ITAT Deletes Addition u/s 69C of Income Tax Act made Solely on Basis of WhatsApp chat [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted addition under Section 69C of the Income Tax Act made solely on the basis of WhatsApp chat.

The assessee, Designers Point (India) P. Ltd had filed appeal against sustaining of addition under Section 69C of the Income Tax Act being part salary alleged to be paid in cash to employees merely on the basis of unsubstantiated WhatsApp conversation between two employees by ignoring the settled law that WhatsApp chats has no evidentiary value.

He also submitted that the facts and circumstances of the case, the Commissioner of Income Tax Appeals (CIT(A) had erred both on facts and in law in sustaining addition without affording the appellant an opportunity of cross examination of the deponents even though specifically requested by appellant.

He also pointed out that the facts and circumstances of the case, CIT(A) had erred in sustained addition without rebutting the claim of the appellant that no such cash was paid on account of salary to employees by adducing any corroborative evidence on record which were found during the course of search and seizure operation.

Akshat Jain, on behalf of the assessee drew attention towards the statement of Shri Ashwani Kumar, Director of assessee company who categorically stated that “We don’t pay any salary in cash”.

He submitted that no addition could be made in absence of any substantial adverse and positive evidence on the basis of WhatsApp conversation between two employees, which had no evidentiary value as per law.

Amit Katoch, on behalf of the revenue submitted that there was sufficient evidence showing unaccounted salary payment to the employees of the company therefore the AO was right in making addition under Section 69C of the Income Tax Act.

The two-member Bench of Chandra MO Han Garg, (Judicial Member) and B.R.R. Kumar, (Accountant Member) noted that there was no other evidence in the hands of AO supporting the factum of cash payment to said two employees and the Assessing Officer had proceeded to make addition on the basis of WhatsApp chats between Seema Dutta and Aman Sheghal and their statements only and no other documentary evidence or adverse positive material had been found and searched during the course of search and seizure operation.

The Bench allowed the appeal filed by the assessee deleted the addition holding that the WhatsApp chats standalone basis was not having valid evidence to support the action of the Assessing Officer making addition under Section 69C of the Income Tax Act on account of alleged part payment of salary in cash to said two persons.

To Read the full text of the Order CLICK HERE

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