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Facts
During a search operation, cash loans were found linked to the assessee, leading the Assessing Officer (AO) to make an addition of Rs.10,00,000/- as deemed hundi under Section 69D, along with Rs.1,20,000/- interest, based on WhatsApp images and an uncorroborated statement. The assessee had filed a Nil return, and the AO's addition significantly increased the assessed income.
Held
The CIT(A) allowed the assessee's appeal, deleting the additions due to the lack of corroborative evidence. The ITAT upheld the CIT(A)'s decision, confirming that in the absence of any independent corroborative evidence for the alleged loan and interest, the additions were not sustainable.
Key Issues
Whether additions made based on uncorroborated WhatsApp messages and statements regarding cash loans and interest are sustainable under Section 69D of the Income Tax Act without independent corroborative evidence.
Sections Cited
139, 250, 69D
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH KOLKATA
Before: Shri Sonjoy Sarma & Shri Rakesh Mishra
Assessment Year: 2018-19 ACIT, Central Circle-3(2), Kolkata ……..……..…………………....Appellant vs. M/s Balaji Polytex Pvt. Ltd..…………....…..………………….…..... Respondent 40/, Strand Road, 2nd Floor, Kol-1. [PAN: AAECB6388B] Appearances by: Shri P. N. Barnwal, CIT-DR, appeared on behalf of the appellant. Shri Miraj D. Shah, AR, appeared on behalf of the Respondent. Date of concluding the hearing : July 28, 2025 Date of pronouncing the order : August 12,2025 आदेश / ORDER
Per Sonjoy Sarma, Judicial Member:
This appeal filed by the revenue is directed against the order of the Commissioner of Income Tax (Appeals), 21, Kolkata dated 30.10.2024, passed against the assessment order under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2018–19.
Brief facts of the case are that in the case of the assessee, the return of income u/s 139 of the Act was filed by the assessee declaring income of Rs.Nil with current year loss of Rs.7,99,660/- which was received on 29.03.2019 with total income of Nil with current year loss of Rs.1,12,00,590/-. A search and seizure operation was carried out at the residential and office premises of “Health Care Group” on 05.02.2021. During the search, reference of the assessee was found. During the assessment proceedings, the Assessing Officer noticed that certain cash M/s Balaji Polytex Pvt. Ltd loan was found from the premises of Shri Sanjay Agarwal and residence of Lakhotia Family. On the basis of whatsapp images, the Assessing Officer found that Rs.10,00,000/- was seized during the search was belong to Shri Sanjay Agarwal and the Assessing Officer made the addition of Rs.10,00,000/- which was deemed as amount borrowed/repaid as hundi u/s 69D of the Act and also added interest of Rs.1,20,000/- on the said amount.
Aggrieved by the above order, the assessee filed an appeal before the ld. CIT(A) where the appeal of the assessee was allowed by the ld. CIT(A) by holding as under:
Dissatisfied with the above order, the revenue is in appeal raising various grounds. The ld. DR stated that the tax effect in the instant case is below the limit prescribed in Circular no.5 of 2022, however, the instant case falls within the ambit of exceptional clauses as proved in the said circular. Therefore, the department filed this appeal. The ld. DR stated that the impugned order of the ld. CIT(A) is bad in law and liable to be set aside by upholding the order of the Assessing Officer.
On the contrary, the ld. AR stated that the appeal may be dismissed in limine as the appeal filed below the prescribed monetary limit however he stated that on merits also, the assessee has strong case. Since at the time of hearing, the ld. AR stated that no clarification was obtained by the Assessing Officer from Shri Sanjay Agarwal regarding the alleged loan of Rs.10,00,000/- from the assessee as well as director of the assessee company, therefore, it remains unsubstantiated. While passing the impugned order, the ld. CIT(A) recorded the alleged loan of Rs.10,00,000/- was specifically denied by M/s Balaji Polytex Pvt. Ltd the director of the assessee as the whatsapp images shows Rs.10,000/- and not Rs.10,00,000/-.
We, after hearing both the parties and perusing the materials available on record, find that in the absence of any corroborative evidence in respect of loan of Rs.10,00,000/- and interest thereon of Rs.1,20,000/-, the ld. CIT(A) rightly deleted both the additions by allowing the grounds raised
by the assessee. We, therefore, do not find any infirmity in the order of the ld. CIT(A) and accordingly the appeal filed by the revenue is dismissed.
7. In the result, the appeal of the revenue is dismissed. Kolkata, the 12th August, 2025.