DCIT Vs Krrish Realtech Private Limited (ITAT Delhi)
WhatsApp exchanges between two independent individuals could not be treated as evidence against the company, especially in the absence of corroboration: ITAT Delhi
In this case, the Delhi ITAT upheld the deletion of an addition of ₹24.75 crore made under Section 69A on the basis of a WhatsApp message allegedly indicating cash receipts. The addition arose from search proceedings where WhatsApp messages on the mobile phone of Shri Amit Katyal showed references to receipt of cash. The Assessing Officer treated the amount as undisclosed income of the assessee company on the ground that Shri Katyal held 99.99% shares in it.
The CIT(A) deleted the addition after noting that the seized message neither mentioned the name of the assessee company nor referred to any specific project belonging to it. No evidence was found during the search to show that the alleged cash was received by the assessee, nor was any buyer examined or any cash or utilisation traced. Importantly, the AO himself had stated in the assessment order that the amount represented undisclosed income of Shri Amit Katyal and not of the assessee company.
Before the Tribunal, the Revenue argued that Shri Katyal being the key person justified the addition, while the assessee contended that WhatsApp exchanges between two independent individuals could not be treated as evidence against the company, especially in the absence of corroboration. The Tribunal agreed with the assessee and held that a private electronic communication between two individuals, without any supporting material, cannot be the sole basis for making an addition in the hands of a company. Since there was no incriminating evidence, no proof of receipt, and no nexus established between the message and the assessee’s business, the addition under Section 69A was unsustainable. Accordingly, the order of the CIT(A) deleting the addition was confirmed and the Revenue’s appeal was dismissed.
FULL TEXT OF THE ORDER OF ITAT DELHI
