Mumbai ITAT Rules: WhatsApp Chats Not Valid Evidence Without Section 65B Certificate, Deletes ₹3.16 Crore Addition
Tribunal Says Digital Messages Need Proper Certification to Hold Legal Value
Unverified WhatsApp Chats Cannot Justify Tax Additions Under Section 69A
By Our Legal Reporter
New Delhi: November 25, 2025:
In a landmark ruling that addresses the growing use of digital communications in tax investigations, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that WhatsApp chats cannot be treated as valid evidence unless certified under Section 65B of the Indian Evidence Act. The Tribunal deleted a massive addition of ₹3.16 crore made by the Assessing Officer (AO) under Section 69A of the Income Tax Act, which deals with unexplained money.
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This judgment is expected to have far-reaching implications for tax proceedings, especially in an era where digital messages, emails, and chats are often relied upon by authorities to establish financial transactions.
Background of the Case
The case involved Niru Dhiren Shah, whose premises were searched under Section 132 of the Income Tax Act.
- For Assessment Year 2022–23, Shah declared an income of ₹30,50,500.
- The AO, however, completed the assessment at ₹3,47,15,985, making an addition of ₹3.16 crore under Section 69A.
- The addition was based solely on a WhatsApp chat between the buyer’s son and his accountant, which allegedly indicated unaccounted cash payments in a property transaction.
- No corroborative evidence of cash was found during the search.
The assessee challenged the addition, arguing that WhatsApp chats without proper certification cannot be considered admissible evidence.
Tribunal’s Observations
The ITAT made several critical observations:
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- WhatsApp chats are electronic records and fall under the purview of the Indian Evidence Act.
- Under Section 65B, electronic records must be accompanied by a proper certificate to be admissible in court or quasi-judicial proceedings.
- In this case, no Section 65B certificate was produced by the Revenue.
- The Tribunal emphasized that uncorroborated digital messages cannot form the sole basis of tax additions.
- Since no incriminating material or cash was found during the search, the addition was unjustified.
The Tribunal thus upheld the deletion of the ₹3.16 crore addition.
Wider Legal Context
This ruling is consistent with earlier judicial interpretations:
- The Supreme Court in Anvar P.V. vs. P.K. Basheer (2014) held that electronic records are admissible only if certified under Section 65B.
- The Delhi ITAT has previously quashed additions based solely on WhatsApp chats found on third-party devices, citing lack of evidentiary value.
- Legal experts note that this ruling reinforces the principle that digital evidence must meet strict legal standards before being used against taxpayers.
Implications for Taxpayers
The ruling provides significant relief and clarity for taxpayers:
- Protection from arbitrary additions: Taxpayers cannot be penalized based on unverified digital messages.
- Strengthening of legal safeguards: Authorities must follow proper certification procedures before relying on electronic evidence.
- Reduced litigation: Clear interpretation of Section 65B will minimize disputes over admissibility of digital records.
- Privacy concerns addressed: The judgment indirectly reinforces the right to privacy by preventing misuse of personal chats in tax proceedings.
Expert Views
Tax professionals and legal experts have welcomed the ruling:
- Chartered accountants argue that the judgment prevents misuse of casual digital communications in serious tax matters.
- Legal analysts highlight that the ruling aligns with the Supreme Court’s stance on electronic evidence.
- Industry leaders believe the decision will encourage businesses and individuals to engage in digital communication without fear of arbitrary tax consequences.
Broader Impact on Tax Administration
The ruling is expected to reshape how the Income Tax Department handles digital evidence:
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- Authorities will need to ensure proper certification under Section 65B before relying on WhatsApp chats, emails, or other electronic records.
- It may prompt the Central Board of Direct Taxes (CBDT) to issue guidelines on the admissibility of digital evidence in tax proceedings.
- The judgment sets a precedent that could influence similar cases across India, especially in property transactions where cash dealings are often alleged.
Conclusion
The Mumbai ITAT’s ruling in the Niru Dhiren Shah case is a landmark in tax jurisprudence. By holding that WhatsApp chats without Section 65B certification have no evidentiary value, the Tribunal has strengthened taxpayer protections and clarified the legal framework for electronic evidence.
This decision ensures that tax assessments are based on credible, certified evidence rather than casual digital messages. It underscores the principle that while technology has transformed communication, legal safeguards must keep pace to protect fairness and justice in taxation.
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