Maldunge Retreat & Farming Pvt. Ltd. Vs DCIT (ITAT Mumbai)
Summary: A WhatsApp message recovered during a search said that “5kg mango” had been given to “Rajiv sir” for the “Mal-Dunge matter.” Statements recorded during the search explained the code as a ₹5 lakh cash payment. The Assessing Officer attributed the payment to Maldunge Retreat & Farming Pvt. Ltd. and added it as the company’s unexplained money under section 69A.
The Mumbai Tribunal deleted the addition. The message and statements gave the department a reason to investigate, but the link between the alleged payment and the assessee company had not been adequately established. The person whose statement supplied that link was not made available for cross-examination, and the Assessing Officer made no independent enquiry to test whether the payment was actually made on the company’s behalf.
The Message Found During the Group Search
Maldunge Retreat & Farming Pvt. Ltd. had filed its return for AY 2020–21 declaring a loss of ₹65,985. A search and survey involving the DB Realty and Dynamix groups and related persons took place on 7 October 2021. Among the digital material seized from the premises of Jayvardhan Goenka were WhatsApp communications referring to a Maldunge matter.
In a message dated 28 May 2019, Jitendra Rathi told Goenka that “5kg mango” had been given to “Rajiv sir” for that matter. Goenka replied “ok”. When questioned during the search, Goenka said that “5kg mangoes” referred to ₹5 lakh in cash given to Rajiv Agarwal. He also said, however, that he did not recall the Maldunge matter.
Rathi supplied the more specific connection. His statement said that the cash had been given to Agarwal, described as a former employee, for approval-related work concerning land at Maldunge held by the assessee company. The Assessing Officer also noted that no corresponding cash transaction appeared in the company’s cash book.
On that material, he treated the company as the beneficial owner of ₹5 lakh of unexplained money and made an addition under section 69A in the reassessment.
Why the Commissioner (Appeals) Upheld the Addition
The company disputed the attribution. It said the statements had been recorded under pressure and later retracted. It stressed that Goenka had not recalled the Maldunge matter, no cash had been found during the search, and the department had not independently verified whether any payment was made for the company’s work.
The Commissioner (Appeals) considered the WhatsApp exchange to be incriminating digital material, supported by the two statements. He reasoned that the absence of physical cash at the time of search did not disprove an earlier cash payment. He also found the retraction unpersuasive and rejected the objection that the company had not been allowed to cross-examine the persons whose statements were used.
The Tribunal’s inquiry was narrower and more precise: even if the message referred to a ₹5 lakh cash payment, did the material prove that the money belonged to, or was paid on behalf of, this assessee?
The Missing Link Between the Chat and the Company
The Tribunal accepted that the WhatsApp exchange referred to the Maldunge matter and an alleged payment to Rajiv Agarwal. It also noted Goenka’s explanation of the coded amount. But Goenka had expressly said he did not recall the Maldunge matter. His reply of “ok” to Rathi’s message did not, without further examination, establish that he authorised a payment on the assessee company’s behalf.
Rathi’s statement was the principal evidence connecting the alleged cash payment with the company’s land work. Yet it did not establish the precise approval involved, the ultimate use of the money, or the circumstances in which the expense was allegedly incurred for the company. The Assessing Officer had not independently questioned Rathi or Agarwal to verify whether the cash was delivered and received and, if so, whether it related to an identified task for the assessee.
Nor had specific questions been put to Goenka to determine whether he understood the “Mal-Dunge matter” to refer to this company, whether the payment was personal or corporate, or whether he had authorised it for the company. These enquiries mattered because a reference to a project in a chat is not, by itself, proof of ownership of the cash by the project company.
An Untested Statement Could Not Sustain the Addition
The Tribunal placed particular weight on the absence of an opportunity to cross-examine Rathi. His statement supplied the essential attribution that the WhatsApp message alone could not establish. Without cross-examination or independent corroboration of that attribution, the statement was insufficient to sustain a section 69A addition in the company’s hands.
The absence of an entry in the company’s cash book did not fill the evidentiary gap. If a payment was made outside the books, its non-recording would be unsurprising. But non-recording cannot prove that the company made the payment in the first place. The Assessing Officer first had to establish the necessary connection between the money and the assessee.
The Tribunal therefore deleted the ₹5 lakh addition outright. Having granted relief on the merits, it left the company’s separate challenge to the validity of the reopening under section 147 undecided as academic. The assessee’s appeal was allowed.
Author’s Comments
The decision turns on attribution, not merely decoding. The Tribunal did not hold that WhatsApp evidence is worthless or that a retracted statement must always be discarded. The coded message and explanations warranted investigation. The missing step was reliable evidence that the alleged ₹5 lakh was the company’s money or a payment made on its behalf.
Where a third-party statement provides that decisive link, the opportunity to test it and enquiries into the recipient and purpose become central. This order illustrates why proof of a suspected cash movement and proof of whose money moved are separate requirements when section 69A is invoked against a particular assessee.
Cases Discussed
- Video Master, 83 ITD 102 (ITAT Mumbai) — Cited by the Assessing Officer among the authorities relied upon while rejecting the assessee’s explanation and making the addition.
- Hiralal Mangal Lal & Co., 96 ITD 113 — Cited by the Assessing Officer among the authorities relied upon in the assessment order.
- Pullangode Rubber Produce Co. Ltd. v. State of Kerala, 1972 CTR (SC) 253 — Cited by the Assessing Officer in connection with the evidentiary effect of statements/admissions.
- CIT v. Harjeev Aggarwal, [2016] 70 taxmann.com 95 (Delhi High Court) — Relied upon by the assessee before the Tribunal while challenging the addition founded substantially on third-party statements and the alleged absence of adequate corroborative evidence.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the assessee is directed against the order dated 11.02.2026, passed by the learned Commissioner of Income-tax (Appeals)-47, Mumbai (in short ‘the Ld. CIT(A)) for Assessment Year (A.Y.) 2020-21, raising following grounds:
“1. On the facts and in the circumstances of the appellant’s case and in law, the Learned Commissioner of Income Tax (Appeals) [“Ld. CIT(A)”] erred in confirming the reopening of assessment u/s 147 by issue of notice u/s 148 dated 18.04.2023, which is illegal, bad in law, void of jurisdiction and hence liable to be quashed.
2. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 5,00,000/- made by the Assessing Officer u/s 69A of the Income Tax Act, 1961 on account of alleged unaccounted money, without appreciating the facts and evidences on record.
3. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in sustaining the addition of Rs. 5,00,000/- in absence of any incriminating material or cogent evidence on record to justify such addition.
4. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 5,00,000/- merely on the basis of statements/confessions of third parties.
5. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in relying upon the retracted statement of Shri Jayvardhan Goenka for sustaining the addition of Rs. 5,00,000/-, without appreciating that such retracted statement has no evidentiary value in the absence of corroborative material.
6. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in sustaining the addition based on conjectures, surmises and suspicion and not on any tangible material or independent verification.”
2. Briefly stated facts of the case are that the assessee filed return of income u/s 139(1) of the Income-tax Act,1961 ( in short the Act) on 14.02.2021, declaring loss at Rs. (-) 65,985/-. Subsequently, a search and seizure action u/s 132 and survey action u/s 133A of the Act was carried out by the Investigation wing of Income-tax Department on DB Realty Group, Dynamix Group and other related entities on 07.10.2021. During the course of the search conducted at the premises of the promoter of the said groups, Shri Jayvardhan Goenka, various documents and digital material, including data backups, were seized. The Assessing Officer noted that certain material so seized contained references relating to the assessee.
3. On the basis of such information, the Assessing Officer recorded a satisfaction note in terms of Explanation 2(iv) to section 148 of the Act, after obtaining the requisite approval of the Principal Commissioner of Income-tax (Central-4), Mumbai. Thereafter, the assessment was reopened under section 147 of the Act by issuance of notice under section 148. In response thereto, the assessee filed its return of income on 16.02.2023, again declaring a loss of Rs.65,985/-. Notice under section 143(2) was thereafter issued, followed by notice under section 142(1) dated 22.02.2023, together with a detailed questionnaire.
4. During the reassessment proceedings the Assessing Officer brought to the notice of the assessee that certain digital material found during the search conducted at the residential premises of Shri Jayvardhan Goenka at Flat No. 9, Carmichael Road, Mumbai. The material comprised WhatsApp communications between Shri Jayvardhan Goenka and Shri Jitendra Rathi, stated to be a key person associated with Shri Goenka. The said WhatsApp communication formed part of the material considered in the statements recorded under section 132(4) of the Act.
5. In the relevant WhatsApp communication dated 28.05.2019, Shri Jitendra Rathi sent a message to Shri Jayvardhan Goenka at 22:07 hours stating, in coded language, “Sir 5kg mango given to Rajiv sir, for Mal-Dunge matter”, to which Shri Jayvardhan Goenka responded, “ok”. In response to Question No. 31 during his statement, Shri Jayvardhan Goenka stated that “5kg mangoes” referred to Rs.5 lakh. When the said WhatsApp communication was confronted to Shri Jitendra Rathi, he stated, in response to Question No. 26 of his statement under section 132(4), that the message related to the communication sent to “Jay sir” around 28.05.2019, informing him that Rs.5 lakh in cash had been given to Shri Rajiv Agarwal, stated to be an ex-employee, in connection with approval-related work concerning land at MalDunge, near Khandala, held by M/s MalDunge Retreat and Farming Private Limited, stated to be a Dynamix Group company.
6. The Assessing Officer further noticed that on examination of the cash book of the assessee during the search and post-search proceedings, no such cash transaction had been found to be recorded. He accordingly called upon the assessee to explain why the alleged cash payment of Rs.5 lakh should not be treated as unexplained money.
7. The assessee, in response, submitted that the statements of Shri Jitendra Rathi and Shri Jayvardhan Goenka had been recorded under mental pressure and stress and that, at the relevant time, the persons concerned did not have access to the requisite books of account and supporting documents. It was further contended that Shri Jayvardhan Goenka had neither accepted nor affirmed the statement of Shri Jitendra Rathi and had himself stated that he was not aware of the MalDunge matter. The assessee also submitted that both the statements had subsequently been retracted and that no cash had been found during the search.
8. The Assessing Officer, however, did not accept the explanation. He regarded the retractions as general in nature and unsupported by contemporaneous evidence and relied upon the seized WhatsApp communication and the statements recorded on oath. He also referred to the role attributed to Shri Jitendra Rathi and concluded that the material indicated payment of Rs.5 lakh to Shri Rajiv Agarwal in connection with the assessee’s MalDunge project. On that basis, the Assessing Officer concluded that the assessee was the beneficial owner of the unexplained money and, in the assessment order passed under section 143(3) read with section 147 of the Act, made an addition of Rs.5 lakh under section 69A of the Act. The Assessing officer relied on various decisions cited in the assessment order including decision of the coordinate bench of the Mumbai in the case of Video Master 83 ITD 102, Hiralal Mangal Lal & Co. 96 ITD 113, Pullangdde Rubbar Produce Co. Ltd. v State of Kerala 1972 CTR (SC) 253 etc., Accordingly, in the assessment order passed u/s 143(3) r.w.s. 147 of the Act on 18.04.2023, the Assessing Officer made addition of Rs. 5 lakh treating the same as unexplained money, in terms of Section 69A of the Act.
9. In appeal, the learned CIT(A) upheld the addition. According to the learned CIT(A), the addition was not founded merely upon the statements of third parties but upon the seized WhatsApp communications, which, in his view, constituted incriminating digital material and were corroborated by the statements of Shri Jayvardhan Goenka and Shri Jitendra Rathi. The learned CIT(A) further held that the absence of physical cash during the search did not, by itself, negate the alleged cash transaction. He also rejected the assessee’s plea regarding retraction and non-grant of cross-examination, holding that the addition was primarily founded upon the seized digital material. The relevant finding on Ld. CIT(A) is reproduced as under:
“10.5 The appellant’s first and principal contention is that there is “no incriminating material” and that the addition is based on assumptions. This contention is contrary to the record. The seized WhatsApp communications themselves constitute incriminating digital material found during search, and the same have been specifically relied upon by the AO as the foundational material for issuing show-cause and for drawing the inference of unaccounted cash payment. In such a case, it is not open to the appellant to contend that the addition is without any incriminating material when the primary material is seized during search from the phone of a key person, specifically refers to “Rs.5 lakhs” (coded), and is linked to Maldunge land-work of the appellant.
10.6 The appellant’s second contention is that no cash was found/seized during search and therefore no addition can be made. This argument is misconceived. Non-finding of physical cash at the time of search does not negate the existence of a cash transaction, particularly where the incriminating material is in digital form showing instructions/payment confirmation. The statutory requirement for invoking section 69A is not the seizure of cash as a condition precedent, but whether the assessee is found to be the owner/possessor of money not recorded in the books and for which no satisfactory explanation is offered. Here, the record-based inference is that Rs.5,00,000/- was paid in cash for the appellant’s Maldunge land approval-related work, and no contemporaneous accounting explanation or documentary substantiation has been produced by the appellant to rebut the seized digital trail.
10.7 The appellant’s third contention is that the statement of Shri Jayvardhan Goenka is retracted and thus cannot be relied upon. The record indicates that the appellant relies upon a retraction affidavit alleging stress/duress and contends that there was no admission. Even assuming the retraction is pleaded, the present addition is not based merely on an uncorroborated confession; rather, it is grounded in seized digital WhatsApp chats recovered during search, and further supported by the statement of Shri Jitendra Rathi explaining that the coded reference and the payment pertain to Maldunge land approval-related work of the appellant. It is seen from record that this alleged retraction was made after almost 520 days from the date of recording of statement. Such prolonged and inordinate delay completely erodes the credibility of the retraction and clearly establishes it to be an afterthought. Retraction, to have evidentiary value, must be prompt and supported by cogent contemporaneous material. In the present case, no such material has been furnished. Mere bald allegations of pressure, raised after nearly one and a half years, cannot override the evidentiary value of statements recorded on oath and seized digital communications. Therefore, the retraction plea does not, by itself, demolish the evidentiary worth of the seized digital communications and the consistent explanation of the payer/handler of the cash.
10.8 The plea of violation of natural justice on account of non-grant of cross-examination is also untenable. The addition is not based merely on third-party statement but primarily on seized digital evidence recovered during search, which was confronted to both Shri Jayvardhan Goenka and Shri Jitendra Rathi. The appellant was issued show cause notice and afforded opportunity to explain the transaction. Despite this, no documentary evidence or books of account were produced to rebut the seized material. The appellant has also failed to demonstrate how cross-examination would negate the seized WhatsApp communications forming the foundation of the addition.
10.9 The appellant’s reliance on CBDT instructions against coercive confessions and various judicial precedents is misplaced. The AO has not proceeded on confession alone but on concrete digital evidence recovered during search. The instructions emphasize evidence-based additions, which is precisely what has been done in the present case. These instructions cannot be read as disabling the Department from relying on evidence gathered during search; rather, they emphasize that additions should be evidence-based. In the present case, the AO’s action is, in substance, consistent with that principle because the addition is predicated upon seized digital evidence (WhatsApp communications) and the explanatory statements recorded when such evidence was confronted.
10.10 The argument that Shri Jayvardhan Goenka did not “approve” the cash payment is also immaterial. Section 69A concerns ownership of unexplained money. The seized chats, coupled with statement of Shri Jitendra Rathi, clearly establish that the cash payment was made for the appellant’s Maldunge land work and the appellant is the sole beneficiary of such unaccounted expenditure. The appellant has failed to explain the source of such cash. The appellant has argued that Shri Jayvardhan Goenka did not recall the Maldunge matter and therefore the link to the appellant is “assumed”. The record, however, contains the specific statement attributed to him that “5kg mangoes refers to Rs.5 lakhs given to Mr. Rajiv Agarwal in cash” though he states he does not recall Maldunge. The relevant part of the statement of Shri Jayvardhan Goenka’s is reproduced as under:
“Q.29 With respect to your above reply, Please offer your comments on the above mentioned whatsapp conversation.
Ans. To the best of my knowledge, Rajiv sir is Mr. Rajiv Agarwal who was the COO of DB realty Itd. 5kg mangoes refers to Rs.5lakhs given to Mr.Rajiv Agarwal in cash, however I don’t recall the maldunge matter.”
10.11 In this regard, it is pertinent to mention here that the appellant has overlooked the chat related to cash given to Mr. Rajiv Agrawal (as mentioned above). It is crystal clear from the aforesaid chat that Shri Jayvardhan Goenka himself written Yes’ to the confirmation message sent by Shri Jitendra Rathi, The AO in the assessment order further recorded that Shri Jayvardhan Goenka has noted / agreed / accepted the confirmation given by Shri Jitendra Rathi. In such a scenario, the contention of the appellant that he never had agreed or accepted or admitted being informed by Shri Jitendra Rathi for any cash payment to Mr. Rajiv Agarwal is not acceptable.
10.12 This is significant for two reasons: first, it reinforces the coded meaning of “5kg mangoes” as Rs.5 lakhs cash; and second, the linkage to Maldunge is not derived only from his recollection but is explicitly provided in the statement of Shri Jitendra Rathi when the chats were confronted to him, wherein he states the cash was given for Maldunge land approval-related work of the appellant. Thus, the appellant’s plea of “no link” is not acceptable.
10.13 The appellant’s further argument that the Department has not proved that Shri Jayvardhan Goenka “approved” the cash payment is also not decisive in the context of section 69A. The issue for adjudication here is whether unaccounted cash payment of Rs.5,00,000/- pertaining to the appellant’s Maldunge land approval-related work has been established from the material, and whether the appellant has satisfactorily explained the same. The seized chats show instruction/communication; the statement of Shri Jitendra Rathi explains payment and its purpose for the appellant’s Maldunge land work; and the appellant has not produced any satisfactory explanation with supporting evidence to neutralize this trail.
10.14 In view of the above, I hold that the AO has brought on record incriminating digital material found during search and a coherent trail of the unaccounted cash payment, namely: seized WhatsApp communications evidencing “Rs.5 lakhs” (coded as “5kg mangoes”), direction/communication attributable to a key person, confirmation/explanation in the statement of Shri Jitendra Rathi that the cash was given to Shri Rajiv Agarwal for Maldunge land approval-related work of the appellant, and absence of any satisfactory rebuttal with supporting evidence from the appellant.”
10. Before us, the learned counsel for the assessee submitted that the addition rests substantially upon the statement of Shri Jitendra Rathi, whereas Shri Jayvardhan Goenka himself stated that he did not recall the MalDunge matter. It was therefore submitted that there was no admission by Shri Jayvardhan Goenka that the alleged payment was made on behalf of the assessee. The learned counsel further submitted that the statements of Shri Jayvardhan Goenka and Shri Jitendra Rathi were recorded under circumstances of stress, duress and pressure and were subsequently retracted. It was contended that the Assessing Officer had not made any independent inquiry to establish that the alleged payment was actually made on behalf of the assessee or that it related to any particular approval concerning the assessee’s MalDunge project. It was further submitted that the assessee was not afforded an opportunity to cross-examine Shri Jitendra Rathi or Shri Jayvardhan Goenka, despite the statements being relied upon against the assessee. The learned counsel also pointed out that no incriminating material evidencing the alleged cash payment was found from the premises of the assessee and no cash was found during the search. Reliance was placed, inter alia, upon the decision of the Hon’ble Delhi High Court in CIT v. Harjeev Aggarwal [2016] 70 taxmann.com 95 (Delhi).
11. The learned Departmental Representative, on the other hand, relied upon the orders of the Assessing Officer and the learned CIT(A).
12. We have heard the rival submissions and carefully perused the material available on record. The short question that arises for our consideration is whether, on the material brought on record, the alleged payment of Rs.5 lakh to Shri Rajiv Agarwal can be conclusively attributed to the assessee so as to sustain the addition under section 69A of the Act.
13. The material relied upon by the Revenue consists principally of the WhatsApp communication between Shri Jitendra Rathi and Shri Jayvardhan Goenka and the statements recorded from them under section 132(4) of the Act. The relevant communication records the message of Shri Jitendra Rathi that “5kg mango” had been given to “Rajiv sir” in relation to the “Mal-Dunge matter”, to which Shri Jayvardhan Goenka responded “ok”. Shri Jayvardhan Goenka subsequently explained that “5kg mangoes” referred to Rs.5 lakh given in cash to Shri Rajiv Agarwal, but, significantly, he also stated that he did not recall the MalDunge matter.
14. The statement of Shri Jitendra Rathi supplied the further link by stating that the cash was given to Shri Rajiv Agarwal for approval-related work concerning the MalDunge land of the assessee. However, this statement, by itself, does not establish the precise nature of the alleged approval, the person to whom the amount was ultimately paid, or the circumstances in which the amount was allegedly incurred on behalf of the assessee. More importantly, the Assessing Officer did not make any independent inquiry from Shri Jitendra Rathi or Shri Rajiv Agarwal to ascertain whether the alleged amount was in fact paid to Shri Rajiv Agarwal, whether it was received by him, and, if so, whether it was actually incurred for any identified approval or other work of the assessee.
15. The Assessing Officer also did not put any specific question to Shri Jayvardhan Goenka to ascertain whether the reference to the “Mal-Dunge matter” related to the assessee, whether the alleged payment was made by him in his individual capacity or on behalf of the assessee, or whether he had authorised or otherwise had knowledge of any such payment on behalf of the assessee. These aspects assume significance because the addition is not merely based upon establishing that a sum of Rs.5 lakh was mentioned in the seized communication; the Revenue was required to establish the necessary nexus between the alleged payment and the assessee.
16. We further find that Shri Jitendra Rathi was not subjected to cross-examination by the assessee, notwithstanding that his statement constitutes the principal link connecting the alleged payment with the assessee. The seized WhatsApp communication establishes, at the highest, a communication concerning an alleged payment of Rs.5 lakh to Shri Rajiv Agarwal. It does not, by itself, establish that the payment was made on behalf of the assessee. The further attribution of the payment to the assessee flows from the statement of Shri Jitendra Rathi. In the absence of an opportunity to test that statement by cross-examination, and in the absence of independent inquiry or corroborative material establishing the nexus with the assessee, such statement cannot, by itself, furnish a sufficient foundation for sustaining the addition.
17. The fact that the assessee’s cash book did not record the alleged payment also cannot, by itself, establish that the payment was made by or on behalf of the assessee. Non-recording of a transaction may justify further inquiry; it does not dispense with the requirement of establishing, on the basis of legally admissible and properly tested material, that the unexplained money belonged to the assessee.
18. We therefore find that the Assessing Officer did not carry out the inquiries necessary to establish the live nexus between the seized communication, the alleged payment to Shri Rajiv Agarwal, and the assessee. The learned CIT(A), while affirming the addition, proceeded principally on the basis of the same material without addressing the aforesaid evidentiary deficiencies. The addition thus rests on an untested statement of a third party without adequate independent corroboration establishing that the alleged payment was made on behalf of the assessee.
19. In these circumstances, the addition of Rs.5,00,000/- under section 69A of the Act cannot be sustained. We accordingly set aside the findings of the lower authorities on this issue and delete the addition of Rs.5,00,000/-.
20. Ground Nos. 2 to 6 raised by the assessee on merits are accordingly allowed. In view of the relief granted to the assessee on merits, Ground No. 1 challenging the validity of the reopening under section 147 of the Act is left open and is not adjudicated, as its adjudication is rendered academic.
21. In the result, appeal of the assessee allowed.
Order pronounced in the open Court on 24/09/2026.
