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Facts
The Revenue appealed against the CIT(A)'s deletion of additions made under Section 69A based on a WhatsApp chat allegedly showing a Rs. 1 crore cash receipt by the assessee. The assessee contended that the chat was not conclusive evidence, no cash was found, and the alleged source denied the transaction. For the second appeal, the addition was made under Section 56(2)(x) for purchasing land allegedly below market value, treating it as a capital asset.
Held
The Tribunal held that WhatsApp messages alone are not conclusive evidence for additions unless supported by corroborative evidence. The CIT(A) had rightly deleted the addition under Section 69A as no cash was found and the alleged source denied the transaction. Regarding Section 56(2)(x), the Tribunal noted that agricultural land is not a capital asset as per Section 2(14) and the purchased lands were agricultural, not falling within industrial zones as per the notification. Therefore, the addition under Section 56(2)(x) was also deleted.
Key Issues
Whether additions made solely on the basis of WhatsApp chats are valid without corroborative evidence, and whether the provisions of Section 56(2)(x) apply to agricultural land purchased below market value.
Sections Cited
147, 143(3), 69A, 132, 148, 56(2)(x), 2(14), 46A(3), 139(4), 69B, 69C, 2(14)
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Income Tax Appellate Tribunal, “C” BENCH MUMBAI
Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL
Present for: Assessee : Shri Nishit Gandhi and Ms Aadnya Bhandari, Advocates Revenue : Mr. R. A. Dhyani, CIT DR Date of Hearing : 07.08.2025 Date of Pronouncement : 25.09.2025 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: These two appeals filed by the Revenue are against the orders of ld. CIT (A) 54, Mumbai, vide order nos. ITBA/APL/S/250/2024- 25/1073952625(1), dated 03/03/2025 and ITBA/APL/S/250/2024- 25/1074007805(1), dated 04.03.2025 passed against the assessment orders by DCIT, Central Circle-6(1), Mumbai, u/s. 147 and 143(3) of the Income-tax Act (hereinafter referred to as the “Act”), dated 08.03.2024 and 31.12.2022 for Assessment Year 2020-21 and 2021-22 respectively. i. On the facts and in the circumstances of the case and in law, the ld. CIT(A) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the AO of Rs. 1,00,00,000/-u/s 69A of the Act without appreciating the fact that the assessee Shri Shailendra Rameshchandra Rathi himself admitted in his statement on oath taken during the course of search proceedings u/s. 132/4) of the Act that he received amount of Rs.1.0 Crore in cash from Shri Nilesh Toshniwal J. The Ld. CITIA) further did not oppreciate that corroborative evidences found shiring the course of search proceedings? ii. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in appreciate the fact that corroborative evidences found from the mobile of the assessee during the course of search proceedings in the form of WhatsApp chat between the assessee and Shri Nilesh Toshniwal, the same are annexed in the statement of the assesses in the page number 6 & 12 as exhibit-9? i. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the AO of Rs. 3,06,93,600/- u/s.56(2)(x) of the Act without appreciating the fact that purchased land is a capital asset as per section 2/14) of the Act and the section 2(14) provides that property of any kind held by an assesser, whether or not connected with his business or profession; is a capital asset and accordingly deeming provision of section 56(2)(x) will apply on the assessee? ii. Whether on the facts and in the circumstances of the case and in law, the Ld. CITYA) erred in appreciating that the land purchased by the assessee is pertains within 08 Kilometer area from notified industrial purpose area as notified by Maharashtra Government vide Notification No. IDC/2018/CR 783/Ind 14 dt. 13.02.20192 iii. Whether on the facts and in the circumstances of the case and in law, the Ld. CITIA) erred in admitting additional evidence in contradiction of Rule-46A(3) of the Income Tax Rules, 1962?*"
Both the appeals are by the Revenue for two different assessment years namely Assessment Year 2020-21 and Assessment Year 2021-22. Both the appeals are on two different issues and therefore will be dealt separately. However, both the appeals relate to the same assessee and arise out of the same operations of search. We pass a consolidated order
Facts of the case are that assessee filed his return on 09.01.2021 reporting total income at Rs.15,82,990/-. Assessee derives income from house property, consultancy business and income from other sources. A search and seizure action u/s.132 was conducted in the “Rucha group” of cases on 23.09.2021 which also covered the case of the assessee. Subsequently, case of the assessee was reopened by issuing notice u/s. 148 on 24.01.2023. Ld. Assessing Officer noted that in the course of search at the premises of the assessee, a WhatsApp chat was found between the assessee and Shri Nilesh Toshnival. This WhatsApp chat was found from the mobile of the assessee. According to the ld. Assessing Officer, said WhatsApp chat shows that the assessee had received Rs. 1 crore from Shri Nilesh Toshnival. He took note of another evidence which was found from the WhatsApp chat between the assessee and Shri Nilesh Toshnival, which according to the ld. Assessing Officer showed that the assessee had received cash of Rs.1 crore on 09.10.2019. Explanations were called for from the assessee who made a detailed submission explaining the case. However, ld. Assessing Officer did not find the submission so made, acceptable and completed the assessment by making an addition of Rs.1 crore by applying provisions of section 69A, treating it as unexplained money.
In the first appeal, ld. CIT(A) took note of the facts of the case in detail which is elaborated as under: and 2924/MUM/2025 Shailendra Rameshchandra Rathi AYs 2020-21 and 2021-22 5.1. During the search at the residence of the assessee, a WhatsApp chat was seized as page 6 of exhibit 9 which was with Shri Nilesh Toshnival. It mentioned “received o1”. Another WhatsApp chat between the assessee and Shri Nilesh Toshnival contained an Excel sheet having columns “In” and “Out”. The “In” column mentioned “1,00,00,000 received from RM Sir 09.10.2019”. In the statement recorded of the assessee during the search, he explained the contents of the first WhatsApp chat and stated he received cash of Rs. 1 crore on 08.10.2019 through Nilesh Toshnival. With respect to the second WhatsApp chat, he explained that the amount of Rs. 1 crore was the same amount of Rs. 1 crore received from Nilesh Toshnival. He further explained that the amount received was not kept in the office but was transferred to various places as per instruction of Shri Nilesh Toshnival and Shri Jayant Shah. Ld. CIT(A) also took note of the fact that this statement by the assessee was later retracted, for which an affidavit was placed on record.
5.2. Ld. Assessing Officer made the addition in the hands of the assessee on the basis of statement of the assessee alone, without correlating with any other corroborative documentary evidence. The statement relied upon by the ld. Assessing Officer was eventually retracted and thus, claim of the assessee was that addition so made has no legs to stand. According to the assessee, in the WhatsApp chat, there was no mention of the word “cash” and assessee did not receive cash of Rs. 1 crore from Nilesh Toshnival. In regard to the second WhatsApp chat, it was submitted that this chat did not contain description of any unaccounted income or expense. Also, there was no mention of the word “cash” or Nilesh Toshnival in this chat. However, this chat mentioned “RM Sir”. Thus, the addition made by the ld. Assessing Officer are and 2924/MUM/2025 Shailendra Rameshchandra Rathi AYs 2020-21 and 2021-22 without bringing any corroborative documentary evidence to allege the assessee for receipt of unaccounted money.
5.3. Assessee also contested on the application of section 69A as applied by the ld. Assessing Officer, since no cash was found during the course of search. Claim of the assessee is that no addition can be made merely on the basis of statement without any corroborative evidence found during the search proceedings. During the search, neither ld. DDIT nor ld. Assessing Officer made any verification with the sender of image, Shri Nilesh Toshnival and made the addition based on the statement that he received Rs. 1 crore from Nilesh Toshnival which is without any basis. According to the assessee, ld. Assessing Officer ought to have confronted both the images to Shri Nilesh Toshnival for verification of its content before making addition in the hands of the assessee for applying section 69A.
5.4. To this effect, assessee brought on record the statement of Shri Nilesh Toshnival which was recorded and has a direct bearing on the case of the assessee. From the statement of Shri Nilesh Toshnival, at question No. 30, he had stated that he has not done any such transaction with the assessee. The relevant extract from the statement of Shri Nilesh Toshnival as contained in the order of ld. CIT(A) is reproduced below. "Q 30 As stated by Shailendra Rathi in his reply to page no 6 of the exhibit that he received Rs 1 Crore in cash from you on 08.10.2020. Please provide details and purpose of this transaction. What is the source of this amount in cash?. Ans 30. I had not done any such transaction with Mr Rathi." and 2924/MUM/2025 Shailendra Rameshchandra Rathi AYs 2020-21 and 2021-22 5.5. Thus, assessee corroboratively established from the statement of Shri Nilesh Toshnival that he has very categorically stated about he not making any payment in cash to the assessee of Rs. 1 crore, which proves beyond doubt that no cash was ever received by the assessee from Shri Nilesh Toshnival and hence, no addition is called for, as made by the ld. Assessing Officer u/s. 69A. Assessee also placed on record the assessment order passed in the case of Shri Nilesh Toshnival for the same year under consideration i.e., Assessment Year 2020-21 dated 23.06.2023, wherein no addition was made in the hands of Shri Nilesh Toshnival in respect of he making payment of cash of Rs. 1 crore alleged to be given to the assessee.
5.6. Assessee also contended that no addition can be made merely on the basis of suspicion and surmises, as ld. Assessing Officer has failed to establish any link of the alleged payment and the nature of expenditure, which is based on the contents of WhatsApp chat without any conclusive evidence. Assessee further submitted that no addition can be made on the basis of WhatsApp images or documents found from the mobile data, without bringing corroborative evidence to support the notings mentioned therein.
5.7. Ld. CIT(A) took note of all these submissions and the factual position while adjudicating on the issue contested by the assessee. Apart from the above submissions, ld. CIT(A) also took note of the fact that no further enquiry was conducted by the ld. Assessing Officer to verify the facts nor ld. Assessing Officer has brought on record any corroborative evidence in support of receipt of cash of Rs.1 crore by the assessee. He further took note of the fact that no corroborative evidence was unearthed during the search proceeding nor any cash was found during the course of search from the premises of and 2924/MUM/2025 Shailendra Rameshchandra Rathi AYs 2020-21 and 2021-22 the assessee for the alleged addition made. Ld. CIT(A) also noted that cash was transferred as per the directions of Shri Nilesh Toshnival and Shri Jayant Shah and therefore, the assessee was not the owner of cash mentioned in the seized document found in WhatsApp chat. Thus, in absence of any evidence linking the assessee with the cash receipt mentioned in the WhatsApp chat, no addition is called for u/s. 69A. He thus, deleted the addition so made.
We have perused the fact-based findings of ld. CIT(A) as well as judicial precedents relied upon by him while giving relief to the assessee. Further, in the given context, we refer to the decision of Hon'ble Supreme Court in the case of Ambalal Sarabhai Enterprise vs. KS Infraspace LLP Ltd. in Civil Appeal No. 9346 of 2019 which dealt on the aspect of WhatsApp chat and observed as under: “The WhatsApp messages, which are virtual verbal communications, are matters of evidence with regard to their meaning and its contents to be proved during trial by evidence in chief and cross-examination. The emails and WhatsApp messages will have to be read and understood cumulatively to decipher whether there was a concluded contract or not". 6.1. Hon'ble Apex Court highlighted the importance of proving the contents of WhatsApp chat during trial by evidence and also cross examination. In the present case, Id. Assessing Officer neither provided any evidence in support of the WhatsApp chats relied upon by him.
6.2. Also, Coordinate Bench of ITAT, Chennai in the case of Mr. A. Johnkumar vs. DCIT in dealt with issues relating to additions made based on WhatsApp messages and observed as under: "First of all, 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. and 2924/MUM/2025 Shailendra Rameshchandra Rathi AYs 2020-21 and 2021-22 ......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. In other words, the AO has abruptly concluded in his own understanding of the messages, the assessee has received so much of cash and distributed so much of cash and which is nothing but cash for votes and hence, concluded that the assessee has incurred a sum of Rs. 17 Crs. for distribution of cash to voters and which is nothing but unexplained expenditure taxable u/s.69C of the Act.......... Further, the AO had relied upon the WhatsApp messages sent from assessee's mobile phone to Mr. Somu and had given his own meaning to those messages. In the process, the AO neither tested the admissibility of WhatsApp messages as evidence u/s.69B of Evidence Act, nor examined Mr. Somu the recipient of messages sent by the assessee. The AO without carrying out necessary enquiries and also examining those persons, simply concluded that those messages are meant for distribution of cash and the assessee has spent such a huge amount for election expenses. In our considered view, the findings recorded by the AO is purely on suspicion and surmises manner without any evidences to justify his findings.”
6.3. We also rely on the decision of the Coordinate Bench in the case of ACIT vs. Prashant Prakash Nilawar in and 5073/Mum/2024, dated 12.02.2025, passed by the undersigned constitution.
6.4. Accordingly, considering the above fact and circumstances as well as judicial precedents, discussed above, grounds raised by the Revenue in its appeal for AY 2020-21 are dismissed, since we do not find any reason to interfere with the detailed findings arrived at by ld. CIT(A).
We now take up the appeal for assessment year 2021-22 in ITA No. 2924/Mum/2025. The only issue raised in this appeal by the Revenue is in respect of relief granted by ld. CIT(A) towards addition made by ld. Assessing Officer u/s. 56(2)(x) on account of difference in the purchase consideration for purchase of three lands and the stamp duty value thereof. Ld. Assessing Officer has made an addition of Rs. 3,06,93,600/- under the said section on account of the difference in the value. This year was taken up for scrutiny assessment u/s. 143(3) after the conduct of search on 23.09.2021 which included the assessee. In and 2924/MUM/2025 Shailendra Rameshchandra Rathi AYs 2020-21 and 2021-22 the course of assessment, ld. Assessing Officer observed that assessee had purchased various lands during the year which were purchased at lower than fair market value, details of which are tabulated as under: Sr Address Area Agreement Fair market Enclosed No in value Value as hectre per Index - II (Rs.) 1 Sr. No. 136, Hissa 1.93 15,00,000 1,08,61,200 Copy of No-1/A, Mauje Purchase Deed Kalzondi, Ratnagiri Agreement on Page No. 48-64 of the APB 2 Sr. No.
117. Hissa 2.46 40,00,000 1,67,32,100 Copy of No- 2 Purchase Deed MaujeKalzondi, Agreement Page Ratnagiri on No. 65-85 of the APB 3 Sr. No. 737, Hissa 2.48 31,62,000 1,1762,300 Copy of Mauje Gadnaral, Purchase Deed Ratnagiri Agreement on No. Page 86-102 of the APB Total 86,62,000 3,93,55,600 7.1. Assessee had filed his return of income u/s. 139(4) on 30.03.2022 reporting total income at Rs. 13,00,500/- along with agriculture income shown at Rs. 2,05,000/-. In the course of assessment, there is no dispute on the agriculture income shown by the assessee at Rs. 2,05,000/- which has been accepted as such by the ld. Assessing Officer while completing the impugned assessment.
Facts of the case relating to the issue under consideration are that assessee had purchased three pieces of lands details of which are already tabulated above. Addition has been made on account of difference between the purchase price and the stamp duty value by applying provisions of section 56(2)(x). In the course of first appeal, and 2924/MUM/2025 Shailendra Rameshchandra Rathi AYs 2020-21 and 2021-22 assessee submitted that land purchased by the assessee are agriculture land which has been duly disclosed in the balance sheet. Assessee contended that these lands are situated at village Kalzondi in Ratnagiri district which has a population of 1,725 and is 47 kilometres away from Ratnagiri local municipal area/taluka and district place. Further, the purchase deed itself mentions that this land is an agriculture land. The value arrived at by the stamp duty authority is on the basis of proposed industrial use of the said land for which a notification was issued by the state of Maharashtra government on 13.02.2019. Copy of the said notification was placed on record vide notification No. IDC/2018/CR- 783/IND-14. According to this notification, the entire area of village Kalzondi and Gadnaral has been considered for industrial zone. However, according to the assessee, in reference to the said notification, the land purchased by the assessee bearing Survey No. 136(1/A), 117(2) in village Kalzondi and Survey No. 737 in village Gadnarala are not included for industrial purposes. These lands purchased by the assessee have been mistakenly assessed by the stamp duty authority as the entire area of Kalzondi and Gadnaral village of Ratnagiri district is considered for industrial use.
8.1. To substantiate the claim made by the assessee, he placed on record valuation certificate issued by the District Registrar dated 19.01.2023, whereby the value determined for each piece of land totalled to Rs.60,15,200/-. Thus, the valuation as per the valuation certificate issued by District Registrar dated 19.01.2023 vis-a-vis the purchase price as per the agreement value is tabulated below: and 2924/MUM/2025 Shailendra Rameshchandra Rathi AYs 2020-21 and 2021-22 Sr Address Area in hectre Agreement Value as per No value Valuation Certificate issued by District Registrar dated 19.01.2023 1 Sr. No. 136, Hissa No-1/A, 1.93 15,00,000 40,21,700 Mauje Kalzondi, Ratnagiri Doc.No.317/2021 2 Sr. No.
Hissa No- 2 2.46 40,00,000 14,01,500 MaujeKalzondi, Ratnagiri Doc. No.4617 3 Sr. No. 737, Hissa Mauje 2.48 31,62,000 5,92,000 Gadnaral, Ratnagiri Doc No.4618 Total 86,62,000 60,15,200 8.2. From the material placed on record, it was demonstrated that these pieces of land purchased by the assessee are agricultural land. It was also demonstrated by the assessee that these are not included in the survey numbers mentioned in the list of land proposed to be used for industrial purposes as per the notification (supra) issued by the Government of State of Maharashtra. Assessee also substantiated his claim by submitting that the lands are situated at village Kalzondi and Gadnarala which are 47 km and 52 km respectively, away from the nearest Ratnagiri municipality and both the villages have population less than 10,000. On these factual positions, assessee also contended that provisions of section 56(2)(x) r.w. clause(d) of explanation to section 56(2)(vii), meaning of “property” mentioned therein states that property means “capital asset”, which is immovable property being land or building or both. In this context, the definition of capital asset as contained in section 2(14) does not include agricultural land i.e. not being land situated in area which is comprised within the jurisdiction of a municipality or in any area within the distance measured aerially not being more than 2 km or 6 km or 8 km from the local limits of any and 2924/MUM/2025 Shailendra Rameshchandra Rathi AYs 2020-21 and 2021-22 municipality or cantonment board which has a population of more than 10,000, but not exceeding 1 lakh or not exceeding 10 lakh or more than 10 lakh, respectively.
8.3 To buttress the contentions, in respect of provisions of section 56(2)(x) which does not apply to agricultural land, reliance was placed on the decision of Coordinate Benches of ITAT in the case of Ram Narayan vs. ITO in Premchand Jain vs. ACIT [2020] 183 ITD 372 (Jaipur), Yogesh Maheshwari vs. DCIT [2021] 125 taxmann.com 273 (Jaipur) and N.D. Mubarak Korabu vs. ITO [2020] 117 taxmann.com 828 (Pune). In these decisions, it has been held that provisions of section 56(2)(x) are not applicable to agricultural land, since it does not fall within the definition of capital asset u/s.2(14).
8.4. Considering the above factual position, provisions of section 56(2)(x) and the judicial precedents of the Coordinate Benches of ITAT referred above, ld. CIT(A) gave his fact-based finding to delete the addition so made by ld. Assessing Officer.
We have heard both the parties and perused the material on record and given our thoughtful consideration to the submissions made. The factual position which emanates from the documents on record and considered by ld. CIT(A) while adjudicating on the appeal have not been controverted by bringing any cogent material on record by the Revenue. Further, assessee had reported agriculture income in his return which has not been disputed by the ld. Assessing Officer. The facts to determine whether the lands are agricultural land or otherwise and not covered by the provisions of section 56(2)(x) have also been not controverted by bringing anything cogent on record. Considering the facts on record and the documents and the material as well as judicial and 2924/MUM/2025 Shailendra Rameshchandra Rathi AYs 2020-21 and 2021-22 precedents referred above, we do not find any reason to interfere with the findings arrived at by ld. CIT(A) who has dealt with the issue giving relief to the assessee. Accordingly, grounds raised by the Revenue are dismissed.
In the result, appeal of the Revenue is dismissed.
In the result, both the appeals of the Revenue are dismissed.