Addition Under Section 69A Deleted as WhatsApp Chats Lacked Proof | ITAT

Case Details: Deputy Commissioner of Income-tax vs. Niru Dhiren Shah - [2025] 180 taxmann.com 370 (Mumbai-Trib.)

Judiciary and Counsel Details

• Narender Kumar Choudhry, Judicial Member & Prabhash Shankar, Accountant Member
• Leyaqat Ali Aafaqui, Sr. AR for the Appellant.
• Dr K. Shivaram, Sr. Adv. & Ms Neelam Jadhav, Adv. for the Respondent.

Facts of the Case

The assessee sold a shop for Rs. 3.38 crores. During the search conducted at the premises of the purchaser’s son, a WhatsApp chat between the purchaser’s son and his accountant was found. The chat contained a screenshot of an Excel sheet, wherein entries such as area, rate, and market value of certain properties were recorded.

Upon reviewing the Department of Registration and Stamps, Government of Maharashtra’s website, the Assessing Officer (AO) noted that the rate of shops in the adjacent area was Rs. 4,40,680 per square meter. Applying this rate, the AO computed the market value of the shop sold by the assessee to be Rs. 6.55 crores. He concluded that the difference amount of Rs. 3.16 crores represented unaccounted cash receipts from the sale of this shop.

Aggrieved-assessee preferred an appeal to the CIT(A), and the CIT(A) deleted the additions. Aggrieved AO filed the instant appeal before the Tribunal.

ITAT Held

The Tribunal held that the AO had not brought on record any comparable case of the said locality to ascertain the actual transaction rates. The market rate adopted by the AO was contrary to the Stamp Duty rate, which is the government-fixed rate of the property under consideration. Moreover, no investigation was made with the Stamp Duty authorities in this regard.

The AO placed considerable reliance on the digital evidence, specifically the chats. However, the order was completely silent on whether the requirements of section 65B of the Indian Evidence Act, 1872, have been satisfied. Mere screenshots or forwarded chats have no evidentiary value since they are susceptible to tampering or fabrication.

Unless the source device is produced or a section 65B certificate is produced, such chats cannot be relied upon. The WhatsApp chat was nothing more than rough working communication between the buyer’s son and his accountant. It did not specifically mention either the name of the assessee or even the impugned property transaction. The Department searched the assessee. However, no corroborative evidence of receipt of any cash over and above the disclosed amount was brought on record by the AO.

In view of the above, the addition made by the AO was based more on conjectures and surmises rather than on concrete evidence. Therefore, the Tribunal did not find any infirmity in the appellate order deleting the addition made.

List of Cases Referred to

• ACIT v. Designers point [ITA No 2517 (Delhi) of 2022, dated 6-9-2023] (para 4.1)
• Sumati Dayal v. CIT [1995] 80 Taxman 89 (SC)/[1995] 214 ITR 801 (SC) (para 5)
• CIT v. Durga Prasad More [1971] 82 ITR 540 (SC) (para 5)
• Arjun Panditrao Khotkar v. Kailash Kushanrau Gorantyal [2020] 7 SCC 1 (para 5).