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The Tax Publishers Additions under Section 69A/69C based on impounded mobile phone whatsapp messages/attachments *Facts:* Mobile phone of the Director of the assessee was impounded as part of search and seizure operations and one loan was found with certain interest calculations @ 24% p.a was unearthed. However no interest payment was seen in the books of the assessee. Accordingly additions were made under Section 69A - unexplained money for the entire interest amount of Rs. 2.62 crores and tax imposed under Section 115BBE. On appeal, CIT(A) held that it ought to be taxed as unexplained expenditure under Section 69C and not under Section 69A but sustained the addition. On higher appeal it was pleaded by the assessee that no addition be sustained based on the whatsapp messages as these were not incriminating documents or books. Held partly in favour of the assessee that since the whatsapp messages confirmed payment of Rs. 1 crore as interest which was not found in the books of accounts, the said amount of Rs. 1 crore alone was held as taxable under Section 69C as unexplained expenditure. The rest of the amount is the loan balance that ought to have been outstanding. "9. Per contra, learned DR contends that when the contents of WhatsApp documents are compared with the books of the assessee, the date of borrowings are tallied and as rightly found out by the learned CIT(A), the data found on the interest computation sheet directly matches with the ledger accounts in the books of the assessee and, therefore, the interest computation did not found in WhatsApp chat is not a dumb document and got an evidentiary value. When such a document recovered from the possession of the assessee speaks that the rate of interest was 24% and the assessee did not make any entry about the interest component in its books, the authorities have rightly held that the interest component must have been paid by the assessee out of books and, therefore, such an unexplained expenditure is rightly brought to tax under Section 69C of the Act. .. 11. There is no rebuttal of the finding of the learned Assessing Officer that there is no entry about the interest component in the books of assessee. When this document was sent by one K.V. Rao with mobile No. 9866352050, the Director of assessee acknowledged the same. Further, as rightly pointed out by the learned CIT(A), the details to be found in this WhatsApp document tallies with the dates of borrowings as admitted by the assessee in its books of accounts. We, therefore, are of the considered opinion that undoubtedly, this is an incriminatory material, and it is not open for the assessee to challenge the reliance of Revenue on this document, without explaining the existence of contents of the document". *Ed. Note:* With data protection, privacy and message trailing, seen/read notifications, how far can digital technology encompass and support such additions is a point which might assume greater debate in the days to come. *Case:* Avexa Corpn. (P) Ltd. v. Asstt. CIT 2023 TaxPub(DT) 4522 (Hyd-Trib)

The Tax Publishers

Additions under Section 69A/69C based on impounded mobile phone whatsapp messages/attachments

Facts:

Mobile phone of the Director of the assessee was impounded as part of search and seizure operations and one loan was found with certain interest calculations @ 24% p.a was unearthed. However no interest payment was seen in the books of the assessee. Accordingly additions were made under Section 69A - unexplained money for the entire interest amount of Rs. 2.62 crores and tax imposed under Section 115BBE. On appeal, CIT(A) held that it ought to be taxed as unexplained expenditure under Section 69C and not under Section 69A but sustained the addition. On higher appeal it was pleaded by the assessee that no addition be sustained based on the whatsapp messages as these were not incriminating documents or books.

Held partly in favour of the assessee that since the whatsapp messages confirmed payment of Rs. 1 crore as interest which was not found in the books of accounts, the said amount of Rs. 1 crore alone was held as taxable under Section 69C as unexplained expenditure. The rest of the amount is the loan balance that ought to have been outstanding.

"9. Per contra, learned DR contends that when the contents of WhatsApp documents are compared with the books of the assessee, the date of borrowings are tallied and as rightly found out by the learned CIT(A), the data found on the interest computation sheet directly matches with the ledger accounts in the books of the assessee and, therefore, the interest computation did not found in WhatsApp chat is not a dumb document and got an evidentiary value. When such a document recovered from the possession of the assessee speaks that the rate of interest was 24% and the assessee did not make any entry about the interest component in its books, the authorities have rightly held that the interest component must have been paid by the assessee out of books and, therefore, such an unexplained expenditure is rightly brought to tax under Section 69C of the Act.

11. There is no rebuttal of the finding of the learned Assessing Officer that there is no entry about the interest component in the books of assessee. When this document was sent by one K.V. Rao with mobile No. 9866352050, the Director of assessee acknowledged the same. Further, as rightly pointed out by the learned CIT(A), the details to be found in this WhatsApp document tallies with the dates of borrowings as admitted by the assessee in its books of accounts. We, therefore, are of the considered opinion that undoubtedly, this is an incriminatory material, and it is not open for the assessee to challenge the reliance of Revenue on this document, without explaining the existence of contents of the document".

Ed. Note: With data protection, privacy and message trailing, seen/read notifications, how far can digital technology encompass and support such additions is a point which might assume greater debate in the days to come.

Case: Avexa Corpn. (P) Ltd. v. Asstt. CIT 2023 TaxPub(DT) 4522 (Hyd-Trib)