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Judgment
PER MANISH AGARWAL, AM :
The captioned three appeals are filed by the assessee and the Revenue against the separate orders, all dated 17.11.2025 by Ld. Commissioner of Income Tax (A)-33, Noida [“Ld.CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the different assessment orders, both dated 21.03.2024 passed u/s 143(3) of the Act pertaining to Assessment Years 2022-23 and 2023-24 respectively.
First we take appeal of the assessee in ITA No.644/Del/2026 for Assessment Year 2022-23.
ITA No.644/Del/2026 [Assessment Year 2022-23]
Brief facts of the case are that the assessee is a company engaged in the business of manufacturing of multi-layer polythene films and flexible packaging products, filed its return of income for the year under appeal on 21.10.2022, declaring total income of INR 39,12,61,920/-. Thereafter a survey was carried out at the business premises of the assessee on 21.02.2023 and during the course of survey at its Haridwar Plant, certain loose papers and documents were impounded. Despite this, certain data were retrieved from the mobile phone of Shri Pankaj Singh who is working as a Deputy Manager, HR in the assessee company. Based on the WhatsApp chat found from his mobile and further statement of other employees recorded, the AO alleged that certain images related to cash payment of salary to staff was found. Accordingly, AO observed that assessee has incurred unexplained expenditure towards of payment of salary and made the addition of INR 12,74,330/- u/s 69C of the Act.
Aggrieved by the said order, the assessee preferred appeal before Ld. CIT(A) who vide order dated 17.11.2025 has allowed part relief to the assessee whereby confirming the addition of INR 8,67,636/- as related to the assessee and deleted the balance addition of INR 4,06,694/- holding that the same relates to the employees of different entities of the Group.
Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before the Tribunal by taking following Grounds of appeal :
1.That the Ld. CIT(A) has erred in law in partially sustaining the addition of ₹8,67,636/- without appreciating that the assessment itself is void ab initio, having been wrongly framed under section 143(3) instead of the mandatory provisions of section 147, rendering the entire assessment unsustainable in law.
2.That the Ld. CIT(A) has erred in appreciating that the assessment under section 143(3), which is bad in law as the mandatory procedure under section 148B of the Income Tax Act, 1961, was not followed as the approval was based on Instruction No. 299/36/2021 dated 15.07.2022, which is not in conformity with the Act.
3.That the Ld. CIT(A) has erred in law in holding that the participation of the assessee in the assessment proceedings validates an assessment framed under an incorrect section. It is a settled position that mere participation by the assessee cannot cure inherent jurisdictional defects, and an assessment framed without authority of law is void ab initio.
4.That the learned CIT(A) has grossly erred in law and on facts in confirming the addition of ₹8,67,636/- under section 69C solely on the basis of WhatsApp chats and a statement recorded during survey proceedings, despite the settled position that such a statement has no evidentiary value. The learned CIT(A) further erred in drawing presumptions in the absence of any reference to, or evidence of, cash payment in the WhatsApp chats and without any independent corroborative material on record.
5.That the Ld. CIT(A) has erred in confirming the addition under section 69C in the absence of any corroborative evidence such as cash books, parallel wage registers, vouchers, employee-wise details, linkage with cash disbursement, and thus the findings are based merely on conjectures and surmises.
6.That the Ld. CIT(A) has erred in law and on facts in sustaining the addition in violation of the principles of natural justice, as no effective opportunity of cross-examination was granted and the material relied upon was not confronted to the directors of the company during the course of search proceedings. 7. That the Ld. CIT(A) has erred in law and on facts in sustaining the addition despite the salary recorded in the duly audited books being substantially higher than the figures appearing in the impugned documents, thereby rendering the alleged notings unreliable and devoid of evidentiary value. 8. That the appellant craves leave to add, alter, amend, modify or withdraw any of the above grounds at or before the time of hearing.
The ground of appeal No. 2 is related to the approval granted u/s 148B and since this ground is not pressed during the course of hearing thus, the same is dismissed.
All the other Grounds of appeal taken are with respect to upholding the addition of INR 8,67,636/- towards alleged cash payment of salary to the employees of the assessee, therefore, all the other Grounds of appeal were taken together for consideration.
Before us. Ld.AR for the assessee filed a detailed written submissions in this regard and argued that the entire addition has been made on the basis of the WhatsApp chat image taken from the mobile phone of Shri Pankaj Singh, an employee. The said document is as under:-
Ld. AR submits that during the course of survey, statements of Shri Pankaj Singh were recorded “on oath” though all the facilities were extended to the survey authorities. In the said statements, in reply to Question No.13, he was confronted with the nature of payments of page 1 of Exhibit A in reply to which he stated that the entries contained monthly payment of salary. The paper as reproduced herein above was confronted to him in Question No.16, in reply to which, Shri Pankaj Singh stated that it contained the cash payment to the employees of Unit No.1 & Unit No.2 of the assessee and also of the employees of M/s Montage Enterprises Pvt. Ltd., a group concern. Ld. AR drew our attention to the reply to Question No.18 wherein Shri Pankaj Singh stated that he was not fully aware that whether payments were made as noted in the dairy or not and stated that he informed to Navneet Raj Anand, Assistant General Manager. Ld. AR further drew our attention to page 25 of the Paper Book wherein the statement of Shri Navneet Raj Anand, Assistant General Manager was recorded where in reply to Question No.2, he denied any acknowledge of said slip and in reply to Question No.3, he stated that bonus was transferred to the accounts of the employees and no cash payment was made. Ld.AR submits that these payments relate to June & July, 2021 however, all the payments were noted in the books of accounts. Ld.AR further submits that only on presumptions and assumptions, additions were made and significant amount of salary of INR 43,98,490/- was already recorded for Unit-2 whereas as per the seized documents, the salary was of INR 7,10,999/- and INR 1,56,637/- noted as paid which is very low as compared to the gross salary paid. It further shows that the entry noted in the image are dummy entries noted for memoranda purposes and should not be taken the sole basis solely for making the addition without bringing on record any corroborative material on the basis of statement of third parties. He, therefore, requested for the deletion of the addition made on this account.
Ld.AR further placed reliance on various judgements of Hon’ble Delhi High Court and Co-ordinate bench of the Tribunal which are as under:-
CIT-XIV vs Vivek Aggarwal 2015 (2) TMI 590 (Delhi High Court)
Sanjay Taneja vs ACIT [2025] 176 taxmann.com 392 (Del.-Trib.)
PCIT(central) vs Rajan Rajesh Kumar [2025] 181 taxmann.com 750 (Uttarakhand High Court)
He thus, prayed that the additions sustained by Ld.CIT(A) be deleted.
On the other hand, Ld. CIT DR for the Revenue vehemently supported the orders of the lower authorities and submits that Ld. CIT(A) has already allowed the desired relief to the appellant and was very reasonable in holding that the additions to the extent of documents pertained to the assessee should only be made. Ld. CIT DR further submits that the additions were made on the basis of the material found and seized as a result of search in the shape of WhatsApp images found from the mobile phone of one of the key employee and this fact has not been denied therefore, he requested for the confirmation of the addition so made.
Heard the contentions of both the parties at length and perused the material available on record. From the perusal of Page 4 of Annexure A which is a WhatsApp image and made the sole basis for making additions in the hands of the assessee company as reproduced herein above, it is observed that the contained some figures with the title “month of December, 2021”. In the statement of Shri Pankaj Singh recorded during the course of search, an employee, in reply to Question No.13 with reference to page 1 in Exhibit A confronted to him, he replied that cash payments were done to the employees of assessee Unit-1 every month. He further stated that paper pertained to the month of June & July, 2021. However, the AO has not made any addition with respect to the salary paid for the month of June & July. Further, in reply to Question No.16, Shri Pankaj Singh stated that these entries are related to the cash payment made to the employees of Unit 1 & Unit 2 of the assessee. In reply to Question No.17 & 18, Shri Pankaj Singh has explained the procedure adopted for making cash payment of salary however, in the same statements, he denied of having made any cash payments as found noted and stated that one Shri Navneet Raj Anand, AGM (Accounts) has paid cash to the employees. Thereafter, in the statement of Shri Navneet Raj Anand which were also placed before us at pages 25 of the Paper Book, he denied any such payments and simply stated that the amounts of bonus were transferred to the employee’s accounts only.
As observed above, the WhatsApp chat image marked as page 4 of Annexure-A does not speak about the nature and only some figures with the title ‘Month of December-2021” is recorded and does not speak whether the same is sales or purchases or some expenses or any figure of stock or otherwise recorded and the purpose for which it is recorded is also not borne out from the paper itself. It is further observed that assessee company, for the month of December had recorded salary of much more than amount found noted in the papers of both the Units. The AO has made the addition solely on the basis of the statement of Shri Pankaj Singh who has stated that the figures noted are with respect to the cash payment of salary however, has filed to state the name of employees, work done etc. and AO has filed to bring out on record any corroborative material to support the conclusion drawn. Further, it is a matter of fact that Shri Pankaj Singh was never paid cash salary to any employee which fact was admitted by Shri Pankaj Singh himself in his statements however, this fact was ignored by the AO. The Hon’ble Delhi High Court in the case of CIT vs Vivek Aggarwal reported in 56 taxmann.com 7 (Del.HC) held that such kind of document as dumb document and the head note read as under:-
Head Note: Section 69A, read with sections 132 and 158BB, of the Income-tax Act, 1961 - Unexplained moneys (Seized documents) - Block assessment years 2001-02 to 2007-08 - A search was carried out at assessee's premises in course of which Assessing Officer seized certain letters/e-mail - On basis of said documents, Assessing Officer made addition to assessee's income on account of undisclosed salary -Commissioner (Appeals) as well as Tribunal deleted addition holding that in absence of any corroborative material to link such e-mail letter or its contents with assessee, inference that some additional income was earned by him by way of salary, was incorrectly drawn - Whether since document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of Assessing Officer, impugned order of Tribunal deleting addition was to be confirmed - Held, yes [Para 13] [In favour of assessee]
Para13. Given the above state of law - and this Court has no hesitation in so concluding, since the document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of the AO, the ITAT's view which endorsed the findings of the CIT(Appeals) were well-founded and do not call for interference. The reliance placed upon Smt.Urmila Gambhir (supra) in this Court's opinion is inapt because in that case there was other corroborative material for the income tax authorities to link the description of the transactions found in the said innocuous document seized with respect to other material. However, such inference cannot be drawn in this case because there is no other material. On the contrary the AO's acceptance and finalization of the assessment for 2007-08 on the basis of salary income of the assessee, undermines the entire findings with respect to the inferences drawn and the additions made, indicated above. The question of law urged, therefore, is not substantial and is answered against the revenue.
In view of the above discussion, and by respectfully following the judgement of Hon’ble Jurisdictional High Court in the case of Vivek Agarwal (supra), we are of the considered opinion that addition has been made by the AO solely on the basis of the statements recorded on the electronic evidence found in the shape of WhatsApp image without bringing on record any corroborative material therefore, the same is hereby, deleted. Grounds of appeal Nos. 3 to 7 raised by the assessee are allowed.
Since we have already allowed assessee’s appeal by deleting the additions, legal Ground of appeal No.1 raised by the assessee with respect to the validity of the assessment passed u/s 143(3) as against the correct provision to pass the same u/s 148 became academic and not adjudicated.
In the result, appeal of the assessee is partly allowed.
Now we take cross appeals filed by the assessee and the Revenue in ITA No.645 & 1821/Del/2026 for Assessment Year 2023-24.
ITA No.645 & 1821/Del/2026 [Assessment Year 2023-24]
The revenue has taken following Grounds of Appeal:
1.“That the learned CIT(A) erred in law and on facts in partly confirming the addition of ₹62,38,930, despite the assessment having been framed under section 143(3) after obtaining approval under section 148B, which is wholly without jurisdiction and renders the impugned assessment order invalid and void ab initio.
2.That the Ld. CIT(A) has erred in sustaining the assessment framed under section 143(3) of the Income-tax Act, 1961, without adhering to the binding Guidelines for Compulsory Selection of Returns for Complete Scrutiny for F.Y. 2024-25, which specifically mandate that cases involving survey under section 133A be selected for scrutiny only with the prior administrative approval of the Pr. CIT/Pr. DIT/CIT/DIT concerned.
3.That the Ld. CIT(A) has erred in law in sustaining an assessment order which is not digitally signed, in violation of CBDT Instruction No. 1/2018, mandating digital signature for orders passed through e-Proceedings, rendering the impugned assessment order invalid and unenforceable in law.
4.That the Ld. CIT(A) has erred in law and on facts in sustaining the addition of ₹62,38,930/- on account of alleged profit from short stock and outside wages, despite the fact that no actual shortage of stock existed and the alleged discrepancy arose solely due to non-consideration of raw material lying in silos duly stated in the statement of Mr. Pradeep Bhatt during the survey proceedings. The incurrence of wages and bonus having been inferred merely on the basis of uncorroborated WhatsApp chats, which do not constitute admissible evidence in law, and without appreciating that no separate addition was warranted, renders the impugned addition unsustainable.
5.That the learned CIT(A) erred in law and on facts in sustaining the addition on account of bonus, without appreciating that the bonus amounting to ₹48,50,000/-, forming part of total bonus of ₹63,79,227/-, was paid through banking channels. The assumption of cash payment by the learned AO is without any corroborative evidence and solely based on a WhatsApp chat, which is contrary to the record and unsustainable in law.
6.That the learned CIT(A) has grossly erred in law and on facts in confirming the addition that solely on the basis of WhatsApp chats and a statement recorded during survey proceedings, despite the settled position that such a statement has no evidentiary value. The learned CIT(A) further erred in drawing presumptions in the absence of any reference to, or evidence of, cash payment in the WhatsApp chats and without any independent corroborative material on record.
7.That the appellant craves leave to add, alter, amend or withdraw any of the above grounds at or before the time of hearing.”
On the other hand, the Assessee has raised following grounds of appeal:
1.“That the learned CIT(A) erred in law and on facts in partly confirming the addition of 762,38,930, despite the assessment having been framed under section 143(3) after obtaining approval under section 148B, which is wholly without jurisdiction and renders the impugned assessment order invalid and void ab initio.
2.That the Ld. CIT(A) has erred in sustaining the assessment framed under section 143(3) of the Income-tax Act, 1961, without adhering to the binding Guidelines for Compulsory Selection of Returns for Complete Scrutiny for F.Y. 2024-25, which specifically mandate that cases involving survey under section 133A be selected for scrutiny only with the prior administrative approval of the Pr. CIT/Pr. DIT/CIT/DIT concerned.
3.That the Ld. CIT(A) has erred in law in sustaining an assessment order which is not digitally signed, in violation of CBDT Instruction No. 1/2018, mandating digital signature for orders passed through e-Proceedings, rendering the impugned assessment order invalid and unenforceable in law.
4.That the Ld. CIT(A) has erred in law and on facts in sustaining the addition of Rs. 62,38,930/- on account of alleged profit from short stock and outside wages, despite the fact that no actual shortage of stock existed and the alleged discrepancy arose solely due to non-consideration of raw material merely on the basis of uncorroborated WhatsApp chats, which do not constitute admissible evidence in law, and without appreciating that no separate addition was warranted, renders the impugned addition unsustainable.
5.That the learned CIT(A) erred in law and on facts in sustaining the addition on account of bonus, without appreciating that the bonus amounting to Rs. 48,50,000/-, forming part of total bonus of Rs. 63,79,227/-, was paid through banking channels. The assumption of cash payment by the learned AO is without any corroborative evidence and solely based on a WhatsApp chat, which is contrary to the record and unsustainable in law.
6.That the learned CIT(A) has grossly erred in law and on facts in confirming the addition that solely on the basis of WhatsApp chats and a statement recorded during survey proceedings, despite the settled position that such a statement has no evidentiary value. The learned CIT(A) further erred in drawing presumptions in the absence of any reference to, or evidence of, cash payment in the WhatsApp chats and without any independent corroborative material on record.
7.That the appellant craves leave to add, alter, amend or withdraw any of the above grounds at or before the time of hearing.”
Brief facts of the case are that the assessee is a company and filed its return of income on 11.10.2023, declaring total income of INR 15,94,51,020/-. A survey action u/s 133A was carried out at the premises of Haridwar on 21.02.2023 wherein stock was physically verified and quantified by the survey authorities and it was found short by INR 7,33,12,930/-. The assessee explained that the stock was lying in Silos was not verified and quantified by the survey team which has resulted into the shortage. However, this explanation was not accepted by the AO and made the addition of the same. Besides this, based on the WhatsApp images found from the mobile phone of Shri Pankaj Singh, the AO alleged that the assessee has made cash payment of salary and bonus of INR 68,99,000/- and INR 48,50,000/-respectively, and accordingly, held the same as unexplained expenditure u/s 69C of the Act and made the addition of INR 1,17,49,000/- and also invoked the provisions of section 115BBE of the Act on the same.
Aggrieved by the said order, the assessee filed appeal before Ld.CIT(A) who vide impugned order dated 12.12.2025 has partly allowed the appeal of the assessee wherein the addition on account on account of shortage of stock was though confirmed however, the Ld. CIT(A) has applied G.P rate on the same and confirmed the profit of INR 62,38,930/-. Regarding the addition of cash salary expenditure of INR 1,17,49,000/- made by the AO, the AO has restricted the said addition to INR 99,04,726/- by holding that the same is related the assessee only and the balance addition was held as related to other firms of the Group.
Aggrieved by the order of Ld. CIT(A), the assessee and the Revenue filed cross-appeal before the Tribunal by taking various Grounds of appeal mentioned in the appeal memo.
Ground of appeal Nos. 1 to 3 raised by the assessee are not pressed hence, dismissed
Ground of appeal No. 4 of the assessee and Ground of appeal Nos. 1 to 4 and 7 to 9 of the Revenue are with respect to the confirmation of the addition of INR 62,38,930/- made on the alleged profit on shortage of stock found during the course of survey.
Before us, Ld. AR for the assessee submits that AO has made the addition of INR 7,33,12,930/- on account of shortage of stock however, Ld. PCIT has treated such shortage of stock as undisclosed sales and applied G.P. rate @ 8.51 % resulting into the confirmation of addition of INR 62,38,930/-. Ld.AR submits that the assessee is engaged in the business of manufacturing and supplying of multi-layer polythene films and flexible packaging products and the assessee has regularly maintained day to inventory which comprises of details of items, item codes, item names, units, quantities thereof and also approximate value and all the stock records were produced before the survey authorities during the course of survey. The survey authorities have physically quantified the stock and value the same at INR 14,00,00,688/- as against the stock as per the books of accounts of INR 21,33,13,618/- and treated the difference of INR 7,33,12,930/- as shortage of stock. During the course of survey when the stock inventory was in progress, it was informed to the survey team by factory Supervisor Shri Pradeep Kumar Bhat, present at the time of survey that stock lying in silos remained to be verified and was not considered in the gross value of stock verified and quantified by the departmental authorities. For this, Ld.AR drew our attention to the reply to Question No.10 of the statements of Shri Pradeep Kumar Bhat recorded during the survey, wherein he specifically stated this fact that raw material as per books of accounts includes the raw material kept in Silos which was considered. The assessee thereafter, filed detailed reconciliation of the stock as per books and as quantified by the survey team before the lower authorities alongwith the records and however, that has not been appreciated and the AO arbitrary confirmed the difference between the stock physically quantified by the survey authorities as short stock and made the addition. Ld. AR submits that Ld. CIT(A) also failed to appreciate the contention of the assessee and observed that if the survey team has not counted the stock in silos then it was the duty of the assessee to inform the team at the time of survey to verify the same. Moreover, Ld. CIT(A) further doubted the quantitative records on the basis of consumption of output ratio. While observing so ld. CIT(A) has ignored the fact that as stated above, at the time of survey factory supervisor brought this fact to their knowledge but no action was taken by the survey team. Ld. CIT(A) however, held the said shortage of stock as bogus sales and applied the gross profit and upheld the addition to this extent only and deleted the remaining addition.
Ld. AR finally submits that the assessee since beginning of the proceedings, stated that raw material stored in silos was neither verified nor quantified which fact was never appreciated by the authorities below. If the raw material stored in silos was taken into consideration and there was no shortage of stocks and therefore, he requested for the deletion of the addition.
Ld. CIT DR for the Revenue vehemently supported the orders of the lower authorities and submits that once the stock was found short at the time of survey and the stock inventory was taken in the presence of employees of the assessee it is wrong to claim now that some stock was remained to be verified/quantified. Ld. CIT DR further submits that survey team was very much fair in quantifying the stock which is evident from the fact the they have quantified the stock in progress in the machines and therefore, claiming that stock in silos was not taken into consideration could not be accepted. As per ld. CIT DR the stock taken by survey team was correct. Ld. CIT DR further submits that the ld. CIT(A) has made an error of making the addition of profit on such short stock only despite of the fact that the stock was found short. He therefore, requested for the confirmation of the additions made by the AO.
Heard the contentions of both the parties at length and perused the material available on record. The inventory sheets so prepared during the course of survey are placed at pages 34 to 87 of the Paper Book. It is observed that Annexure S-3 contained total value of raw material of INR 14,00,00,688/- dated 23.03.2022 quantified. Further from the perusal of the inventory sheets, it is observed that entire exercise of physical verification and quantification of raw material as available in the plant at Haridwar was carried out on 21.02.2023. As per the list, total 98 + 17 different items of plastic granules having gross weight of more than 9,20,000 KGs kept in more than 3200 bags was physically verified and quantified in few hours on a single day. Besides this, as per page 37 of Paper Book, work-in-progress of raw material available in machines was quantified at INR 1,36,99,070/-. It is further observed that stock inventory position as per books of accounts, submitted by the assessee to the survey team available at page 25 to 33 where at page 29, details of work-in-progress as on 22.02.2023 was supplied by the assessee which is the same sheet which was stated to have been prepared by the survey team after physically verify and quantified by the survey team, available at page 37 of the Paper Book. It appears that no actual exercise physical of physical verification was carried out to quantify the work-in-progress available in machines. The other sheets contained the stock of furnished goods which was quantified on 22.02.2023. From the perusal of these stock sheets running from pages 34 to 87 of the Paper Book, it is observed that more than 1650 items of furnished goods contained in different packing such as bag, rolls etc. were not only counted but quantified on a single day which appears to be an impossible task. It is further observed that statement of Shri P.K. Bhat, AGM (Commercial) of the assessee company who was presented during the course of survey were recorded. In the said statement, he has described the process of manufacturing in reply to Question No.7. Further, in reply to Question No.10, where he was confronted with the difference in raw material as per books and as per physical verification, Shri P.K. Bhat has clearly replied that stock available in silos perhaps has not been quantified. The relevant question as and answers are reproduced herein below:-
It is further observed from the statement that after the reply of Q. No. 10, no further question was raised with respect to the stock to Shri P.K. Bhat. The assessee thereafter, submitted the stock re-conciliation statements which are available at page 96 of PB and onwards and page 100 contained the details of the stock available in the silos which was not quantified. Besides this assessee also filed the photographs of Silos to support the contention that they were physically installed and no quantity was measured which was available in the same which is evident from the inventory sheet prepared by the survey team. Had such goods was quantified, there was no shortage of stock. The assessee also filed copies of purchase bills of raw material and kept in Silos which were produced before the authorities below however, no effort was made by the AO below to verify the contentions of the assessee. The assessee also filed details of stock available in each Silos which are placed at page 192 to 223 of the Paper Book.
All these facts established that during the course of survey, survey team had physically verified and quantified the stock available in a very casual manner where the stock inventory as per the books of accounts was taken from the assessee and made basis for computing the stock as per physical verification. This is support from the fact that items available thousands in numbers were verified and counted in few hours on 21.02.2023 when physical verification of stock was carried out. Further, on the same day, thousands of items of finished goods were also physically verified and quantified as could be seen from the perusal of the inventory sheet placed at page 34 to 87 of PB. It appears that print out of the assessee’s stock inventory was taken and made part of the inventory physically verified where the raw material available in Silos was ignored.
It is further observed that Shri P. K. Bhat in his statement recorded during the course of survey, in its reply to Question 10 has stated that the stock lying in Silos was probably not verified and quantified by the survey authorities however, no further action was taken despite of this serious objection raised by the person in-charge available at the time of survey on behalf of assessee by the Survey authorities. We further observed that Ld. CIT(A) while upholding the addition has observed that the assessee has not pointed out the fact of stock lying in Silos to the survey authorities which in the light of statements of Shri P.K. Bhat as reproduced above, are patently incorrect and thus excluded.
With regard to the observations of Ld. CIT(A) that assessee has not produced the consumption to output ratio, in our considered opinion, there is no any requirement under any of the provisions of Act to maintain such types of details whereas the assessee has maintained day to day stock inventory of raw material, work in progress and finished goods which has not been doubted.
In view of the above discussion and considering the material available on record and further looking to the fact that stock lying in Silos was not physically verified and quantified though this fact was brought to the notice of the survey authorities during the course of survey itself, we are of the view that entire exercise of physical verification of stock available by the survey authorities suffers from serious errors and omission where no effort was made to quantify the stock of raw material lying in the Silos and if the same was taken into consideration, there would be no shortage of stock. Accordingly, we hold that there was no shortage of stock when the survey was carried out u/s 133A of the Act at the business premises of the assessee therefore, the addition upheld by Ld. CIT(A) by applying G.P. rate on such alleged short stock as bogus sales is hereby, deleted. Thus, the Ground of appeal No. 4 of the assessee is allowed and Grounds of appeal Nos. 1 to 4 and 7 to 9 of the Revenue are dismissed.
Now coming to the Grounds of appeal Nos. 5 & 6 of the Revenue and of the assessee are with respect to the additions of INR 99,04,726/- confirmed by Ld. CIT(A) out of total addition of INR 1,17,49,000/- made by AO (though no separate addition was confirmed by Ld. CIT(A) by allowing the benefit of telescoping ).
Identical issue was come up before us for consideration in assessee’s appeal in AY 2022-23 in ITA No.644/Del/2026 wherein based on the same WhatsApp images found from the mobile phone of Shri Pankaj Singh, an employee of assessee company, addition was made for alleged unexplained cash payment of salary and bonus. While deciding the aforesaid appeal of the assessee in ITA No. 644/Del/2026, we have hold that WhatsApp images found solely cannot be made the sole basis for making addition without bringing on record any corroborative material more particularly when the expenses recorded in the books of account towards salary and bonus are much more than the alleged amounts noted in the WhatsApp images and deleted the additions made.
Since the facts are identical and the additions are made based on same WhatsApp images and the statement of Shri Pankaj Singh, therefore, by following the observations made therein which are mutatis mutandis applicable to the fact of present case also, we delete the additions made on this account. Accordingly, the grounds of appeal Nos. 5 & 6 of the assessee are allowed and of the revenue are dismissed.
In the result, appeal of the assessee is partly allowed and appeal of the Revenue is dismissed.
In the final result, appeal of the assessee in ITA No.644 & 645/Del/2026 for Assessment Year 2022-23 and 2023-24 respectively, are partly allowed and appeal of the Revenue in ITA No.1821/Del/2026 for Assessment Year 2023-24 is dismissed.