ITAT Mumbai Quashes Section 69A Addition: Uncorroborated WhatsApp Chats Lack Evidentiary Value Without Section 65B Certification

In the contemporary era of digital communication, the reliance of tax authorities on electronic evidence, particularly instant messaging platforms, has become a subject of intense judicial scrutiny. A recent and highly significant ruling by the Income Tax Appellate Tribunal (ITAT), Mumbai, in the case of DCIT Vs Niru Dhiren Shah, has provided critical clarity on this front. The Tribunal categorically ruled that WhatsApp chats recovered from third parties, devoid of corroborative material and lacking the mandatory certification under Section 65B of the Indian Evidence Act 1872, cannot form the sole basis for making substantial additions under Section 69A of the Income-tax Act 1961.

The Revenue had preferred an appeal against the order of the Commissioner of Income-tax (Appeals)-50, Mumbai, dated 11.04.2025, which had deleted a massive addition of Rs. 3,16,65,485/-. This addition was originally framed by the Assessing Officer (AO) for the Assessment Year (A.Y.) 2022-23 based on screenshots of an Excel sheet shared via WhatsApp between two third parties. The ITAT's order, pronounced on 27/10/2025, serves as a vital precedent emphasizing that tax assessments must be anchored in concrete evidence rather than conjectures, surmises, or unauthenticated digital forwards.

Factual Matrix: Search, Seizure, and Property Transaction

The Genesis of the Dispute

The factual background of the case stems from a search and seizure operation conducted under Section 132 of the Income-tax Act 1961 on 27.10.2021. The search covered the premises of the assessee as well as M/s Amhara Construction Pvt. Ltd. Subsequently, the assessee's case was centralized and taken up for scrutiny.

For the A.Y. 2022-23, the assessee had filed a return declaring a total income of Rs. 30,50,500/-. However, the assessment completed under Section 143(3) determined the total income at Rs. 3,47,15,985/-, incorporating a singular addition of Rs. 3,16,65,485/-.

Simultaneous to the search on the assessee, the investigation wing also conducted a search under Section 132 at the residential premises of one Shri Rounak Kumar in Pune. During this parallel operation, the authorities discovered a registered sale deed dated 28.09.2021. This document pertained to the sale of Shop No. 5, Sarita Taran Cooperative Housing Society, Shivaji Nagar, Pune. The sellers were identified as Smt. Neeru Shah (the assessee) and Shri Nikhil Dhiren Shah, while the purchaser was Shri Rakesh Kumar (father of Shri Rounak Kumar).

The Assessing Officer's Computations

The registered sale deed explicitly recorded the sale consideration at Rs. 3,38,59,224/-. The stamp duty value, as per Index II, was lower, standing at Rs. 2,56,17,339/-.

The controversy ignited when the search team extracted a WhatsApp chat from the mobile phone of Shri Rounak Kumar. The conversation was between him and his accountant, Shri Prashant Somnath. The chat contained a screenshot of an Excel sheet that listed various properties along with parameters such as area, rate, and estimated market value.