DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, , LUDHIANA V. DEEPANKAR JAIN, LUDHIANA

ITA 183/CHANDI/2025

AI Insights

The case involves an appeal by the Department against the order of the CIT(A) which had deleted the addition of Rs. 1,12,50,000 made by the Assessing Officer (AO) on account of unexplained investment under section 69 of the Income Tax Act. The addition was based on a WhatsApp chat between the assessee, Deepankar Jain, and another individual, which the AO interpreted as evidence of a financial transaction. However, the CIT(A) found that the WhatsApp chat alone was insufficient to substantiate the addition, especially in the absence of any corroborative evidence such as bank statements or other documents. The Tribunal upheld the CIT(A)'s decision, emphasizing the need for corroborative evidence in cases where substantial additions are made based on electronic communications.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775696 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2022-2023
• Appeal Filed On: 04-02-2025
• Other Referred Cases: Homelife Buildcon Pvt. Ltd. in ITA No.880/Chd/2024, Atul Tantia Vs DCIT in ITA No. 492/Kol/2021, ACIT Vs Machukonda in ITA No. 87A/Viz/2020
• Laws Referred To: Income Tax Act, 1961, Evidence Act, 1872
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANAV BANSAL
• Assessee Lawyers: SUDHIR SEHGAL
• Keywords: Unexplained investment; Documents seized; Bonafide belief; Search and seizure
• Section: 147; 148; 143(3); 132; 68; 69

Judgement Text

"1 आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी राजपाल यादव, उपाȯƗ एवं ŵी क ृणवȶ सहाय, लेखा सद˟ BEFORE: SHRI. RAJPAL YADAV, VP & SHRI. KRINWANT SAHAY, AM आयकर अपील सं./ ITA No. 183/Chd/ 2025 िनधाŊरण वषŊ / Assessment Years : 2022-23 The Dy. CIT Central Circle-1 Ludhiana बनाम Deepankar Jain C/o NIkkamal Jewellers, 455, The Mall, Ludhiana-141001 Punjab ˕ायी लेखा सं./PAN NO: AOZPJ7289M अपीलाथŎ/Appellant ŮȑथŎ/Respondent Cross Objection No. 26/Chd/2025 In आयकर अपील सं./ ITA No. 183/Chd/ 2025 िनधाŊरण वषŊ / Assessment Years : 2022-23 Deepankar Jain C/o NIkkamal Jewellers, 455, The Mall, Ludhiana-141001 Punjab बनाम The Dy. CIT Central Circle-1 Ludhiana ˕ायी लेखा सं./PAN NO: AOZPJ7289M अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Sudhir Sehgal, Advocate & राजˢ की ओर से/ Revenue by : Shri Manav Bansal, CIT, DR सुनवाई की तारीख/Date of Hearing : 07/08/2025 उदघोषणा की तारीख/Date of Pronouncement : 09/09/2025 आदेश/Order PER KRINWANT SAHAY, AM: This is an appeal filed by the department and the cross objections is filed by the assessee against the order dt. 20/11/2024 passed by the Ld. CIT(A)-5, Ludhiana for Assessment Year 2022-23. Grounds of appeals as taken by the department and cross objections are being reproduced as under:- 2. The Department has raised following grounds in its appeal: Printed from counselvise.com 2 1. \"Whether upon facts and circumstances of the case, the Ld. CIT(A) was justified in deleting the addition to Rs. 1,12,50,000/- made by the AO on account of unexplained investment u/s 69 of the Act on the basis of logical and rational based on evidences?. 2. Whether upon facts and circumstances of the case, the Ld. CIT(A) was justified in holding that Whatsapp chat alone cannot be considered as sufficient documentary evidence ignoring the section 65B of Evidence Act, 187 regarding admissibility of Electronicrecords ? 3. Whether upon facts and circumstances of the case, the Ld. CIT(A) has failed to appreciate the facts of the case as well as evidences gathered from the digital device of Sh. Deepankar Jain?. 4. The appellant craves leave to add, amend, modify, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal. 3. The Assessee has raised following grounds in it Cross Objection: 1. That the Ld.AO has erred in law and on facts in framing the assessment under section 143(3) of the Income Tax Act, 1961, without fulfilling the mandatory conditions prescribed under Section 148, read with Explanation 2 to clause (iv) thereof, particularly by failing to record a valid and proper satisfaction note prior to initiating proceedings based on documents allegedly seized from another premises—such recording being a sine qua non for using such material against the assessee— rendering the assessment order bad in law and liable to be quashed. 2. That the Ld.AO has further erred in relying on documents seized during a search conducted on another person for making additions in the hands of theassessee, without obtaining the prior approval of the Principal Commissioner of Income Tax (PCIT), thereby rendering the assessment illegal, void ab initio, and without jurisdiction. 3. That the assessment framed under section 143(3) is bad in law, as it pertains to a year immediately preceding search year where the mandatory approval as prescribed under section 148B of the Income Tax Act, 1961, has not been followed. That in the absence of compliance with the provisions of section 148B Printed from counselvise.com 3 read with CBDT issued the Manual of Office Procedure in February 2003, the assessment is vitiated and liable to be annulled. 4. That even the approval as sought by the Assessing Officer of the order u/s 143(3) from the Addl. CIT is nonest/bad in law and the granting of the approval of the order u/s 143(3) by the Addl. CIT is null and void and, thus, assessment as framed u/s 143(3) vide order, dated 31.03.2024 deserves to be quashed.\" 4. At the very outset, the Ld. Counsel invited out attention to the Cross Objections filed by the assessee and stated that the Cross Objections are late by 53 days, for which, the condonation application has been filed by the assessee that the assessee was under a bonafide belief that nothing is required to be done as relief had been granted by the CIT (A) and it was only when, the assessee contacted his lawyer and shared with him the grounds of appeals as taken by the department then on the suggestion of his counsel, the cross objections were filed and, thus, was pleaded that the said delay be condoned on account of the bonafide reason. 5. The Ld.CIT (DR) stated that the decision be taken as per the merits of the case. After considering the application of assessee for condonation, the delay of 53 days as calculated below is being condoned: Memo of appeal of the department received 27.03.2025 by the assessee Due date of filing Cross Objections 26.04.2025 Cross Objections filed on 19.06.2025 Delay 53 days 6. We have gone through the ground of Cross Objections and since the legal issue has been raised about the completion of Printed from counselvise.com 4 search assessment u/s 143(3) and all the facts are borne out from the order of AO/CIT(A), the same is admitted for adjudication. 7. The Ld. Counsel of the assessee on this legal grounds as raised in cross objections argued that the round No.1 & 2 in the grounds of cross objections are not being pressed. With regard to ground No.3, the Ld. Counsel argued that the assessment u/s 143 (3) have been framed, without fulfilling the mandatory condition prescribed u/s 148 read with explanation-2 to clause (iv). Since no mandatory approval has been taken from the Addl. CIT as prescribed u/s 148, the assessment as framed by the Assessing Officer u/s 143(3) deserves to be quashed. 8. The Ld. Counsel of the assesse had also filed his arguments on the above said legal ground which are being reproduced for the sake of clarity:- ARGUMENTS ON THE GROUNDS TAKEN IN CROSS OBJECTIONS 1. In our Cross objections, we have taken grounds that the assessment as framed u/s 143(3) of the Income Tax Act, 1961 without fulfilling the mandatory condition prescribed u/s 148, read with Explanation 2 to clause (iv) thereof, and also no mandatory approval as prescribed u/s 148 of the Income Tax Act, 1961 has been taken from the Addl. CIT, as it pertains to a year immediately preceding search year. 2. Further, the approval has been sought by the Assessing Officer of the order u/s 143(3) from the Addl. CIT is also nonest and bad in law since the approval ought to have been taken/granted u/s 148B of the Income Tax Act, 1961. 3. We have already filed 'Brief Synopsis' and our arguments on the cross objections are that there was search conducted at the assessee' residence on 24.11.2022 and the sequence of the events is as under:- Printed from counselvise.com 5 Filing of return of income 30.07.2022 Search Operation 24.11.2022 Centralization of PAN 01.02.2023 Issue of Notice u/s 143(2) 21.06.2023 4. It is submitted that the case of the assessee was centralized after search on 24.11.2022 on 01.02.2023 as per evidence enclosed with the Brief Synopsis and subsequently, the notice u/s 143(2) was issued on 21.06.2023. Thus, it is not a case that the notice u/s 143(2) was issued prior to centralization of the case rather the issuance of notice u/s 143(2) occurred after centralization and at that point, the Assessing Officer was fully equipped with the information and material seized during search. 5. It is further submitted that the explanation-2 to section 148, reads asunder:- (i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section 133A, other than under sub-section (2A) or sub-section (5) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the \"three assessment years\" immediately preceding the assessment year relevant to the previous year in which the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of Printed from counselvise.com 6 account or documents are seized or requisitioned in case of any other person.\" In our, case clause (iv) is relevant. 9. Reference is made to notice u/s 143(2), which is dated 21.06.2023 and which reads as under: - \"The Income Tax Department appreciates your contribution, towards development of the Nation by filing of your return of income for the Asstt. Year 2021-22 vide Ack. No.293502530050322 on 05.03.2022. 'While acknowledging the care you may have taken in preparing the return of income, there are certain issues on which further clarification is required. Therefore, the return of income has been selected for scrutiny assessment in accordance with the provisions of the Income-tax Act, 1961'. 'Your may submit or cause to submit any evidence on which you may rely in support of your return of income electronically in 'e- Proceedings' facility through your account in e-Filing website (www.incometax.go.in) at your convenience on or before 11.07.2022. It is advised that you should gather all the information, documents, evidences, etc. in respect of various financial transactions, you have entered during the Assessment Year under consideration, which may be relevant for the scrutiny proceedings. Detailed questionnaire(s) or communication may be issued during the course of assessment proceedings. As and when questionnaire(s) or communication is issued, you are required to provide specific point-wise response within the time specified.\" 10. From the above bare perusal of the above notice u/s 143(2), it is very much clear that the said notice is only limited to the issue with regard to the return of income and reference is made to the proviso to section 148 B, which reads as under:- Prior approval for assessment, reassessment or recompilation in certain cass. \"148B. No order of assessment or reassessment or recompilation under this Act shall be passed by an Assessing Officer below the rank of Joint Commissioner, in respect of an assessment year to which clause (i) or clause (ii) or clause (iii) or clause (iv) of Printed from counselvise.com 7 Explanation 2 to section 148 apply except with the prior approval of the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director.\" 11. From the above reading of section and the facts on record, it is very much clear that the assessment for Asstt. Year 2022-23, 'being the preceding three years' had to be framed u/s 148 and the approval had also to be accorded u/s 148B as stated above, but from Assessment order, it is very much clear that the approval has been taken in compliance to the CBDT circular, dated 15.07.2022 and not under the mandatory provisions of section 148B of the Income Tax Act, 1961. 12. The Ld. Counsel relied upon the approval as sought by the Assessing Officer vide her letter, dated 29.03.2023, which is with regard to the draft assessment order u/s 143(3) and the approval was granted by the Addl. CIT on 31.03.2024. The said approval is of the order as passed u/s 143(3). Thus, there is fundamental error in granting the approval u/s 143(3), instead of148B. 13. Ld. Counsel relied upon his argument as recorded in the order of the Hon'ble ITAT, Chandigarh Bench, Chandigarh In the case of Homelife Buildcon Pvt. Ltd. in ITA No.880/Chd/2024 a Others, wherein vide order, dated 17,.07.2025 from para 19, page 13 to page 17, and the finding of the Hon'ble Bench is there from para 21, page 18 and the relevant finding applicable to the case of the assessee is in paras 22,23, 24,26,27,28,29,30,32,33 and 34 of the order. Printed from counselvise.com 8 14. In nutshell, it was argued that since the Assessment year under consideration falls in \"three preceding assessment years\" immediately preceding the assessment year relevant to previous year, in which, the search is conducted therefore, the assessment ought to have been framed u/s 148 and mandatorily approval, too ought to have been obtained u/s 148B, which is very much clear. The said mandatory procedure had to be followed in the present case. The framing of assessment u/s 143(3), for the Assessment Year 2022-23, which is immediately preceding to the Assessment year, relevant to previous year, in which, the search is initiated, therefore, the order as passed u/s 143(3) based on the search material and, further that the approval as granted to the order u/s 143(3) is, therefore, bad in law and the assessment as framed deserves to be quashed, following the finding in the case of M/s Homelife Buildcon as cited above. 15. The Ld. CIT (DR) argued that even in the assessment framed u/s 143(3), the Assessing Officer is at liberty and duty bound to consider all other information relating to assessment year under consideration for the purposes of framing the fair assessment and, thus, there is no illegality in framing of assessment u/s 143(3), after search and seizure and further stated that the Addl. CIT has rightly accorded the approval of assessment framed u/s 143(3) as per para 6, page 10 of the order of Assessing Officer. 16. We have gone through the cross objections as filed before us and arguments of the Ld. Counsel and the Ld. CIT (DR) alongwith Printed from counselvise.com 9 detailed submissions as reproduced above. The facts are not disputed that the search was conducted on 24.11.2022 and the case was centralized on 01.02.2023. The notice u/s 143(2) was issued on 21.6.2023 on the basis of return of income filed by the assessee on 30.07.2022. Thus, the notice u/s 143(2) was issued after the case was centralized and the Assessing Officer was well aware of the information and material found and seized from the assessee during the course of search. 17. The issue before the Bench is whether in the facts and circumstances of the case, the assessment had to be framed u/s 143(3) or u/s 147 of the Income Tax Act. We find in view of explanation-2 to 148, which is abundantly clear that the legislature has widened the scope of reassessment particularly through Finance Act 2021. Legislative intent to bring all search conducted on or after 1st of April 2022 within the ambit of new assessment regime u/s 147 of the Income Tax Act,1961 is also evident. This new regime was introduced through significant amendments to section 147 and section 148, along with the insertion of Explanations 1 and 2, and the concept of \"information suggesting escapement of income\" was explicitly defined. From the reading of Explanation 2 to Section 147, it is evident that in cases where a search is initiated on or after 1st April 2021, the Assessing Officer shall be deemed to have information, which suggests that income chargeable to tax has escaped assessment for three assessment years immediately preceding the assessment year relevant to the previous year, in which, the search is initiated. Printed from counselvise.com 10 18. The relevant extract Memorandum explaining the finance bill is reproduced as under: - '(ii) Assessments or reassessments or in re-computation in cases where search is initiated under section 132 or requisition is made under 132A, after 31st March 2021, shall be under the new procedure (VI) Further, in search, survey or requisition cases initiated or made or conducted, on or after 1st April, 2021, it shall be deemed that the Assessing officer has information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three assessment years immediately preceding the assessment year relevant to the previous year, in which, the search is initiated or requisition is made or any material is seized or requisitioned or survey is conducted.\" Further, the notice u/s 143(2) which was filed before us, from the same, it is evident that the assessment u/s 143(3) was solely for the purposes of verifying the return of income filed by the assessee. 19. Furthermore, there exists a mandatory statutory requirement that in all cases involving search-related assessments falling within the assessment year, immediately preceding the year of the search, the prior approval of the Joint Commissioner is required under section 148B of the Income-tax Act, 1961. In the present case, the Assessing Officer (AO) has proceeded without obtaining such approval, which is a clear violation of the procedural safeguards envisaged under the law and, as such, vitiates the assessment proceedings. In the present case, approval has been granted for assessment framed u/s 143(3) only. The relevant provision of section 148B reads as under: Printed from counselvise.com 11 Prior approval for assessment, reassessment or recompilation in certain cass. 148B. No order of assessment or reassessment or recompilation under this Act shall be passed by an Assessing Officer below the rank of Joint Commissioner, in respect of an assessment year to which clause (i) or clause (ii) or clause (iti) or clause (iv) of Explanation 2 to section 148 apply except with the prior approval of the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director. Thus, under the amended provisions, approval u/s 148B is now required in all cases where the proceedings are initiated pursuant to search. 20. Even we find while framing the assessment under section 143(3), the Assessing Officer (AO) has, on the last page of the assessment order, referred to an approval obtained from the supervisory authority. However, a bare perusal of this approval shows that it was obtained in reference to F. No.299/36/2020/1DAR/INV3(3)/577 dated 15.07.2022, i.e., in accordance with the CBDT Circular dated 15th July 2022, and not under the mandatory provisions of section 148B of the Income tax Act, 1961. 21. The above view was also before us in the case of Homelife Buildcon Pvt. Ltd. in ITA No. 880/Chd/2024 & Others, where on similar facts and circumstances, the assessment was framed u/s 143(3), though there was search and there was no approval granted as per statutory procedure outlined u/s 148. Herein this case. There is also complete failure to comply with the mandatory provisions of section 148B and, thus, the assessment as framed by the AO vide order, dated 31.03.2024 is hereby quashed. We have Printed from counselvise.com 12 also gone through the request for seeking approval of draft assessment order u/s 143(3) by the DCIT, CC-I, Ludhiana vide letter, dated 29.03.2024 and the said approval as sought u/s 143(3) was granted by the Addl. CIT (Central), Ludhiana vide order, dated 31.03.2024 and, thus, we have no hesitation in following the earlier order of 'Homelife Buildcon Pvt. Ltd.', where under the similar facts and circumstances, the assessment as framed u/s 143(3) was quashed. 22. Though, we have quashed the assessment as framed by the Assessing Officer but we find that both the assessee and the department have raised various grounds on merits and in view of the facts and circumstances of the case, we deem it appropriate to adjudicate the grounds as raised by the assessee and department on merits. 23. The only ground of appeal raised in the department appeal is about the deletion of addition of Rs. 1,12,50,000/- made by the Assessing Officer on account of unexplained investment u/s 69, based on digital device of Sh. Deepankar Jain. The facts have been discussed by the Assessing Officer from page 2 to page 10 of the order. The facts are that during search from the digital device of the assessee, 'whatsapp chat' with a contact person namely Mr. Manish was noticed by the Assessing Officer from where, it transpired that Mr. Manish had sent a message to the assessee asking \"Should I give your 1.5 lakh USD to Hemant Sir which inferred that USD 1.5 lakhs was belonging to Sh. Deepankar Printed from counselvise.com 13 Jain were his own funds and given to a contract name 'Hemant.. Sh. Deepankar Jain replied \" OK\" in response to the said message and, thus, the Assessing Officer formed a view that Hemant received 1.5 lakhs USD (Rs. 1,12,50,000/- on behalf of assessee. The assessee contended that there was just a proposal of loan transfer, which could not materialize and no business commenced in the name of M/s H.L. Exports, an entity set up at Dubai by the assessee. Further, the assessee provided the identity proof of Mr. Manish, establishing that he is resident of Dubai and an affidavit of Mr. Manish Kumar was also filed, where he confirmed that though, he had arranged the funds, through his professional contact in Dubai, which was to be given to the assessee, but since the business proposal did not materialize therefore, no funds were passed to the assessee concerned. 24. Further, the identity proof of Mr. Manish was also filed before the Assessing Officer alongwith copies of passport of the assessee to prove that he was present in India at the time of 'whatsapp chat' Bank statement of H.L. Export, assessee's company was also filed to prove that there was no such transaction in Dubai. It was further argued that no corroborated evidence was found during the course of search from any of the premises of the assessee concerned, confirming such allegation. The assessee relied upon various case laws to substantiate that suspicion, howsoever strong it may be,, cannot take the shape of evidence and even after the assessee has furnished the documentary evidence of the Printed from counselvise.com 14 confirmation from Sh. Manish, no further query or enquiry was made by the assessee. 25. The submissions were made before the CIT(A) on the identical line and also on the fact that merely on the basis of unproved 'whatsApp chat' with no corroborated evidence found from the premises of assessee, the addition is unsustainable in law as held by the Kolkata Tribunal in the case of Atul Tantia Vs DCIT, in ITA No. 492/Kol/2021, dated 28.03.2023 and also in the case of ACIT Vs Machukonda in ITA No. 87A/Viz/2020. Thus, it was concluded that there is no evidencery value of the WhatsApp message. In nutshell, the contention of the assessee that since the confirmatory letter has been filed from one Mr. Manish alongwith his identity proof clarifying that no money was transferred to the assessee and only on the basis of 'WhatsApp chat on standalone basis is not a reliable evidence for making the addition. The contentions of the assessee as per order of CIT(A) are as under as per para 5.2.2 of the order of CIT(A) :-  The assessee intended to start a jewellery business in Dubai and on the same grounds, the Assessee had established a Company in Dubai under the name and style of M/s HL Exports DMCC.  The impugned chat of the assessee was merely an enquiry conversation made for making arrangement of funds for the future endeavors/business deals that were expected.  The assessee was very much present in India during the dates when this chat was happening between the assessee and Sh. Manish and, thus, there is no factual possibility for the assessee to receive the said loan on those dates. Printed from counselvise.com 15  The assessee has never received such money and nor there is any ownership of the assessee over the said money.  The assessee this information before the Assessing officer along with filing of letter of confirmation from Mr. Manish stating all the facts of the matter alongwith his identity Proof and the chronology of events.  The bank account statement of the Assessee as well as his company in Dubai were also filed wherein there is no such credit of USD 1,50,000/-  The assessee tried to arrange funds on loan basis from the acquaintances that he may require in case any business deals materialized for the Company, however, neither any business deal was secured nor the assessee required funds.  The assessee had already closed the said entity and even closed the banking operation in November, 2022 as the assessee had failed to operate any business for the entity.  The assessee did not received any money and hence, cannot be said to be the owner of such money by any stretch of imagination.  The documents filed during the course of assessment proceedings, it is clear that assessee had duly discharged his onus to substantiate the fact that there was no flow of money from Mr. Manish to the Assessee and that it was merely an enquiry conversation.  When the two persons involved in the WhatsApp chat referred by the AO, have given the confirmation that no such money as mentioned in this chat was evern passed onto the assessee, then, in the scenario, the addition made by the AO on the basis of assumption and presumptions is bad in law and deserves to be deleted.  When there is documentary or financial trail to prove otherwise, the AO has merely presumed that the Assessee has received so called funds by ignoring the fact that the Assessee was present in India at the time of chat and not in Dubai. Printed from counselvise.com 16  The addition has been made by the Ld. Assessing Officer on the basis of the WhatsApp chat between the Assessee and Mr. Manish Kumar in respect of some enquiry regarding arrangement of funds for future business needs which is not maintainable, when it was never stated that the money belonged to the assessee.  No addition can be made solely on the basis of the WhatsApp chat as, it holds no evidentiary value unless supported by some primary evidence to prove the same.  There is no material on record to prove otherwise and the assessee has duly started it multiple times before the various Income Tax Authorities that the Assessee has never received any money from Mr. Manish and likewise, the same has been confirmed by Mr. Manish by way of a letter before the Assessing Officer. 26. The Ld. CIT (DR) relied upon the order of the Assessing Officer and on the whatsApp chat and further stated that 'whatsAp chat' is an authenticated piece of evidence and the same deserves to be taken into consideration. The Ld. Counsel of the assessee relied upon the affidavit of Mr. Manish alongwith identity proof and relied upon the contention as raised before the AO and CIT(A). 27. We have gone through the arguments of both the sides, findings of the CIT(A) and the order of Assessing Officer. It is an undisputed fact that no corroborated evidence have been found during the course of search with regard to the 'WhatsApp chat' as relied upon by the Assessing Officer for making the addition. We also find that the assessee had filed an affidavit from Mr. Manish, alongwith his identity proof and no enquiry, whatsoever, have Printed from counselvise.com 17 been made by the Assessing Officer to dispute such identity and the facts as confirmed by Mr. Manish in his affidavit. 27.1 We have also gone through the judgment of Kolkata Bench of the ITAT in the case of Atul Tantia as referred, in which, the following finding of fact have been recorded with regard to whatsApp chat:- \"ITAT Kolkata held that addition towards undisclosed income u/s 68 of the Income Tax merely based on the SMS or whatsApp messages without any corroborative evidence is unsustainable in law.\" 27.2 Further, similar finding is there in the case of ACIT Vs, Machukonda Shyam in ITANo. 87A/iz/2020, order, dated 23.09.2020, in wich, it has been held as under:- \"No evidence was found by the department to establish that assessee has given loan to Shri Lanka Anil Kumar during the course of search and no evidnece was found regarding the utilization of purported advances by Sh.Lanka Anil Kumar. Shri Anil Kumar also subsequently retracted from the statement and clarified that he has not received any cash loans from the assessee. Addition was made merely on the basis of whatsapp messages and the statement recorded from section 132(4) from Shri Lanka Anil Kumar, which was subsequently retracted. Therefore, we are of the view that the addition made by the AO is unsustainable and the Ld. CIT(A) rightly deleted the addition. Accordingly, we do not see any reason to interfere with the order of the Ld. CIT(A) and same is upheld. The appeal of the revenue on this ground is dismissed.\" 28. In the present case no corroborated evidence, whatsoever have been found. Further, we find that the CIT(A) has very rightly deleted the addition of Rs. 1,12,50,000/- and, for which, we are in agreement with the finding of the CIT (A) in para 5.2.3.1, which is being reproduced as under:- Printed from counselvise.com 18 \"5.2.3.1: On analysis of the facts of the case and legal position, following facts emerge: (a) Both the parties involved in 'WhatsApp chat' i.e. the appellant as well as Sh. Manish Kumar has denied having made any such transaction. Both of them mentioned that it was preliminary enquiry and finally the transaction did not take place. Sh. Manish Kumar who is resident of Dubai has filed his confirmation in this regard alongwith the proof of his identity. By looking at the signature in confirmation letter and in the identity proof, it is apparent that it is the same person i.e. the confirmation is a genuine one. (b) The appellant was in the process of establishing a business at Dubai in the name of M/s HL Exports DMCC. However, as per documents gathered during search, as well as in view of documents produced/filed by the appellant, it is observed that the business did not look off. The AO in the assessment order, also has not denied this fact. (c) The appellant did not travel to Dubai during this relevant time period, it is apparent from the copy of Passport of the appellant. Also, it was a COVID-19 Pandemic period, when various stringent restriction on foreign travel was in force. (d) There is no other documentary evidence of having received this amount of Rs. 1,12,50,000/- either in the bank account of the appellant or M/s HL Exports DMCC or in cash. Besides, there is no documentary evidence of any unexplained investment or expenditure of this amount of Rs.1,12,50,000/- during search at appellant's premises. (e) There is no trail of movement of money. (f) Further, there is no independent enquiry from Sh. Manish Kumar or any other person to establish the trail of money. (g) As per various case laws cited by the appellant (including those of Hon'ble Supreme Court), the WhatsApp chat alone cannot be considered as an evidence unless supported by some other corroborative evidence. In the present case, WhatsApp chat proves that there was discussion for transaction of this amount of Rs. 1,2,50,000/-. However, there is no further WhatsApp chat or any other communication to indicate that the transaction has actually taken place. Printed from counselvise.com 19 5.2.3.2 In view of the above discussion, I am in the considered view that the nature of WhatsApp chat is such that it alone cannot be considered as sufficient proof of transaction of Rs. 1,12,50,000/- have been taken place. There is no other documentary evidence to support this transaction. Whereas the Appellant has provide the copy of the bank account, confirmation from Sh. Manish Kumar as well as evidence of his present in India ( and not in Dubai) during relevant period. The appellant has also been able to establish that the business proposed to be established in Dubai did not take place. Under these circumstances, I am of the considered view that the addition made by the AO is not sustainable and therefore, deleted. Accordingly, these grounds of appeal are allowed. 29. Thus, we are in agreement with such finding of CIT(A) and, thus, the appeal of the department on merits is dismissed. 30. In the result appeal of the Department is dismissed and Cross Objection of the Assessee is allowed. Order pronounced in the open Court on 09/09/2025 Sd/- Sd/- राजपाल यादव क ृणवȶ सहाय (RAJPAL YADAV) (KRINWANT SAHAY) उपाȯƗ/VICE PRESIDENT लेखा सद˟/ ACCOUNTANT MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "