ACIT Vs Prashant Prakash Nilawar (ITAT Mumbai)
Conclusion: Addition based on WhatsApp messages exchanged between the taxpayer and third parties, alleging undisclosed financial transactions was not justified as AO had simply relied on such material found from the premises of a third party and relied on third party statement to make addition without corroborating it with any kind of independent evidence and enquiry.
Held: In the instant case, premises of GNP Group were also covered during the search action on Rucha Group. During the said search action, certain evidences were found and seized from the mobile phone of one Shri Kaustubh Latke, which contained WhatsApp conversation between him and Shri Shailesh Patil. In this context, an image was retrieved wherein record of payment of Rs.3 crores by assessee to GNP Group was alleged to be found. Based on the contents of the image found in the mobile of Shri Kaustubh Latke and statement given by him, AO arrived at a conclusion that Rs.3 crores had been received by GNP Group from assessee was thus, required to prove the source of cash so paid and explain the nature of transaction with accounting of the same in his books of account. Assessee had strongly contended that he was unaware of who Shri Kaustubh Latke and Shri Shailesh Patil are, since they were not connected with him or Rucha Group. Assessee had requested for a copy of statement of Shri Kaustubh Latke, seized evidence and opportunity to cross examine him. AO noted that assessee had already been provided with the evidence and relevant portion of the statement and hence proceeded to complete the assessment by making the addition as unexplained expenditure u/s.69C. It was held that addition could not be made only on the basis of WhatsApp conversation between third parties without adducing corroborative evidence in support of such allegation. It was to be noted that CIT(A) after considering various judicial precedents to state that documents/material found from the premises of third party or a statement of third party could not be relied upon to make additions in the hands of the assessee, unless such material or statement was corroborated by independent evidence. Such material could be a good reason for starting an investigation, however, AO had simply relied on such material found from the premises of a third party and relied on third party statement to make addition without corroborating it with any kind of independent evidence and enquiry. Moreover, in respect of compliance of Section 65B of Indian Evidence Act which also applied on the issue in hand, there was no infirmity in the findings arrived at by CIT(A) in deleting the addition made by AO.
