Whatsapp Chats Revealed Transactions of ₹1 Crore: Rajasthan HC Upholds Income Tax Proceedings [Read Order]

In a significant ruling, the Rajasthan High Court upheld the legitimacy of transactions of ₹1 Crore, unearthed on the basis of Whatsapp chats against which proceedings under Section 153C of the Income Tax Act, 1961 were sought to be conducted.

The decision was given by the Rajasthan High Court while adjudicating a Division Bench Writ Petition filed by Giriraj Pugalia against the Assistant Commissioner Of Income Tax, Circle-1, Income Tax Department, Bikaner seeking a quashal of the impugned order and subsequent proceedings initiated by the Revenue.

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The factual matrix follows a search and seizure action by the Investigation Directorate, Jaipur, on the Om Kothari Group on July 13, 2020. During the raid, WhatsApp chats between the Group’s directors and associates surfaced, indicating that Pugalia had purchased plots and rendered payment of ₹48 lakh and ₹52 lakh towards the purchase from Om Metal Infotech Private Limited (Om Petal).

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Contending that the transactional amounts were unaccounted for, the Income Tax Department issued a notice under Section 153C on June 16, 2023, requiring Pugalia to file returns for the Assessment Year (A.Y.) 2019-20, despite him having previously declared an income of ₹41.89 lakh for the said A.Y.

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Upon express request by the Petitioner, the Revenue issued a satisfaction note through which it was inferred that the Petitioner had conducted business with Om Petal, paying in cash, none of which were recorded in the books of accounts, barring incriminating chats on Whatsapp.

Aditya Vijay and Pankaj Arora appearing for the Petitioner contended that the jurisprudence of Section 153C requires strict compliance, and has a mandates that the alleged dereliction shall arise out of the books of account or the documents or assets seized, and thus may not be inferred on the basis of WhatsApp chats.

On such basis, it was contended that the Petitioner could not be deemed to be ‘other person’ to operate Section 153C of the Act.

Meanwhile, K.K. Bissa appeared for the Revenue.

The Division Bench of Justice Pushpendra Singh Bhati and Justice Chandra Prakash Shrimali noted that the chats were specific, mentioning plot numbers, dates, and amounts, and were corroborated by digital evidence and employee testimonies deciphering coded entries like "1 File" (₹1 lakh) and "1 Pcs" (100 gm gold).

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After examining the material and the legal framework, the Rajasthan High Court held that digital evidence like WhatsApp chats, when corroborated by seized documents and other tangible evidence, falls within the ambit of "documents" under Section 153C and thus proceeded to dismiss the Petition, after the finding the case to be satisfy the requirements to initiate proceedings under Section 153C of the Income Tax Act, 1961.

To Read the full text of the Order CLICK HERE

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