Serajuddin And Co. Vs DCIT/ACIT (ITAT Cuttack)
Telegram Talk Is Not Taxable Truth: Third-Party Chat, Without Corroboration or Confrontation, Cannot Justify Addition in Assessee’s Hands
A casual digital conversation may generate suspicion, but suspicion cannot be converted into taxable income without establishing its connection with the assessee. The Cuttack Bench of the ITAT deleted an enhancement of ₹3.50 crore made by the CIT(A) solely on the basis of a Telegram chat found on the mobile phone of a third party, particularly when neither the assessee nor any of its partners was a participant in the conversation.
During a search operation, the backup of the mobile phone belonging to Shri Mofazzulur Rahman was taken by the Department. A Telegram conversation between him and Shri Meraj Yusha allegedly referred to amounts connected with Serajuddin & Co. According to the Department, the conversation suggested that the assessee had received cash back of ₹3 crore from Sarosh Aliza Mining and ₹50 lakh from Modern Mining Pvt. Ltd., subsequently known as K.K. Resources Pvt. Ltd.
The Department sought to rely upon this conversation to contend that contractual payments made by the assessee to these entities were bogus and that a part of the payments had been returned to the assessee in cash.
