ITO Vs Deepika Sanjay Patil (ITAT Mumbai)
WhatsApp Whispers Cannot Prove ₹81.40-Lakh On-Money: Uncertified Third-Party Chats & Uncross-Examined Statement Fail Section 69 Test
Facts of the Case
The assessee, Ms. Deepika Sanjay Patil, filed her return for AY 2022-23 on 30.07.2022, declaring total income of ₹25,59,290.
Her return was selected for scrutiny under CASS based on information suggesting that she had made an unaccounted cash payment of ₹81.40 lakh while purchasing a flat in Tower-1 of the Transcon Triumph Project, Andheri, Mumbai, developed by Transcon Developers Pvt. Ltd.
The information originated from a search conducted on the developer on 23.09.2021. During the search, the Department recorded a statement u/s 132(4) of Mr. Vishal Suresh Makhija, General Manager (Sales) of Transcon Developers Pvt. Ltd.
Mr. Makhija stated that the assessee & Mr. Laksh Rastogi had agreed to purchase Flat No. A-2502 for an agreement value of ₹2.21 crore, whereas the actual deal value was allegedly ₹3,02,40,000. The difference of ₹81.40 lakh was alleged to have been paid in cash.
WhatsApp Chats Relied Upon by the AO
The allegation was also based on WhatsApp chats dated 28.06.2021 & 29.06.2021 between two employees of the developer.
One of the relevant contact numbers belonged to Mr. Lalit Birla, an accountant working at the developer’s head office. The conversations allegedly referred to collection of cash of ₹81.40 lakh in connection with the flat purchased by Mr. Laksh Rastogi.
The chats further indicated that, out of this alleged amount, ₹50 lakh was transferred to Rajani Developers Pvt. Ltd. & ₹31.40 lakh was given to Mr. Rishi Todi, a director of Transcon Developers Pvt. Ltd.
Based on the statement & chats, the AO issued a show-cause notice proposing to treat ₹81.40 lakh as unexplained cash investment.
Assessee’s Explanation
The assessee disputed the evidentiary value of the WhatsApp chats. She argued that these were private communications between two employees of a third party & that neither participant was acting on her behalf.
No document was found from her possession acknowledging payment of cash. There was also no receipt, cash trail, bank withdrawal, confirmation by the assessee, seized material bearing her signature or other independent evidence linking her to the alleged payment.
The assessee further objected that the statement relied upon by the AO had not been furnished to her & no opportunity to cross-examine the maker of that statement had been granted.
The AO nevertheless required the assessee to produce confirmation from the developer stating that no cash had been paid. Since she could not furnish such negative confirmation, the AO treated ₹81.40 lakh as unexplained investment u/s 69.
CIT(A) Deletes the Addition
Before the CIT(A)/NFAC, the assessee reiterated that the addition rested entirely upon uncorroborated third-party material.
The CIT(A), after considering the explanation & decisions of Coordinate Benches on similar additions involving the same developer, held that the evidence was insufficient to establish payment of on-money.
The addition of ₹81.40 lakh was deleted.
The Revenue challenged the deletion before the ITAT. It argued that the statement recorded u/s 132(4), the WhatsApp conversations & the assessee’s failure to produce confirmation from the developer collectively justified the addition.
Third-Party Material Required Corroboration
The Tribunal observed that the addition had been made solely on the basis of:
- a statement by the developer’s employee;
- WhatsApp chats between two other employees; &
- the assessee’s inability to obtain a confirmation denying cash payment.
There was no corroborative material directly showing that the assessee had paid ₹81.40 lakh in cash.
The ITAT followed Amit Shantaram Bagade v. ITO, ITA Nos. 832 & 6286/Mum/2025, wherein a similar on-money addition was deleted because the Revenue had failed to produce independent corroborative evidence.
Reliance was also placed on decisions including Anil Jaggi v. ACIT [2018] 89 taxmann.com 266, Ramesh Kumar Puraji Jain v. DCIT, Naresh Bhavanji Cheeda v. ACIT, Shivaji Tukaram Pawale v. ITO & Mafatlal Mangilal Kothari v. ACIT.
These decisions reiterate that Excel sheets, electronic records or statements found during a third-party search do not automatically establish undisclosed investment by another taxpayer. The AO must prove a direct nexus through credible supporting evidence.
Digital Evidence Lacked Section 65B Certificate
The Tribunal additionally observed that the WhatsApp data was unauthenticated & was not accompanied by a certificate u/s 65B of the Indian Evidence Act, 1872.
Relying upon the Supreme Court’s decision in Anvar P.V. v. P.K. Basheer [(2014) 10 SCC 473], the ITAT held that the necessary certificate was required for admissibility of electronic evidence.
The absence of authentication further weakened the Revenue’s reliance upon the chats.
ITAT’s Decision
The Tribunal held that the AO had failed to discharge the burden of proving that the assessee paid on-money of ₹81.40 lakh.
Uncorroborated third-party statements, unauthenticated WhatsApp chats & denial of cross-examination could not sustain the addition u/s 69.
Finding no infirmity in the CIT(A)’s order, the ITAT upheld the deletion of ₹81.40 lakh & dismissed the Revenue’s appeal.
Authors’ Comments
The decision does not declare WhatsApp chats inherently worthless. It holds that digital conversations between strangers to the assessee require authentication, context & independent corroboration before creating a tax liability.
The AO also effectively required the assessee to prove a negative by obtaining the developer’s confirmation that no cash was paid. The primary burden to establish unaccounted investment remained with the Revenue.
The decisive weakness was not merely the absence of a section 65B certificate. It was the complete absence of a reliable money trail, seized document, acknowledgment or cross-examined testimony connecting the assessee to the alleged cash.
A developer’s internal chat may trigger investigation—but without corroboration, it cannot finish the assessment.
Cases Discussed
- Amit Shantaram Bagade v. ITO, ITA Nos. 832/Mum/2025 and 6286/Mum/2025 (Mumbai ITAT).
- Anil Jaggi v. ACIT, [2018] 89 taxmann.com 266 (Mumbai ITAT).
- Heena Dashrath Jangi Aani v. ITO, ITA No. 467/PUM/2026 (Pune ITAT).
- Ramesh Kumar Puraji Jain v. Deputy Commissioner of Income Tax, ITA Nos. 8519/MUM/2025 and 8520/MUM/2025 (Mumbai ITAT).
- Naresh Bhavanji Cheeda v. Assistant Commissioner of Income Tax, ITA No. 2607/MUM/2024 and DCIT v. Naresh Bhavanji Cheeda, ITA No. 2999/MUM/2024 (Mumbai ITAT).
- Shivaji Tukaram Pawale v. Income Tax Officer Ward, ITA No. 2526/MUM/2026 (Mumbai ITAT).
- Mafatlal Mangilal Kothari v. ACIT, ITA Nos. 5894/5895/5896/5897/Mum/2025 (Mumbai ITAT).
- Anvar P.V. v. P.K. Basheer, (2014) 10 SCC 473.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. This appeal has been filed by the Revenue against the order passed under section 250 of the Income-tax Act, 1961 (in short, “the Act”), dated 13 December 2025, for the assessment year 2022-23, arising out of the assessment order passed under section 143(3) read with section 144B of the Act, dated 4th March 2024.
2. The Revenue has raised the following grounds of appeal before us:
(1) “On facts and circumstances of the case and in law, the learned CIT(A) erred in deleting the addition of Rs.81,40,000/- made by the AO under section 69 of the Income-tax Act, 1961, without considering that during assessment proceedings the assessee could not offer reasonable explanation alongwith documentary evidences with regard to the cash payment made for the purchase of immovable property.”
(2)”On the facts and circumstances of the case and in law, the learned CIT(A) erred in not considering that, during the search proceedings at Trascon Developers Private Limited, the General Manager (Sales) of Trascon Developers Private Limited had accepted that cash payment amounting to ₹81,40,000/- was made by the assessee during the purchase of the said property.
(3) “The appellant craves leave to add, alter, amend and/or vary the grounds of appeal and/or relief sought at any time before the decision of the appeal.”
3. The brief relevant facts of the case, that the Assessee is an individual who filed her return of income for the assessment year 2022-2023 on 30th July 2022, declaring total income of Rs. 25,59,290/-. The return of income of the Assessee was selected for scrutiny assessment under the CASS for the reason that she made cash payment of Rs. 81.40 lac for purchase of immovable property at Tower-1, Transcon Triumph Project, Andheri, Mumbai from Transcon Developers Pvt Ltd.
4. The Assessing Officer was having information about the aforesaid transaction pursuant to the search proceedings conducted at Transcon Developers Private Limited on 23.09.2021. During the search proceedings, the General Manager (Sales), Mr. Vishal Suresh Makhija, M/s Transcon Developers Private Limited, stated in the statement under section 132(4) of the Act, dated 29th September, 2021, that the Assessee, namely, Deepika Sanjay Patil and Laksh Rastogi had entered into a deal for purchase of Flat No. A-2502, Tower-1, Transcon Triumph Project, Andheri, Mumbai for an agreement amount of ₹2,21,00,000/- against the deal value of ₹3,02,40,000/-, finding difference of ₹81,40,000/- has been paid in cash to the developer.
5. The admission of Mr. Vishal Suresh Makhija came after investigation of WhatsApp chats dated 28.06.2021 and 29.06.2021 with contact number 7738831809. The said contact mobile number belongs to Shri Lalit Birla, Accountant at the head office, of searched person. The chat between the two employees of Transcon Developers Private Limited contained discussion regarding Rs. 81.40 lac cash collected from sale of the flat to Mr. Laksh Rastogi for Flat No. A-2502, Tower-1, Transcon Triumph Project, Andheri, Mumbai. Out of that an amount, Rs. 50,00,000/- was given to Rajani Developers Private Limited and Rs.31.40 lac to Rishi Todi, Director, Transcon Developers Private Limited.
6. The Assessing Officer issued a show-cause notice dated 19th February 2024 proposing an addition on account of variation in the purchase consideration and stated deal value to the tune of Rs. 81.40 lac. Assessee, in response thereto, challenged the evidentiary value of the WhatsApp chat between two employees Mr. Vishal Makhija and Birla Ji, particularly in absence of any corroborative material. The Assessing Officer observed that since, assessee failed to provide documentary evidence, being confirmation from Transcon Developers Pvt Limited regarding non-payment of cash to the tune of Rs. 81.40 lac for the flat purchased by her. Therefore, on the premise of statement of Mr. Vishal Makhija and whatsapp chat, he made an addition of Rs. 81.40 lac under section 69 of the Act for non furnishing of an explanation for source of cash investment.
7. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the Learned Commissioner of Income-tax (Appeals) and contested therein that the addition of Rs. 81.40 lac was purely based on the WhatsApp chat between two employees of the searched person, without there being any corroborative evidence to substantiate the alleged cash transaction between the assessee and the searched company. She further Relied upon the judgments of the Co ordinate Benches, ITAT, Mumbai. The learned Commissioner of Income-tax (Appeals) NFAC, considering the reply and reliance on judgments, deleted the addition of Rs. 81.40 lac made under section 69 of the Act, consequently, granted relief to the assessee.
8. The Revenue, being aggrieved by the order of the Learned Commissioner of Income-tax (Appeals), is in appeal before the Tribunal. The Ld. Departmental Representative, relied upon the order of the Assessing Officer and contended that the addition under section 69 of the Act of ₹81.40 lac was on basis of statement u/s 132(4) of the Act, exchange of whatsapp chat containing information of cash payment by assessee and failure of furnishing of confirmation for non cash payment by her, thus, addition was justified. The learned Commissioner of Income Tax (Appeals) has incorrectly deleted that addition of Rs. 81.40 lac. Therefore, the order of the Ld. Commissioner of Income-tax (Appeals) is liable to be reversed and the assessment order may be restored.
9. Per contra, the Ld. Authorised Representative of the Assessee strongly contended that no addition can be made for cash-on-money payment on the basis of material found at a third party or merely on the basis of a statement recorded without any corroborative evidence, A.O. also failed to prove the evidentiary value of the whatsapp chat between two employees of Transcon Developers Pvt Limited. Our attention is also invited towards the fact of the case that herein an addition of ₹81.40 lac was purely based on the statement of a third party and WhatsApp chat between two employees of searched person, further, neither the statement was shared to assessee nor provided any cross examination.
10. He relied upon the order of the Co-ordinate Bench of the Tribunal Bench, ITAT Mumbai, of Amit Shanta Ram Bagade vs. ITO, ITA Nos. 832/Mum/2025 and 6286/Mum/2025, (Mumbai ITAT), wherein its held that:
“Para 23. In the light of the foregoing discussions and in the entirety of the facts and circumstances of the case, in absence of any corroborative evidence on record that assessee has paid on-money of ₹62,00,000 in cash to the City Corporation Limited, addition so made is hereby directed to be deleted.”
11. The Ld. Authorised Representative also relied upon the following orders:
- Anil Jaggi vs. ACIT, 89 taxmann.com 266, (Mumbai ITAT),
- Heena Dashrath Jangi Aani vs. ITO, ITA No. 467/PUM/2026, (Pune ITAT),
- Ramesh Kumar Puraji Jain vs. Deputy Commissioner of Income Tax, ITA No.8519/MUM/2025, and ITA No.8520/MUM/2025 (Mumbai ITAT),
- Naresh Bhavanji Cheeda vs. Assistant Commissioner of Income Tax, ITA No.2607/MUM/2024 and Deputy Commissioner of Income Tax, vs. Naresh Bhavanji Cheeda ITA No.2999/MUM/2024 (Mumbai ITAT),
- Shivaji Tukaram Pawale vs. Income Tax Officer Ward, ITA No.2526/MUM/2026 (Mumbai ITAT),
- Income Tax Officer vs. Deepika Sanjay Pati, ITA No.2293/MUM/2026 (Mumbai ITAT),
- MafatLal Mangilal Kothari vs. ACIT, ITA Nos. 5894/5895/5896/5897/Mum/2025, (Mumbai ITAT).
In the aforesaid order, it has been held as under:
54. “Respectfully following the ratio laid down in the aforesaid decisions, we find that the facts of the present case are on identical footing, inasmuch as the addition has been made purely on the basis of Excel sheets and statements of third parties without establishing any independent linkage with the Assessee and without granting effective opportunity of cross-examination. In view of the above discussion, we are of the considered opinion that the Revenue has failed to discharge the burden of establishing that the alleged transactions reflected in the seized Excel sheet pertained to the Assessee.
55.”Accordingly, in view of the foregoing discussion and respectfully following the judicial principles laid down in the decisions referred to hereinabove, we hold that the addition sustained by the learned CIT(A) under section 69/69A of the Act is not sustainable in law, the same having been made solely on the basis of uncorroborated third-party material without establishing any direct nexus with the assessee and in violation of principles of natural justice. The said addition is, therefore, directed to be deleted.”
12. We have carefully considered the rival submissions, perused the material available on record, and relied upon judgments of the Tribunal, noted that learned Commissioner of Income Tax (Appeals), relying upon over all facts and circumstances, following the ratio of judgments deleted the addition of Rs 81.40 lac, as made u/s 69 of the Act.
13. Accordingly, we observed that, the deletion of addition by Ld. CIT(A) for the reason that such addition has been made by A.O. solely on the basis of statement of third party, whatsapp chat between two employees of searched person are unauthenticated and failed to adduce any corroborated evidence to substantiate allegation of cash payment of Rs. 81.40 lac by assessee. Moreover, the digital data without accompanying certificate under section 65B of the India Evidence Act, 1872, are not admissible as an evidence. The requirement of certificate u/s 65B for the digital data has been uphold by the Honorable Supreme Court in case of Anvar P.V. v. P.K. Basheer (2014) 10 SCC 473.
14. We respectfully follow the ratio of judgments of co-ordinate Bench, ITAT Mumbai, that no addition can be made purely on the basis of third-party statements, without discharging onus by A.O. placing corroborative evidence to substantiate its prime allegation of payment of on-money in cash by the assessee, thus, we do not find any reason to interfere the order of Learned Commissioner of Income Tax (Appeals).
15. Accordingly, we hold that there is no infirmity in the order of the Ld. Commissioner of Income-tax (Appeals).
16. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 04.09.2026.
