Income Tax Appellate Tribunal (ITAT), Delhi has given a big decision in a case related to Income Tax, in which the tax added on the basis of WhatsApp chat has been rejected. The court rejected the tax addition of Rs 22.5 crore made by the Income Tax Department, which was mostly based on WhatsApp chats and digital images found on a third party’s phone. The court said that tax liability cannot be justified only on the basis of such things.
What is the whole matter?
This matter is related to the search conducted in Hans Group on January 6, 2021. During the search, tax officials had found WhatsApp chats, images of envelopes and some digital sheets from the mobile phone of an alleged middleman. On the basis of this material, the department alleged that the taxpayer had made a cash investment of Rs 22.5 crore and earned interest on it. Action under Section 153C was initiated and in March 2024, the Assessing Officer added Rs 22.50 crore as undisclosed investment and Rs 22.50 lakh as alleged interest income.
Case made on chat, not on documents
The taxpayer denied any such transactions and said the entire case was based on third-party digital data without any confirmation, without any agreement, receipt or financial trail. This became the main issue before the tribunal. After this the hearing on the case started.
What was the finding of ITAT?
In its order dated October 15, 2025, ITAT closely examined the material relied upon by the tax department and found major shortcomings. The tribunal noted that the WhatsApp chats were without context, while the images and sheets relied upon were unsigned, unauthenticated and non-specific. It also found that no documentary evidence or transaction trail was presented. None of the people who had chats on their phones confirmed any transaction. The alleged company involved denied any dealings with the taxpayer.
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