Case Law Details
Banpreetsingh Surindersingh Atal Vs DCIT (ITAT Mumbai)
WhatsApp Chats + Third-Party Tally Data Alone Can’t Create Tax Liability: Mumbai ITAT Pulls Up Accommodation Entry Additions
In a significant ruling arising out of the alleged Polycab India Limited search-related proceedings, the Mumbai ITAT examined additions made against Tegh Cables Private Limited and its director on the basis of coded Tally data, WhatsApp messages and retracted statements allegedly indicating accommodation entry transactions.
The Department alleged that entities of the Sunrise Group maintained parallel Tally records under coded names like “Ka”, “Km”, “CN”, “Rupesh Bhai” and “Neel”, reflecting bogus sales and accommodation entries aggregating over ₹569 crores. It was further alleged that the assessee facilitated such transactions through “Mode-2” operations using Tegh Cables Pvt. Ltd. and earned commission income at 1% of corresponding sales.
However, the assessee strongly contested the additions, arguing that the entire case rested upon third-party Tally data seized from another group, unsupported statements and assumptions. It was specifically pointed out that the key statements of Shri Vijay Pahuja and Shri Kalpesh Kumbhar – heavily relied upon by the Revenue – were subsequently retracted. The assessee also relied upon the CBDT Circular cautioning officers against obtaining additions merely on the basis of confessional statements without corroborative evidence.
The assessee further argued that the so-called coded names merely referred to internal sales tracking mechanisms and employee-wise mapping of transactions for business monitoring purposes, and that selective interpretation of isolated entries could not justify treating the transactions as bogus.
The Tribunal’s discussion highlights a recurring controversy in search assessments- whether coded digital data, WhatsApp chats and retracted statements without independent corroboration can legally sustain additions for bogus purchases or commission income.
Author Bio
