DCIT Vs Shriya Properties (ITAT Bangalore)
WhatsApp Chats, Retraction & Pure Estimates Can’t Build a ₹1.22 Crore ‘On-Money’ Addition+ Bangalore ITAT Deletes Additions in Unabated Search Assessment
In a significant ruling, the Bangalore ITAT held that no addition can be made in a completed/unabated assessment u/s 153A without incriminating material relatable to the relevant assessment year. The Tribunal upheld deletion of multiple additions made against real estate firm Shriya Properties, Hubballi, including a major ₹1.22 crore alleged on-money addition for AY 2015-16.
The Tribunal noted that the search took place on 16.08.2018, whereas AY 2015-16 had already attained finality since the time limit for issue of notice u/s 143(2) had expired on 30.09.2016. Hence, it was a completed/unabated assessment and additions could survive only if backed by incriminating material found during search.
The AO had made additions exceeding ₹2.22 crore, including alleged on-money receipts, negative cash balance, estimated disallowance of sundry creditors, disallowance u/s 40(a)(ia), interest disallowance, understatement of closing stock, etc. However, the Tribunal observed that almost all additions were based merely on books of account, audited financials and assessment proceedings material and not on seized incriminating evidence.
On the alleged on-money issue, the Revenue relied heavily on a statement recorded u/s 132(4), WhatsApp chats and certain loose papers. But the Tribunal found that the WhatsApp chats and cash receipts related only to later years like AYs 2017-18 to 2019-20 and not AY 2015-16. The Tribunal also emphasized that the managing partner had later retracted the statement, alleging coercion and pressure during search.
Importantly, the ITAT held that there was “not even a whisper” of excess cash found during search, and that uncorroborated statements without supporting evidence could not justify additions. The Bench observed that a solitary WhatsApp message or statement cannot automatically justify extrapolation of on-money across all projects and years.
For AY 2019-20 also, the Tribunal refused to sustain large estimated on-money additions, holding that the AO had merely extrapolated one alleged cash instance into all flat sales without corroborative evidence. Only the specific ₹4 lakh transaction supported by WhatsApp evidence was sustained.
The Tribunal relied upon the Supreme Court ruling in Abhisar Buildwell and reiterated that completed assessments cannot be disturbed in search proceedings unless supported by incriminating material pertaining to that year
FULL TEXT OF THE ORDER OF ITAT BANGALORE
