Case Law Details
Vikas Vilas Rasal Vs ACIT (ITAT Mumbai)
Summary: Mumbai Bench of the ITAT deleted an addition of ₹66.82 lakh made as undisclosed income solely on the basis of WhatsApp chats recovered during search proceedings, holding that electronic evidence without a valid certificate under Section 65B of the Indian Evidence Act has no evidentiary value. The Tribunal observed that the Revenue failed to produce any corroborative evidence such as cash seizure, bank trail, books of account, third-party confirmation, or independent enquiry linking the assessee with the alleged unaccounted cash transactions involving one Vilas Pawar. It further noted that neither the assessee’s name nor his family members’ names appeared in the chats and the addition was based merely on assumptions and suspicion. Relying on decisions including Saravana Selvarathnam Retails (P.) Ltd. v. CIT and ACIT v. Prashant Prakash Nilawar, the Tribunal held that unauthenticated digital conversations unsupported by independent evidence cannot form the sole basis for additions under the Income-tax Act.
Core Issue: Whether an addition for undisclosed income can be sustained solely on the basis of WhatsApp chats recovered during search proceedings when (i) no certificate under Section 65B of the Indian Evidence Act, 1872 was furnished, and (ii) no independent corroborative evidence such as cash seizure, bank trail, books of account, or third-party confirmation was brought on record.
Brief Facts: During a search action, the Revenue extracted certain WhatsApp chats from the assessee’s iPhone showing communication with one Vilas Pawar. The Assessing Officer inferred from these chats that the assessee had parked unaccounted cash with Shri Vilas Pawar and made an addition of ₹66,82,000 as undisclosed income. No unaccounted cash was found, no parallel books were seized, and no independent enquiry was conducted to establish that the amounts mentioned in the chats belonged to the assessee.
Revenue’s Contentions: The Revenue argued that the WhatsApp chats constituted incriminating material found during search and were therefore entitled to the presumption under Sections 132(4A) and 292C of the Income-tax Act. It was contended that the messages reflected cash dealings and unaccounted transactions, and that strict rules of the Evidence Act were not fully applicable to income-tax proceedings. The Department further submitted that surrounding circumstances and the language used in the chats were sufficient to infer undisclosed income.
Assessee’s Contentions: The assessee submitted that the entire addition was founded on electronic evidence that was inadmissible in law because the mandatory certificate under Section 65B of the Indian Evidence Act had not been produced. It was argued that even otherwise the chats did not establish ownership of any cash or undisclosed income, and there was no corroborative evidence such as seizure of cash, bank trail, confirmations, or third-party verification. The assessee also contended that presumptions under Sections 132(4A) and 292C are rebuttable and do not prove the truth of every entry in a digital conversation.
Tribunal’s Findings: The Tribunal held that WhatsApp chats are electronic records and their admissibility is governed by Section 65B of the Indian Evidence Act. In the absence of the mandatory certificate, the chats had no evidentiary value and could not be relied upon as primary evidence. The Tribunal further observed that no corroborative material was brought on record to show that the amounts mentioned in the chats represented undisclosed income of the assessee. Neither the assessee’s name nor the names of his family members appeared in the conversations, and no independent enquiry or verification was conducted by the Assessing Officer. The addition was therefore based only on assumptions and suspicion, which cannot substitute proof.
The Tribunal also relied on the principle that while income-tax proceedings are not strictly governed by technical rules of evidence, additions must nevertheless rest on credible and legally admissible material. Unauthenticated electronic conversations, particularly those susceptible to manipulation, cannot by themselves justify an addition.
Held: The ITAT Mumbai deleted the addition of ₹66,82,000 and held that mere WhatsApp chats, unsupported by a valid Section 65B certificate and unaccompanied by any corroborative evidence, cannot form the sole basis for making an addition as undisclosed income.
Key Legal Principle: Electronic evidence such as WhatsApp chats can be relied upon in income-tax proceedings only when:
1. The requirements of Section 65B of the Indian Evidence Act are complied with;
2. The authenticity and chain of custody of the electronic record are established; and
3. The contents are corroborated by independent evidence.
In the absence of these conditions, digital conversations have no independent evidentiary value and cannot justify an addition.
Judicial Precedents Relied Upon
Madras High Court in Saravana Selvarathnam Retails (P.) Ltd. v. CIT (160 taxmann.com 287).
Income Tax Appellate Tribunal in ACIT v. Prashant Prakash Nilawar (ITA No. 5689/Mum/2024).
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal has been filed by the assessee challenging the impugned order dated 31.08.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2017-18. The following grounds are reproduced below:
Ground no. 1: On the facts and circumstances of the case as well as in law the Ld. CIT(A) has erred in confirming the addition of 10% of the declared agricultural income, amounting to Rs. 86,458/- by estimating alleged inflation in agricultural income, without any cogent material or evidence to substantiate such estimation.
Ground no. 2: On the facts and circumstances of the case as well as in law the Ld. CIT(A) has erred in confirming action of the Ld. Assessing Officer in making an addition of Rs. 66,82,000/- on account of transaction with Vilas Pawar as alleged undisclosed income of the Assessee, without considering the facts and circumstances of the case.
Ground no. 1
2. AR submitted at bar the he does not want to press this ground. Consequently, considering the statement made by the ld. AR, ground no. 1 raised by the Assessee stand dismissed as not pressed.
Ground no. 2
3. This ground raised by the Assessee relates to challenging the order of Id. CIT (Appeal) in confirming the addition of Rs. 66,82,000/- made by the AO on account of transaction with Mr. Vilas Pawar.
4. We have heard the counsels for both parties, perused the material placed on record, the judgments cited before us, and the order passed by the Revenue Authorities. From the records, we noticed that during the course of search proceedings, some whatsapp communication with Vilas Pawar from the I-phone of the Assessee was found by the department. On the basis of the said whatsapp communication, the department alleged that the Assessee has kept his unaccounted income in the form of cash with Shri Vilas Pawar and accordingly made the addition of Rs. 66,82,000/- as alleged Undisclosed income. Summary of these transaction reproduced by AO on page 24 of the assessment order.
5. At the outset we noticed that the message exchanged on whatsapp did not have any evidentiary value as has been held by the Hon’ble Apex Court more particularly when no certification u/s 65B of the Indian Evidence Act 1972 was obtained by the search team on seizer of digital evidence. Thus on this ground no additions can be made, in this regard reliance has been placed on the following decision;
a. Saravana Selvarathnam Retalls (P.) Ltd. CIT (160 com 287) (Madras);
b. ACIT Vs. Prashant Prakash Nilawar (2024) ITA 568 9/Mum/2024) (Mumbai)
c. A Johnkumar Vs. DCIT (ITA 3092/Chny/2019) (Chennai)
6. Moreover as per the record, the Assessee was known to Vilas Pawar from last 6 to 7 years. He has good knowledge of financial matters such as rate of gold-silver, dollar, other currencies, Assessee used to take his advice from him from time to time. He used to arrange loans for various persons from various sources for small commission for the services rendered. Assessee used to recommend his name to his friends. However, Assessee never had any transactions with him. Evenno evidence was found during the course of search that the Assessee had any transaction with Vilas Pawar. The Assessing Officer only on the basis of the whatsapp communication alleged that the Assessee had kept his unaccounted income in the form of cash with Shri Vilas Pawar, but nowhere in the communication it was mentioned that the said amount was collected by the parties belongs to the Assessee. In the said whatsapp there is no reference of assessee’s name or any other family member of the assessee. It had nothing to do with the Assessee. Thus the Assessee is nowhere involved in these transaction. Even the department failed to produce any evidence which prove that the Assessee had transaction with Vilas Pawar. Thus, without doing further enquiry on the said transaction, the Assessing Officer simply alleged that the Assessee kept his unaccounted income in the form of cash with Shri Vilas Pawar, which is not tenable under the Act.
7. Ld CIT(A) discussed this issue on page 21 para 8.4.3 and confirmed the addition on the plea that in the statement assessee has admitted the said amount. He has not appreciated the fact that there was no section 65B certification for seizure of digital evidence nor any third party enquiry was carried out by the AO.
8. Therefore, considering the totality of the facts of the present case and also considering the decision in our case bearing ITA No. 7636/Mum/2025wherein on the identical set of facts the additions were deleted. Thus keeping in view the above facts and also considering the decision in ITA no. 7636/Mum/2025 in Assessee’s own case we allowed this ground raised by the Assessee.
9. In the net result appeal of the Assessee stand partly allowed.
Order pronounced in the open court on 20.04.2026
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