LSL Tools (P) Ltd. Vs ACIT (ITAT Delhi)
No 65B Certificate, No Addition – ITAT Quashes WhatsApp-Based Cash Sale Theory- Digital Gossip Isn’t Tax Evidence – ITAT Delhi Tears Down WhatsApp-Based Additions
Search u/s 132 at LSL Tools Group led AO to disallow ₹44.10 lakh salary paid to Director Smt. Priti Singla u/s 40A(2)(b) & add ₹5 lakh as notional profit on alleged unrecorded cash sales inferred from WhatsApp chats.
Tribunal noted that Priti Singla had been regularly drawing salary since AY 2017-18 & duly offered it to tax at the maximum marginal rate. Her statement u/s 132(4) admitting lack of role was later retracted through an affidavit detailing her administrative duties, & no corroborative material was found during search. Relying on Delhi HC rulings in Pavitra Realcon Pvt. Ltd. & Moon Beverages Ltd., ITAT held that a statement u/s 132(4) alone cannot justify an addition without supporting evidence.
On the cash-sales issue, Tribunal observed that the WhatsApp chat lacked evidentiary integrity—no certificate u/s 65B of the Evidence Act or forensic validation per CBDT’s Digital Evidence Investigation Manual (2014) was on record. Following SC’s decision in Arjun Panditrao Khotkar & the recent Suresh Kumar & Co. Impex Pvt. Ltd. ruling, ITAT held that unverified electronic data cannot sustain additions.
