The Income Tax Appellate Tribunal ( ITAT ) , Mumbai Bench, has held that an addition under Section 69A of the Income Tax Act, 1961 cannot be sustained solely on the basis of a WhatsApp image found on an employee’s mobile phone, without any corroborative evidence. The bench termed it as a ‘dumb document’.
The assessee, Rucha Consultancy LLP had originally filed its return declaring an income of ₹24.87 crore. However, following a search under Section 132 of the Act, the AO completed the assessment by determining a total income of ₹47.75 crore. One of the key contentions of the assessee was the addition of ₹2.10 crore under Section 69A based on an image retrieved from the phone of Ashish Chhangani, a personal assistant of the group’s promoter, Prashant Nilawar.
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The image in question, sourced from Chhangani’s smartphone, reflected certain entries marked as “in” and “out” along with numerical values, which were interpreted as lakhs of rupees. However, Chhangani admitted that the image was forwarded to him by other employees and was not created by him. He later retracted his statement through an affidavit. The assessee completely disowned the image and any connection with the alleged unaccounted transactions.
Despite this, the AO proceeded with the addition, treating the ₹2.10 crore as unexplained money under Section 69A, and ₹1.99 crore as unexplained expenditure under Section 69C of the income tax law. The Commissioner of Income Tax (Appeals)[CIT(A)] upheld the ₹2.10 crore addition but deleted the ₹1.99 crore on the basis that the disbursements were sourced from the same alleged receipts.
However, the bench of Anikesh Banerjee ( Judicial member) and B.R. Baskaran ( Accountant member ) took a different view. It noted that the image did not mention the assessee’s name, the figures were cryptic and denoted in “Kg,” which were presumed to mean lakhs.
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More importantly, the image was not prepared or owned by Chhangani and was simply forwarded to him. The Tribunal observed that no physical cash was found, and there was no evidence linking the image to the assessee or establishing ownership of any unexplained money. The image was thus held to be a “dumb document”a term used in tax jurisprudence to denote documents lacking evidentiary value without corroboration.
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The bench relied on precedents, including ITAT rulings in the cases of Prashant Nilawar, Shri Manchukonda Shyam, and Shankar Nebhumal Uttamchandani, and the Supreme Court’s view in Common Cause v. UOI, it was ruled that abstract or unverified documents cannot form the basis for additions. The Tribunal also clarified that for Section 69A to apply, the assessee must be found to be in possession or ownership of unexplained assets, which was not the case here.
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The Mumbai bench set aside the CIT(A)’s order and directed the deletion of ₹2.10 crore, holding that the AO was not justified in making additions based solely on a WhatsApp image. Further, since the ₹1.99 crore alleged expenditure was sourced from the same ₹2.10 crore, and no valid basis remained after deleting the latter, the Tribunal also dismissed the Revenue’s appeal challenging its deletion by CIT(A).
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