9911796707
TMI Blog2025 (3) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... arned by the assessee on sale of shares of above said company cannot be considered to be an accommodation entry. Accordingly, CIT(A) was justified in deleting the addition of long term capital gains made by the AO. Since the long term capital gains earned by the assessee is held to be genuine one, the question of paying any commission expenses does not arise in the facts of the present case. Accordingly, we are of the view that the CIT(A) was justified in deleting the estimated commission expenses. Addition on the basis of whatsapp chat - HELD THAT:- As decided in case of Designers Point (India) P Ltd [2023 (9) TMI 1664 - ITAT DELHI] has held that the addition cannot be made on the basis of whatsapp chat without bringing any material to corroborate the same. AO has not brought any E-certificate as required u/s 65B of the Act before placing reliance on the digital evidence. Hence, the AO could not have placed reliance on the said document which is alleged to be print out of whatsapp chat. In the absence of e-certificate, the same shall become a third party document and it cannot be relied upon by the AO without bringing any corroborative evidence to show that the assessee has rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The said Ad-interim order contained the name of the assessee and his sister. Accordingly, the assessee was subjected to search and seizure operations u/s 132 of the Act by the Income Tax Department from 10-09-2015 to 13-09-2015. A sworn statement u/s 132(4) of the Act was also recorded from the assessee during the course of search. In the statement, the assessee had stated that the shares of M/s.Pine Animation Ltd., were purchased by him on the advice of his share broker Shri Bhavesh Sha. The Revenue recorded a statement from the above said share broker also u/s 131 of the Act and he also confirmed that he had advised the assessee to buy the shares of M/s. Pine Animation Ltd. 4. Subsequently, the assessments of both the years under consideration were framed u/s 143(3) r.w.s 153A of the Act, wherein the AO held that the long term capital gains earned by the assessee on sale of Pine Animation Ltd are bogus in nature. Accordingly, he assessed the long term capital gains declared by the assessee in both the years as income of the assessee, i.e., he rejected the claim for exemption u/s 10(38) of the Act. Besides the above, the AO presumed that the assessee would have incurred commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O noticed that the assessee has not carried out fundamental analysis of M/s Pine Animation Ltd before investing in the shares of above said company. He noticed that the financials and fundamentals of M/s Pine Animation Ltd did not justify the prices quoted in the stock exchange. Further, the AO referred to the report given by the Investigation wing of Kolkatta, particularly, the statements recorded by them from few persons, who were operating in the penny stocks. The AO referred to the statements recorded from Shri Raj Kumar Kedia, wherein he had admitted that he had arranged investment in the shares of M/s Pine Animation Ltd on behalf of the beneficiaries. The AO also noticed that the Investigation wing had recorded statements from various other persons and found out that a syndicate of share brokers, entry providers of Jamakharchi companies and penny stock companies were operating together to generate bogus capital gains, i.e., they have been jointly operating to give the benefit of accommodation entries to the beneficiaries for a commission ranging from 5% to 7% of the trade value or long term capital gains. Then the AO referred to the financial statements of the above said comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med the fact that the shares of M/s. Pine Animation Limited have been used for providing entry of bogus LTCG. * Various Exit Providers have confirmed that they have purchased the shares of M/s. Pine Animation Limited to provide entry of bogus LTCG. * Transactions of shares were not governed by market factors prevalent at relevant time in such trade, but same were product of design and mutual connivance on part of assessee and the operators. * Therefore, it is found that the shares of M/s. Pine Animation Limited were used to provide accommodation entry in terms of LTCG to the beneficiaries. Then, the AO referred to certain decision rendered by ITAT and High Courts, wherein the addition relating to bogus capital gains had been confirmed. Accordingly, he held that the long term capital gains declared by the assessee are bogus and accordingly assessed the same as income of the assessee. 10. The AO also referred to the statement given by one of the exit providers named Shri Jagdish Purohit, wherein had had admitted to be charging 5% commission. Relying upon the said statement, the AO assessed 5% of the long term capital gains as estimated commission expenses incurred by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) Mukesh Mittal (TS-271-ITAT-2021 (Del)) Accordingly, the assessee contended that no addition as regards Long Term Capital Gains or cash commission can be made. 14. In view of the submissions made by the assessee against the remand report, the Ld.CIT(A) called for another remand report from the assessing officer specifically asking the AO to find out as to whether the final order of SEBI dated 19-09-2017 (wherein the assessee and her sister have been exonerated) has attained finality or not. The AO replied that the assessee had challenged the Interim order by filing appeal before Securities Appellate Tribunal and the same has been dismissed as infructuous in view of the final order passed by SEBI. The AO also reported that a notice was sent to Shri Jagdish Purohit, the exit provider, asking him to appear before him in order to provide opportunity of cross examination. Shri Jagdish Purohit has replied that he did not know Mr. Pankaj Dhanji Ghoshar (assessee herein) and also denied any business relationship with him. Also he submitted that he does not possess any document relating to Shri Pankaj Dhanji Ghoshar. Thus, Shri Jagdish Purohit did not appear before the AO and hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant during the course of appellate proceedings before me, in support of the long-term capital gains earned on sale of shares of PAL filed the following documentary evidences (i) Allotment advice dated 21.12.2012 from company for purchase of shares by appellant (ii) Allotment advice dated 04.02.2013 from company for purchase of shares by appellant's sister Smt Lata V Shah (iii) Demat account statement of the appellant showing share transactions (iv) Personal details of Bhavesh Shah (former deputy manager of Karvy Stock Broker Ltd) who recommended the appellant to subscribe in the preferential issue of PAL. (v) Declaration of gift of shares from Smt Lata V Shah to appellant. (vi) Certificate showing STT paid by appellant for sale of share of PAL for FY2013-14 (vii) For source of investment in shares of PAL- Copy of financial statement, audit report, acknowledgement of return of income and loan confirmation of M/s. Grafton Merchants Pvt Ltd from whom temporary loan was taken by appellant and repaid immediately within less than a month. (viii) Brokers report, bank statement for AY 2013-14 showing purchases of preferential shares of PAL and contract notes refle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reated as non genuine merely because they are done in off market." The Ld.CIT(A) took support of the decision rendered by the Hon'ble jurisdictional Bombay High Court in the case of CIT Vs. Jamna Devi Agrawal (328 ITR 656)(Bom). 18. The Ld.CIT(A) noticed that the assessee and his sister has been exonerated by the SEBI in its order dated 19-09-2017. Further, the SEBI had also exonerated certain exit providers quoted by the AO in the assessment order. Accordingly, he held that the reliance placed by the AO on Ad-interim order of SEBI would fail. 19. The Ld.CIT(A) also noticed that the AO had placed reliance on the statements recorded by the investigation wing from Shri Rajagopalan Nagraj Sharma - Director of Pine Animation Ltd (PAL); Shri Mandar Subhas Palav, Independent Director of PAL; Shri Narayan Toshniwal, CA of PAL and Shri Jagdish Purohit, exit provider. The Ld CIT(A) also noticed that the assessee had requested the AO (through various letters ) to provide an opportunity to cross examine all the above said persons, but he has not provided such an opportunity . However, he held that the AO has not made addition solely on the basis of statements given by the above said person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Yes Yes Sale proceed received through Cheque Cheque Cheque SEBI finding No role of the assessee price manipulation No role of the assessee price manipulation No role of the assessee price manipulation Accordingly, the Ld CIT(A) held that the decision rendered by the co-ordinate bench of Tribunal in the case of Priyanka Ankit Miglani is fully applicable to the present case. Further, the Ld CIT(A) also took support of the decision rendered by Mumbai bench of Tribunal in the case of Gopal Nihaldas Pariani (order dated 24-02-2023. Finally, the Ld.CIT(A) concluded as under:- "23. From the above discussion, it is a facts that there is no adverse findings regarding purchase of shares, the appellant is a regular investor in the shares. The SEBI has given a clear cut findings that the appellant was not involved in price manipulation and has no nexus with the promoters or entities related to the PAL. Further, the facts in the appellant's case and the facts in the above mentioned decisions are identical. Hence, respectfully following the decisions of Hon'ble jurisdictional ITAT in case of Gopal Nihaldas Pariani and Priyanka Miglani, the addition made by the AO on account of long t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeded to add estimated commission @ 6% on LTCG amount for arranging the said bogus transaction as unexplained expenditure u/s 69C of the Act. 5.1. At the outset, we find that the documentary evidences submitted by the assessee were found to be genuine and no adverse inferences were drawn by the ld.AO on the same. Infact the ld. AO had an occasion to examine the same thrice - once during original assessment proceedings; second during the first remand proceedings and third during second remand proceedings. Even in the remand reports, the ld. AO had not given any adverse comments or drawn adverse inferences on the documentary evidences submitted before him. The transactions were carried out by the assessee in the secondary market through a registered share broker at the prevailing market prices. Payments were received by the assessee by account payee cheques from the stock exchange through the registered broker. Amounts received on sale of shares were duly subjected to levy of Securities Transaction Tax (STT) at the applicable rates. 5.2. We find that no enquiries were carried out by the ld. AO either on the broker or with the stock exchange with regard to transactions carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions were off-market transactions could not be a ground to treat the transactions as sham transactions. On a perusal of those documentary evidences, the Tribunal had arrived at a finding of fact that the transactions were genuine. Nothing was brought to notice of the Court that the findings recorded by the Tribunal were contrary to the documentary evidences on record. Therefore, no substantial question of law arose from the order of the Tribunal." 5.5. We find that independent enquiries were conducted by SEBI and SEBI had passed an interim order dated 08.05.2015 in the case of Pine Animation Ltd, wherein the assessee and Pine Animation Ltd together with some others, were restrained from accessing the securities market, either directly or indirectly in any manner whatsoever, till the final investigation by SEBI is completed. After completion of the final investigation, SEBI had passed a final order dated 19.09.2017 in the case of Pine Animation Ltd clearly acquitting 114 persons which admittedly included the assessee on the plea that they were not involved in artificial price rigging of shares. In the said order, SEBI had listed out the names and PAN of various persons who wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Pine Animation Ltd. Hence it could be safely concluded that the assessee herein is merely a gullible investor, who had resorted to make investment in the shares of Pine Animation Ltd based on market information through the guidance of her father in law Shri Rajinder Miglani and had sold the shares in the secondary market in prevailing market prices. It is not the case of the ld. AO that assessee herein had directly sold the shares in the secondary market with clear knowledge of the name of the person to whom the said shares were sold. In secondary market transactions, the buyer and seller are not supposed to know each other unless it is a case of 'block deals'. Same is the case of the assessee herein. Admittedly, the assessee's case does not fall under the category of 'block deals'. 5.7. We find that one of the findings of the ld. AO in page 3 of his order is that assessee does not have elaborate experience in share trading and that the isolated investment made by the assessee is in Pine Animation Ltd. This is factually incorrect as assessee has been regular in making investments in various scrips which is evident from the demat statement furnished on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itting the assessee as stated supra. Before the first appellate proceedings, the assessee had furnished the SEBI final order dated 19.09.2017 duly acquitting the assessee, which was duly appreciated by the ld. CIT(A) while granting relief to the assessee. We find that the main basis for denying the exemption u/s 10(38) of the Act was the reliance placed on the Interim order of SEBI dated 08.05.2015, wherein the assessee's name was included as one of the beneficiaries and to have indulged in mal practices. Later pursuant to detailed investigations carried out by SEBI, a final order was passed on 19.09.2017, wherein specifically the assessee along with remaining 113 entities had been discharged by SEBI stating that those 114 entitites were not involved in price manipulation of scrip of Pine Animation Ltd. When the final SEBI order dated 19.09.2017 was placed before the ld. AO in the remand proceedings, the ld. AO shifts his stand that findings of SEBI are not binding on the Income Tax Department. We are unable to persuade ourselves to accept to this argument of the ld. DR and the ld. AO. This aspect was subject matter of adjudication by the Co-ordinate Bench of this Tribunal in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought on record to establish any link between the assessee herein with the entry operators who were allegedly involved in price rigging of shares artificially or any other person named in the assessment order being involved in any price rigging and also the exit provider. This onus is admittedly not discharged by the revenue in the instant case. 5.10. We find that the Co-ordinate Bench of this Tribunal in the case of Mukesh RatilalMarolia vs Additional CIT reported in 6 SOT 247 (Mum ITAT) dated 15.12.2005 had held that personal knowledge and excitement on events should not lead the ld. AO to a state of affairs where salient evidences are overlooked. It was held that when every transaction has been accounted, documented and supported, it would be very difficult to brush aside the contentions of the assessee that he had purchased shares and had sold shares and ultimately purchased a flat utilizing the sale proceeds of those shares and therefore, the co-ordinate bench chose to delete the impugned additions. We find that this tribunal decision was approved by the Hon'ble Jurisdictional High Court in ITA No. 456 of 2007 dated 07.09.2011. It is pertinent to note that the Special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he scheme. 6. It is in that regard that we find that Mr.Gopal's contentions are well founded. The Tribunal concluded that there was something more which was required, which would connect the present Assessee to the transactions and which are attributed to the Promoters/Directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for the total consideration of Rs.25,93,150/-. These shares were sold and how they were sold, on what dates and for what consideration and the sums received by cheques have been referred extensively by the Tribunal in para 10. A copy of the DMAT account, placed at pages 36 & 37 of the Appeal Paper Book before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available and which gave details of the transactions. The contract note is a system generated and pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi High Court in the case of PCIT vs Krishna Devi and others in ITA 125/2020 ; 130 & 131/2020 dated 15.01.2021 reported in 126 taxmann.com 80 (Delhi HC) wherein similar issue of penny stock vis a vis long term capital gain exemption u/s 10(38) of the Act was subject matter of adjudication, in favour of the assessee. This decision rendered in the case of Smt Krishna Devi considers all the propositions laid out hereinabove and are squarely applicable to the facts before us. Infact the Hon'ble High Court duly endorses the elaborate findings given by the Delhi Tribunal on various facets of the issue. Moreover, in this decision, the Hon'ble Delhi High Court duly considered the decision of Suman Poddar (earlier Hon'ble Delhi High Court decision referred to supra) and also the decision of Hon'ble Supreme Court in the case of Sumati Dayal which was heavily relied upon by the ld. DR before us also herein. The relevant operative portion of the decision of Hon'ble Delhi High Court in the case of Smt Krishna Devi is reproduced hereunder:- "10. We have heard Mr. Hossain at length and given our thoughtful consideration to his contentions, but are not convinced with the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that "There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels." The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the matter, no question of law, much less a substantial question of law arises for our consideration. 15. Accordingly, the present appeals are dismissed." 5.13. The transactions of sale of shares were done in online platform of BSE through the registered share broker from whom the received the sale consideration. The broker also receives payments for all his transactions from Stock Exchange. The seller and the buyer cannot know the names of each other as well as their respective brokers, who were involved in the trading transactions in the secondary platform. In such a situation, it cannot be presumed that there could be any transfer of cash between the buyers and sellers to convert the unaccounted money of the beneficiaries as alleged by the ld AO. There is absolutely no evidence brought on record whatsoever to allege that money changed hands between the assessee and the broker or any other person including the alleged exit provider whatsoever to convert unaccounted money for getting benefit of LTCG as alleged. Hence we hold that in the absence of any material to show that huge cash was transferred from one side to another, addition cannot be sustained. 5.14. We find t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44 of the order of ld. CITA. After this, one more remand report was called for by the ld. CITA from the ld. AO. The second remand report dated 24.01.2019 was submitted by the AO reiterating the findings of the assessment order. Assessee filed rejoinder to the second remand report on 20.02.2020. The ld. CIT(A) after considering all these submissions had passed a reasoned order granting relief to the assessee. 5.16. We find that the ld. CIT(A) relied on the decision of Nagpur Bench of Hon'ble Jurisdictional High Court in the case of Sanjay Bimalchand Jain vide order dated 10/04/2017 reported in 89 taxmann.com 196 which is against assessee. We find that the distinguishing facts in the case of Sanjay Bimalchand Jain vis a vis the facts of the case are as under:- (a) The assessee therein had purchased shares of two companies whose address was same and even the authorized signatory was same for both the companies and eventually both the companies merged with another company, which is not the case of the assessee herein before us. (b) The address of the broker from whom the assessee therein had purchased the shares of these companies was also the same as that of those companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .com 48 (SC) but that does not help the revenue in as much as the facts in that case were entirely different. 5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law. 6. The appeal is devoid of merits and it is dismissed with no order as to costs." 5.18.We find that the Hon'ble Calcutta High Court in the case of M/s Classic Growers Ltd. vs. CIT in ITA No. 129 of 2012 had observed that in that case, the ld. AO found that the formal evidences produced by the assessee to support huge losses claimed in the transactions of purchase and sale of shares were stage managed. The Hon'ble High Court held that the opinion of the ld. AO that the assessee generated a sizeable amount of loss out of prearranged transactions so as to reduce the quantum of income liable for tax might have been the view expressed by the ld. AO but he miserably failed to substantiate that. The Hon'ble High Court held that the transactions were at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral), Ludhiana vs Hitesh Gandhi in ITA NO. 18 of 2017 dated 16.02.2017 (P&H) in Para 5 & 6 of its order had rendered the similar decisions in favour of the assessee on identical facts and circumstances. 5.22. We find that the Hon'ble Jharkhand High Court in the case of CIT vs Arun Kumar Agarwal HUF reported in 210 taxman 405 (Jharkhand) had rendered the similar decision on identical facts and circumstances as under:- "10. We have considered the submissions of the learned counsel for the parties and we are of the considered opinion that the learned Assessing Officer was much influenced by the enqiury report which may has been brought on record by the efforts of the Assessing Officer and that enquiry report was prepared by the SEBI and from the observations made by the Assessing Officer himself, it is clear that after getting that enquiry report, the SEBI prima facie found involvement of some of the share brokers in unfair trade practices. Even in a case where the share broker was found involved in unfair trade practice and was involved in lowering and rising of the share price, and any person, who himself is not involved in that type of transaction, if purchased the share fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, these Appeals are dismissed. 5.23. We find that the ld. DR before us vehemently relied on the recent decision of Hon'ble Calcutta High Court in the case of PCIT vs Swati Bajaj reported in 139 taxmann.com 352 (Cal) which is an elaborate decision rendered after considering various decisions of various High Courts on the subject. In the said decision, it was held that assessee had to establish the genuineness of rise of price of shares within a short period of time that too when general market trend was recessive. But we find that when there are several decisions of Hon'ble Jurisdictional High Court as stated supra are already in favour of the assessee, the same would prevail over this tribunal and this tribunal need not take cognizance of the Hon'ble Non-Jurisdictional High Court. The law is very well settled by the Hon'ble Supreme Court in the case of Union of India vs Kamalakshi Finance Corporation Ltd reported in 55 ELT 43 (1991) that the decision of Hon'ble Jurisdictional High Court would have higher precedence value than the decision of Hon'ble Non-Jurisdictional High Court on the Tribunal. The Hon'ble Supreme Court emphasised therein that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has got enhancement powers and he could do what ld. AO had not done with regard to the issue in dispute before him. We hold that the ld. DR before this tribunal would be entitled only to defend the case of the ld. AO and cannot improve the case of the revenue. No power is vested in the statute for the same. The tribunal, being a second appellate authority, could only adjudicate the disputed order before it i.e. the order of ld. CIT(A). That order of ld. CIT(A) had already been passed after considering the assessment order. In this regard, the wordings used in section 254(1) of the Act would also be relevant which reads as under :- Section 254(1). The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The crucial words are -a) such orders andb) thereon. The expressions 'such orders' and 'thereon' used in section 254(1) of the Act restricts the scope of powers of the tribunal to confine only to the orders before it and not to travel beyond it. That is precisely the reason the power of enhancement of income has not been granted by the statute to the tribunal, when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision following the binding decisions rendered by the Hon'ble jurisdictional Bombay High Court. 23. We may refer to some of the facts prevailing in the instant case. We notice that the assessee has discharged its obligation by furnishing all documents evidencing purchase and sale of shares. The payments have been given and the sale proceeds were received through banking channels. The shares have entered demat account of the assessee on purchase/split and exited it upon sale of those shares. The shares have been sold in the stock exchange platform by paying Securities Transaction Tax. We notice that the assessing officer did not find fault or found any deficiency in any of those documents. 24. We noticed earlier that the AO had fully placed reliance on the Investigation report given by the Investigation wing and the Ad-interim report given by SEBI. However, in the final report, the SEBI has exonerated the assessee and his sister herein. Their name finds place in serial number 30 and 49 of the final order of SEBI. This fact has been recorded by Ld CIT(A) at page 42 of his order. We noticed earlier that the revenue has conducted search on the assessee on the basis of Ad-interim rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We also notice that a statement was taken from the assessee u/s 132(4) of the Act, wherein the AO did not find anything wrong. In the statement, the assessee had stated that he had purchased shares of Pine Animation Ltd on the advice of his Share broker Shri Bhavesh Shah and he had also confirmed that he only has advised the assessee to buy shares of M/s Pine Animation Ltd. None of these statements were found to be false. 28. In view of the foregoing discussions, it has to be held that the assessee has purchased the shares of M/s.Pine Animation Ltd in the normal course of his investment activities. Hence the long term capital gain earned by the assessee on sale of shares of above said company cannot be considered to be an accommodation entry. Accordingly, we are of the view that the Ld.CIT(A) was justified in deleting the addition of long term capital gains made by the AO. 29. Since the long term capital gains earned by the assessee is held to be genuine one, the question of paying any commission expenses does not arise in the facts of the present case. Accordingly, we are of the view that the Ld CIT(A) was justified in deleting the estimated commission expenses. ASSESSMENT YE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry of Rs.2 crores received by you on some dates in F.Y. 2014-15." The assessee contended that the whatsapp chat does not have evidentiary value. It was further contended that the print out of the same does not bear any date and time. Therefore, the authenticity and reliability of alleged whatsapp chat is questionable and doubtful. Accordingly, it was contended that the AO should not place reliance on it to make any addition. 32. The AO observed that the same whatsapp chat was available in the phone of the assessee also and a back up of the same was also taken by the search officials. The whatsapp chat is related to the entry cheque and the corresponding cheque was returned back by Shri Jayant Shamji Chheda and his company. The entries mentioned in whatsapp chat were matching with the books of the assessee and it proves that the cash was exchanged between the parties. In view of the above, the AO assessed Rs.2.00 crores as unexplained cash credit u/s 68 of the Act. 33. Before the Ld.CIT(A), the assessee narrated the explanations given by him to the AO. It was stated that Shri Jayant Shamji Chheda is a neighbor of the assessee staying in the same building. There was exchange of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the AO. The Ld.CIT(A) has also extracted the same in his order. He submitted that the Ld.CIT(A) has also incorporated the copy of print out of Whatsapp chat. A perusal of the same would show that it does not contain any dates. The fact of absence of date was also specifically raised before the tax authorities. However, they have proceeded to take the alleged transactions as pertaining to the year relevant to AY 2015-16. The Ld A.R. invited our attention to the notice dated 27-09-2017 issued by the AO u/s 142(1) of the Act, which is placed at pages 58 to 66 of the paper book. Referring to query No.8, the Ld A.R submitted that the AO had raised query on the alleged accommodation entry of Rs.5.00 crores Rs.9.50 crores and Rs.50,00,000/-. The AO did not ask any question about the impugned addition of Rs.2.00 crores and he proceeded to make the addition without raising any query thereon. He further submitted that it is not clear as to whether the whatsapp chat referred to by the AO was available in the phone of the assessee, as the assessee disputed the same before the AO in his letter dated 24th October, 2017 filed before him. He submitted that the assessee has stated in his sworn st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry with regard to the amount of Rs.2.00 crores. However, the AO raised a query on this issue by a letter dated 15-12-2017. In response thereto, the assessee filed a reply, wherein he denied the whatsapp chat altogether. He also contended that the print out of whatsapp chat does not have any evidentiary value. He also submitted that the said document has been impounded from a third party and it cannot form part of books of accounts of the assessee. (c) The AO has observed that the data in the I-phone of the assessee has been copied in the Hard disk by the Search team. With regard to copying of the data from mobile phone, the assessee has only confirmed the action of copying the data in reply to the question no.130 posed to the assessee. Accordingly, we agree with the contentions of Ld A.R, it cannot be taken as confirmation of whatsapp chat. (d) However, the assessee has filed a letter dated 24-10-2017 before the AO, wherein he has submitted as under:- ".....I was informed by the concerned officers who were in charge of the Search/Survey that the entire data of my mobile phone has been found to be erased/deleted. In the circumstances, the question of taking print out from my ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the year relevant to AY 2015-16. He presumes that they may belong to AY.2015-16. When the AO was not sure as to whether the above said transaction has happened or not, he could not have made the addition u/s 68 of the Act. (g) We also notice that the AO has not brought any corroborative material on record to support the whatsapp chat nor did he examine Shri Jayant Chheda. Hence, we are of the view that the tax authorities are not justified in making this addition, when the evidences relied upon by them do not support their conclusion. 37. We also notice that the Delhi Bench of Tribunal in the case of Designers Point (India) P Ltd (ITA No.2517/Del/2022 dated 06-09-2023) has held that the addition cannot be made on the basis of whatsapp chat without bringing any material to corroborate the same. The relevant observations made by the Tribunal are extracted below:- "7. This is also pertinent to mention that the Assessing Officer has proceeded to make addition on the basis of whatsapp chats between Ms. Seema Dutta and Mr. Aman Sheghal and their statements only and no other documentary evidence or adverse positive material has been found and searched during the course of search a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
