The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has dismissed an appeal filed by the Income Tax Department and upheld the deletion of an addition made on account of alleged unexplained cash receipt in a property transaction, citing absence of credible and legally admissible evidence.
The case related to the sale of a commercial property located in Pune, wherein the taxpayer had declared a sale consideration of ₹3.38 crore through a registered sale deed. The declared consideration was higher than the stamp duty value of ₹2.56 crore as reflected in official Index-II records maintained by the Registration and Stamp Duty authorities. Despite this, the Assessing Officer alleged that the actual market value of the property was ₹6.55 crore and that the balance amount of over ₹3 crore had been received in cash, which was treated as unexplained income under the provisions of the Income-tax Act, 1961.
The allegation of undisclosed cash receipt was based primarily on a screenshot of a WhatsApp chat recovered during a search conducted on a connected third party. The chat contained an Excel-style rough working of property rates in the locality. The Assessing Officer relied on rates available on a government website applicable to adjacent properties and adopted the same to determine the alleged market value, without bringing on record any comparable sale instances or making inquiries with the Registration or Stamp Duty authorities.
After considering the facts and material on record, the Tribunal observed that the impugned screenshot did not bear any authentication, signature, or reference to the taxpayer or the specific property transaction under consideration. The Tribunal held that the chat appeared to be a rough internal calculation exchanged between third parties and did not establish any linkage with the taxpayer.
The Tribunal further noted that electronic records are admissible as evidence only when supported by a valid certificate under Section 65B(4) of the Indian Evidence Act, 1872. In the present case, no such certificate was furnished, nor was the source device produced, rendering the digital material inadmissible.
It was also observed that no incriminating material, cash, documents, or statements were found during the search proceedings to substantiate the allegation of receipt of unaccounted money. The Tribunal found that the Assessing Officer had disregarded the government-notified stamp duty valuation, which was lower than the declared sale consideration, and had adopted an arbitrary market rate without proper verification.
In view of the above, the Tribunal concluded that the addition was based on assumptions and conjectures rather than concrete evidence. Accordingly, the deletion of the addition by the appellate authority was upheld, and the appeal filed by the Revenue was dismissed. The order was pronounced in open court on 27 October 2025.
Source from: https://economictimes.indiatimes.com/wealth/tax/tax-dept-accuses-lady-of-taking-rs-3-crore-cash-in-property-deal-itat-mumbai-disregards-whatsapp-chat-evidence-says-no-proof-no-tax/articleshow/126345037.cms?from=mdr
