Rs. 10,31,000/- and therefore the contention of the appellant that the value of total US Dollar mentioned in the chat was at Rs. 10,31,000/- is not correct. I find the AO has rightly made the addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self in its return under any of these six sections or the assessment is made by the AO under these sections. (iii) Further, as per the provisions of section 115BBE, the income in nature of incomes prescribed u/s 68 to 69D shall be subject to higher tax rate @ 30% u/s 115BBE upto the AY 2016-17 and would be subject to higher tax rate @ 60% u/s 115BBE from 01.04.2017 onwards, In fact under the IT Act, when omission to record any entry has itself been defined to be deemed as an attempt to evade tax/penalty/interest, then non-recording or incorrect recording of any entry in books of accounts, for the purposes of section 68 to 69D, also needs to be understood in the same manner, as attempt to evade tax/penalty/ interest etc. Therefore, a conjoint reading of section 115BBE with section 68/69A and explanation to section 276C, would reveal that even in case where assessee discloses some unrecorded incomes subsequently in statements u/s 132(4)/ 131(1) or in ROI u/s 139/148/153A or application filed before ITSC u/s 245C(1), which otherwise was assessable under the deeming provisions as being nor recorded in books or incorrectly recorded, it does not take away such disclosed incomes from be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch no incriminating documents were found or seized by the Department except Whatsapp chattings and images of the same were taken by the search party during the course of search. The ld. AO made the addition of Rs. 24,20,366/- under section 69 of the IT Act, 1961 on account of Whatsapp messages contained in the Mobile No. 99502 00007. During the course of assessment proceedings, the appellant challenged the said addition legally as well as factual on merits. But the ld. AO after summarily rejecting the submissions and facts of the case, made the addition of Rs. 24,20,366/- without bringing on record any corroborative supporting evidence and making any enquiry. 2. Action of the ld. CIT (Appeals): The appellant challenged the said addition made by the ld. AO legally as well as on facts and merits before the Ld. CIT(A) but the Ld. CIT (A) vide para 4.2 of her impugned order relying on the judgment of the Hon'ble Supreme Court in the case of Amba Lal Sarabhai Enterprises Ltd. vs. KS Infraspace Ltd. confirmed the addition made by the ld. AO. The appellant has challenged the said addition sustained by the ld. CIT (A) before your Honours by raising the grounds of appeal supra. 3. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch non speaking documents are referred to as the dumb document. In this connection it is also submitted that a fictional receipt cannot be deemed to be a receipt in the absence of any cogent material to support the factum of actual receipt. Refer K.P. Verghese vs. ITO, 131 ITR 597 (SC). Further, the Hon'ble Delhi High Court in case of CIT vs. D.K. Gupta (2008) 174 taxman 476 held as under :- "4. Consequently, the tribunal upheld the findings of the Commissioner of Income-tax (Appeals) and agreed with the view taken by the latter that the assessee was liable to tax only on those receipts which had been proved to be income in the hands of the recipient. As a result thereof, the Tribunal found no reason to interfere with the findings recorded by the Commissioner of Income- tax (Appeals) on the ground that the same were based on valid and cogent materials placed on record and also produced before the Assessing Officer during the course of assessment proceedings. The Tribunal also noted that all the evidences, materials, explanations were furnished before the Assessing Officer and it is on the basis of such material that the Commissioner of Income-tax (Appeals) had arrived at the conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document only if the conditions mentioned Under Sub-section (2) are satisfied, without further proof or production of the original. The very admissibility of such a document, i.e. electronic record which is called as computer output, depends on the satisfaction of the four conditions Under Section 65B(2). " [Emphasis Supplied]. Hon'ble Apex Court held that these safeguards are taken to ensure the 'source and authenticity', which are "the two hallmarks pertaining to electronic record sought to be used as evidence;. The importance of following this procedure was emphasized by the fact that electronic records are more susceptible to tampering, alteration, transposition, excision, etc. and in absence of these safeguards, the whole trial based on proof of electronic records can lead to "travesty of justice'. "Only if the electronic record is duly produced in terms of Section 65B of the Evidence Act, the question would arise as to the genuineness thereof and in that situation, resort can be made to Section 45A - opinion of examiner of electronic evidence. The Evidence Act does not contemplate or permit the proof of an electronic record by oral evidence if requirements Under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essages are being forwarded/shared in a group and the phone may be used by some known person(s), friend(s) and/or some other person in the absence of the owner of mobile phone. Thus generally only on the basis of messages in the mobile phone or a whatsapp call know adverse inference legally can be drawn against the owner of the phone without any supporting corroborative evidence tenable in the eyes of law. In assessee's case the above submitted basic principal/theory is applicable as it is. The submissions are driving support from the alleged print out of the whatsapp message, copy of which supplied by the I.T. department to assessee that the noting in the messages are deaf and dumb. As now it is a settled position of law on the issue that tax can be levied on the basis of document found and seized during the course of search only when the document is a speaking one. The document should speak either out of itself or in the company or other material found on investigation. The document should be clear and unambiguous in respect of all the four components of the charge of tax. If it is not so the document is only a dumb document. No charge can be levied on the basis of a dumb documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Page No. 11. The Page contains whatsapp chat wherein assessee replied "Total dollar 27051 cash Rs. 10.31", perusal of this message and previous message shows that assessee has made payment of US $ 21051 and Rs. 10,31,000 to someone at Orchard Park Suites, Orchard Turn Behind Takasimaya. The recipient also affirmed to the above message by replying "Ok dear". Since, 1 USD was equivalent to INR 66, total US $ 21051 will be INR 13,89,366. Apart from dollar there is reference of Rs. 10,31,000. Thus total of cash transaction comes to Rs. 24,20,366/-. Further, the source of Rs. 24,30,366/- transferred was not found recorded in books of account furnished by the assessee. From the entirety of circumstances and factual matrix of the case it is clearly evident that Rs. 24,20,366/- is transferred out of unexplained money and thus the same is liable to be taxed in terms of the provisions of section 69A of the Act." As per above particulars of the whatsapp message, it was for US $ 21051 equivalent to Indian currency amounting to Rs. 10.31 lacs i.e. only for one transaction and not of two as interpreted by the ld. AO. After that the message is "OK dear". The place of transaction is Orchard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was confirmed by Commissioner (Appeals), which was based only on mere assumption and not on any material recovered during search and seizure - High Court by impugned order held that in absence of supporting evidence, additions based merely on presumption that asse4ssee had earned undisclosed income and incurred expenses outside books of account would not be sustainable - Whether Special Leave Petition against said impugned order was to be dismissed - Held, yes (para 2) (in favour of assessee)." c. 278 Taxman 293 (SC) It is evident that the assessee's case is completely covered by the issue decided by the Hon'ble Apex Court in the above said cases. The assessee further submits that he made no alleged payment of dollars to any person(s). It is, therefore again requested that the impugned addition made by the ld. AO is wrong, bad in law and deserves to be deleted. Without prejudice to above, the assessee also submits (though he does not accept for a moment) that the working of addition of Rs. 24,20,366/- is also not correct. The correct amount works out to Rs. 10,31,000 = $ 21051. But the ld. AO in his assessment order has added Indian Rs. 10,31,000/- mentioned in the mes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed is also reiterated here in below: 9. The ld DR is heard who has relied on the findings of the lower authorities. The ld.DR further submitted that the records are the electronic records and there cannot be watertight evidence then the evidence found from the persona mobile whatsapp chat. It is not under dispute that the print out were taken from the whatsapp image and that was confronted before the assessee. The case law cited are on difference facts and are not directly applicable to the facts of the case on hand. Considering the provision of the Information Technology Act the evidence are incriminating in nature and the assessee explanation which are verified with the record are not subject matter of dispute and the addition made are those chats which are not properly explained by the assessee and are related to the hawala transaction done by the assessee for which no proper explanation furnished by the assessee. All the papers based on which the additions were made are clinching evidence are clearly of the nature of unrecorded and undisclosed transactions and the explanation are cryptic. Even the assessee on these charts given the acknowledgment and in that situation how can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerns. There is no expenditure or investment from the side of the assessee. The ld. AR of the assessee contended that it may a case that 10,31,000 is the rupee price of the dollar exchanged to some of the group relative travelers. The ld. AO did and that of the ld. CIT(A) did not appreciate that which there are not two figure first of all and other part is that it neither the investment nor expenditure it is not seems to be the helping the guest in getting the foreign currency exchanged. The ld. 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. 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 ld. CIT(A) noted that the WhatsApp message was found in the mobile of the assessee. When questioned in the statement u/s. 132(4), the assessee has ..... 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