WhatsApp Chat Between Buyer’s Son and Accountant Has No Evidentiary Value Without 65B Certificate: ITAT deletes S.69A Addition [Read Order]

The Mumbai Bench of the Income Tax Appellate Tribunal, held that an unverified WhatsApp chat recovered from a third party could not form the basis of an addition under Section 69A of the Income Tax Act, 1961.

The case concerned Niru Dhiren Shah, whose premises were searched under Section 132 of the Income Tax Act, 1961. For Assessment Year 2022-23, she declared an income of ₹30,50,500, but the Assessing Officer (AO) completed the assessment under Section 143(3) at ₹3,47,15,985.

The major dispute arose from an addition of ₹3,16,65,485, which the AO alleged represented unaccounted cash received by the assessee over and above the registered sale consideration of ₹3,38,59,224 for a shop in Pune.

This addition stemmed solely from a WhatsApp chat found during a search on the purchaser’s son, containing an Excel screenshot of rough calculations purporting to show a higher market value for the shop. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, and the Revenue challenged that deletion.

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Represented by Leyaqat Ali Aafaqui, the Revenue argued that the WhatsApp chat constituted digital evidence recovered under Section 132, and that it corresponded with market rate data available on the official website of the Department of Registration and Stamps, Government of Maharashtra. The Revenue contended that the AO had rightly applied the test of human probabilities, asserting that the significant difference between the registered value and the alleged market value indicated a cash component.

The assessee, represented by Dr. K. Shivaram and Neelam Jadhav, argued that the chat did not contain her name or any reference identifying the property sold. It was submitted that the communication was strictly between the buyer’s son and his accountant, making it a third-party exchange with no evidentiary value. The assessee emphasised that the screenshot lacked authentication, was not supported by a certificate under Section 65B of the Indian Evidence Act, 1872, and therefore could not be treated as admissible evidence.

The Bench comprising Narender Kumar Choudhry, Judicial Member and Prabhash Shankar, Accountant Member, observed that the WhatsApp screenshot was an unauthenticated rough working that did not bear any signature or verification from any authority.

The Tribunal held that the WhatsApp chat was merely a private exchange between the purchaser’s son and his accountant and did not mention the assessee or the specific shop sold. No corroborative evidence of any cash payment was found during the search on the assessee.

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The Tribunal noted that the AO did not produce any comparable sale instances from the same locality to support his adopted market rate, nor did he investigate with the Registration Department to ascertain actual transaction rates. Subsequently, the market value adopted by the AO was at odds with the official stamp duty valuation, which he brushed aside without demonstrating any defect in it.

Furthermore, the AO had not established compliance with Section 65B of the Evidence Act, which is mandatory for the admission of electronic records. The Court affirmed that without such certification, the screenshot could not be treated as valid evidence for making an addition under Section 69A.

Therefore, the Tribunal upheld the order of the CIT(A) and deleted the addition of Rs. 3,16,65,485.

The appeal of the Revenue was accordingly dismissed.

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