ITAT Ahmedabad Strikes Down On-Money Addition Derived Solely from Third-Party WhatsApp Chat
Background and Context
A set of three Revenue appeals, along with corresponding cross objections filed by the assessees, came before the Income Tax Appellate Tribunal (ITAT), Ahmedabad, arising from separate orders of the CIT(A)-12, Ahmedabad, under the National Faceless Appeal Centre (NFAC), Delhi. All impugned orders were dated 27.03.2025 and pertained to Assessment Year 2018-19. The cross objections were withdrawn at the outset and were accordingly dismissed as not pressed.
The core question that bound all three appeals together was identical: whether an addition towards alleged receipt of unaccounted "on-money" from a land sale could be sustained solely on the basis of a WhatsApp chat message discovered during a search conducted on an entirely unrelated third party.
The Transaction and the Incriminating Material
The Underlying Sale
In the lead case — ACIT Vs Ashokkumar Babulal Bambharoliya — the assessee, together with five co-owners, executed a registered sale of a land parcel measuring 9,611 sq. metres bearing Survey No. 241/1, TP Scheme No. 241, Nana Chiloda, Gandhinagar, in favour of M/s Shivam Associates for a total consideration of Rs. 1,65,00,000/- on 21.09.2017.
The Search and the WhatsApp Chat
A search operation was carried out under Section 132 of the Income Tax Act, 1961 on 15.10.2019 in the case of one Mr. Vijay K. Manghrani. During this search, a WhatsApp chat dated 14.09.2018 was extracted from Mr. Manghrani's mobile device. The Revenue interpreted this chat as reflecting a prevailing market rate of Rs. 22,500 per sq. yard for land situated in TP Scheme No. 241 during F.Y. 2018-19.
The Assessing Officer (AO) contrasted this with the documented sale rate of approximately Rs. 1,435.40 per sq. yard at which the assessee and co-owners had sold the land in F.Y. 2017-18. On this basis, the AO concluded that the actual consideration ought to have been Rs. 25,86,37,500/- rather than the registered Rs. 1,65,00,000/-. The differential of Rs. 24,21,37,500/- was treated as unaccounted cash received by the six co-owners in proportion to their respective ownership shares, resulting in an addition of Rs. 6,05,84,375/- in the hands of the assessee as undisclosed income under Section 153C of the Act.
The AO further relied upon the fact that the WhatsApp chat backup had been prepared in the presence of witnesses and a technical expert who had certified it under Section 65B of the Evidence Act, and treated the chat as constituting cogent evidence.
Proceedings Before the CIT(A)
Deletion of the Addition
The assessee challenged the AO's order before the CIT(A)-12, Ahmedabad / NFAC, Delhi, and succeeded in obtaining complete deletion of the addition. The CIT(A) examined the factual matrix carefully and identified multiple fatal weaknesses in the Revenue's case:
Absence of any nexus between the assessee and Mr. Manghrani — the Revenue had not established any relationship whatsoever between the two.
Mr. Manghrani was never questioned about the chat — not a single question concerning the WhatsApp message had been put to him during his statement recorded at the time of the search conducted on him.
Temporal disconnect — the WhatsApp chat was dated 14.09.2018, nearly a full year after the sale transaction that had been completed on 21.09.2017. No rational basis existed to link a post-dated message to a concluded transaction.