WhatsApp Messages are 'Dumb Document' without Corroborative Evidence: ITAT quashes Addition against BJP MLA for alleged Distribution of Cash for Votes [Read Order]

In a major relief to BJP MLA Shri A John Kumar, the Income Tax Appellate Tribunal (ITAT), Chennai bench has deleted an addition under section 69C of the Income Tax Act for alleged distribution of cash for votes, by observing that the addition was merely based on WhatsApp messages which are a “Dumb Document”.

The Tribunal comprising Shri V. Durga Rao, Judicial Member and Shri G. Manjunatha, Accountant Member was considering an appeal by the current MLA of Nellithope, Puducherry, Tamil Nadu. The assessee is engaged in the business of running a Departmental Store and real estate business. during search operations, the income tax department found certain incriminating material with regard to distribution of gift articles was also found and emanated during the course of search, which contains identity cards issued by M/s.Johnkumar Trust to general public of Nellithope Constituency in Pondicherry Union Territory.

After conducting investigation, the Assessing Officer made an addition under section 153C of the Act under various heads including unexplained expenditure towards gifts to beneficiaries and unexplained expenditure incurred for election amounting to Rs.17 Crs.

Before the Tribunal, the assessee submitted that he does not have any knowledge of distribution of cash to voters of Nellithope Constituency, but he had accepted that it was widely known that cash was given to the voters in general.

With regard to the evidence relied on by the Assessing Officer based on WhatsApp chats of assessee, the Tribunal held that WhatsApp messages cannot be considered as a conclusive evidence to draw an adverse inference against the assessee, unless those WhatsApp messages are supported by corroborative evidences to indicate that those messages and contents represents undisclosed income of the assessee.

It was observed that “the AO had also in his own meaning for some other contents recorded in WhatsApp messages and inferred cash distribution timings, shift change timings, etc., and concluded that the assessee has received so much cash and distributed so much of cash to various persons in the process. The AO neither bring on record from which person, the assessee has received cash and to whom the assessee has distributed cash. The AO neither made out a case of source for cash and destiny of cash distributed by the assessee.”

Deleting the addition towards unexplained expenditure, the Tribunal concluded that “In our considered view, the AO is grossly erred in denying the explanation offered by the assessee, because whether or not any explanation offered by the assessee on the messages, but the fact remains that the AO could bring some positive evidence to link the WhatsApp messages to allege that the contents of WhatsApp messages depicts the undisclosed income or expenses of the assessee. In this case, on perusal of those WhatsApp messages what we could understand is that those messages are a dumb document without any corroborative evidence on record and therefore, no addition can be made on the basis of said documents.”

The assessee was represented by Mr. S. Xavier Felix, Adocate.

To Read the full text of the Order CLICK HERE

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