Gurveer Singh Vs DCIT (ITAT Delhi)
Delhi ITAT: Uncorroborated WhatsApp Chats and Statements Cannot Sustain Addition Under Section 69A
The Delhi ITAT deleted an addition of ₹34.20 lakh made under section 69A, holding that mere WhatsApp chats and statements recorded during search, without independent corroborative evidence and without supplying the electronic material relied upon to the assessee, cannot form the basis of an addition.
A search was conducted on United Exim Pvt. Ltd., during which the assessee’s mobile phone was seized. The Assessing Officer alleged, on the basis of WhatsApp chats between the assessee and the company’s Chartered Accountant and an Excel sheet prepared by the AO, that the assessee had received cash of ₹34.20 lakh through the Chartered Accountant. The amount was accordingly brought to tax under section 69A read with section 115BBE.
The assessee contended that the alleged WhatsApp chats were never supplied despite a specific request during the assessment proceedings, no independent enquiry was conducted, no opportunity to cross-examine the Chartered Accountant was granted, and the Chartered Accountant himself had never admitted to transferring any cash to the assessee.
The Tribunal found that the assessment order relied substantially on statements, while the alleged WhatsApp chats themselves were neither reproduced nor made part of the assessment order, nor furnished to the assessee. This indicated that the Assessing Officer had largely relied upon the Investigation Wing’s report without independently examining the underlying electronic evidence.
The ITAT further observed that even if the strict requirements of section 65B of the Evidence Act were assumed to be inapplicable to income-tax proceedings, the Department was nevertheless expected to substantially comply with the CBDT’s Digital Evidence Manual, 2014, which prescribes the procedure for collection, preservation, authentication and reliance upon electronic evidence. In the present case, these safeguards were not followed.
Holding that uncorroborated statements unsupported by the underlying electronic evidence cannot sustain an addition, the Tribunal concluded that the Revenue had failed to establish the alleged cash transactions. Accordingly, it deleted the addition of ₹34.20 lakh and allowed the assessee’s appeal.
Cases Discussed
- M/s LKS Gold House Private Limited vs. Deputy Commissioner of Income Tax & Others (Madras HC), W.P. No. 11630 of 2023 and connected batch, pronounced on 18.01.2024
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is preferred by the Assessee against the order dated 09.06.2025 of the Ld. Commissioner of Income Tax(Appeals)-3, Noida (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in DIN No : ITBA/APL/M/250/2025-26/1076845981(1) arising out of the assessment order dated 20.03.2024 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by DCIT, Central Circle-II, Noida, for AY: 2022-23.
2. A search was conducted at the premises of M/s United Exim Pvt. Ltd., on 05/11/2022. Mobile phone of the Assessee (being director of company) was confiscated during search and seizure proceeding. Based on WhatsApp’s chat of the Assessee with company’s Chartered Accountant namely Mr. Rahul Singhal, the AO prepared his own excel sheet, taking certain figures from the alleged WhatsApp’s chat and proposed to make addition of an amount of Rs. 34,20,000/-, in the income of A. Y. 2022-23, considering the same as cash transaction between Assessee and Chartered Accountant. Case of Appellant was re-opened under Section 143(3) of the Income Tax Act, 1961 (In short “Act”). Notice under Section 142(1) of the Act received on 14/02/2024 and Reply was submitted on 07/03/2024 by Assessee. Show-Cause Notice under Section 143(3) of the Act was served on 08/03/2024 with a direction to submit reply by 11/03/2024 i.e. only two (2) day time. Though reply was submitted by the Assessee. It is further stated that statement under Section 132 of the Act was recorded. However, no independent enquiry in regard to said alleged transactions was conducted. There is no evidence in regard to source and origin of said alleged transactions, was bring on record by the AO. No opportunity to cross examine to CA Mr. Rahul Singhal, was ever provided to the Assessee. Further, CA Mr. Rahul Singhal never admitted that he had ever transferred any funds to the Assessee (Page 27 to 29 of Appeal). Assessment Order dated 20/03/2024 (Page 25-31) was passed by AO DCIT, Cir.2, Noida) while making addition of an amount of Rs. 34,20,000/-, in the income of A.Y. 2022-23, under Section 69A read with 115 BBE of the Act. An appeal was filed before Learned CIT(Appeal), Noida, which was dismissed. Learned CIT(Appeal vide order dated 09/06/2025 (Page 10-24), upheld the Assessment Order dated 20/03/2024, without considering grounds and submission made by the Assessee.
3. Ld. DR has contested the issue and grounds by submitting that ld. tax authorities below have duly considered the evidences in the form of whatsapp chat and the corroborative statements in which the admissions were made. It was submitted that all the statement of the assessee were sufficient to dispel all the averments questioning the admissibility of electronic evidences and it was submitted that as provisions of Income Tax Act, 1961 are not applicable to the assessment proceedings, there is no substance in ground No. 8 of the assessee. Reliance was specifically placed on the decision of Hon’ble Madras High Court the relevant portion is reproduced as under:
“In particular, reliance is placed on the judgment of the Hon’ble Madras High Court in M/s LKS Gold House Private Limited vs. Deputy Commissioner of Income Tax & Others (W.P. No. 11630 of 2023 and connected batch), pronounced on 18.01.2024, wherein paras 70 to 75 clearly hold that the provisions of the Indian Evidence Act apply strictly to civil and criminal proceedings only and not to income-tax assessment proceedings. The Hon’ble Court has held that the Assessing Officer is empowered to act on material gathered during search and investigation, including electronic evidence, based on the principles of preponderance of probabilities.”
4. We have considered the rival contentions and perused the material on record and what we find from the impugned order is that AO specifically records in para 4 that when assesse was confronted by notice u/s 142(1) dated 14.02.2024 during the assessment proceedings with regard to allegation that assesse has received cash through chartered accountant, Rahul Singhal as established on the basis of data from whatsapp chat of the assesse. In reply the assesse had stated that he does not have record of such data and requested for the data to be provided to the assesse. Now, we find instead of supplying any electronic evidence relied the ld. AO mentions that as these chat were confronted to the assesse and on oath statement was recorded during the investigation proceedings the assesse cannot now retract and deny the expenses of chat.
5. On the basis of findings recorded by ld. AO we find that it is primarily statement alone which are relied in the assessment order and no matter whatsoever in the form of chats of assesse with his chartered accountant, Rahul Singhal finds placed in the assessment order. We are of the considered view that when AO claims that chat are corroborated by the statement then those chats should have been very much part of the assessment order or should have been provided to the assesse in response to the claim of assesse arising out of notice u/s 142(1) dated 14.02.2024. The absence of those chat being made part of the assessment order on one hand indicates that those chats may not have actually being examined by the AO and relying the investigation wing report or the appraisal report of the investigation wing alone the conclusions have been drawn and addition has been made.
6. In this context, we are of the considered view that even if the claim of department is considered that provision of Section 65B of the Evidence Act are not applicable yet where CBDT crystalized the principles for collection, examination and reliance of digital and electronic evidence in the form of Digital Evidence Manual, 2014 and specifically provides in manual in Chapter, as to how ld. Tax authorities shall rely digital evidence for drawing conclusions, the same should be substantially complied with and in this context we consider it necessary to reproduce the relevant part of this manual;
“Some guidelines that assessing officer need to follow when using the Digital Evidence Analysis in the assessment order etc, are as follows:
Brief description of the case, details/description of the objects, date and time of collection of the objects, Status of the objects when collected (On or Off), Seized from – person, organization, location etc should be included in the Assessment Order.
Digital Evidence Collection Form, Mobile Phone Evidence Collection Form should be enclosed in the order to show the initial state of the Digital Evidence.
Digital Forensic Report( Given by Forensic Examiner) containing details of hash value and the details of all mahazar drawn to open the digital evidence at various times to gather further evidences should be included as an annexure to the assessment order. If the chain of custody form is present, the same can be annexed to the assessment order. This will establish the integrity of the data before any court of law.
The Key digital evidences retrieved if deleted along with the description of the same. In case of business application software, a note on how the business application software is and the technical details of all critical components.
Whether these digital evidences have been confronted to the assessee under any section of the law? The relevant portions of the statement under various sections of Income Tax Act should be included in the order.
Circumstantial evidences and other key physical evidences seized/impounded should be linked to the digital evidence. Usually the physical evidences like loose papers, sheets gives details of one particular transaction, while the digital evidences may help in unearthing the entire consolidated data for the whole year. Such digital evidences should be linked to the physical evidences seized during the course of search to establish the genuineness of the data and also to quantify to the total unaccounted income.”
7. In the light of aforesaid we are of the considered view that what is left on record is merely statements which are uncorroborated by any other evidence and the same thus cannot be basis for making addition. We thus, inclined to sustain the ground No. 1 & 7. The appeal is allowed and the impugned addition is deleted.
Order pronounced in the open court on 05.08.2026
