Can WhatsApp chats recovered from another person’s mobile phone be enough for the Income Tax Department to treat ₹10.52 lakh as an unexplained investment? The Pune bench of the Appellate Tribunal (ITAT) has ruled in favour of a taxpayer after finding that the Revenue had relied on WhatsApp data without establishing its authenticity through the prescribed requirements for electronic evidence.
The case concerned Rameshwar Fakirchand Totala, a practicing lawyer from Maharashtra, for assessment year 2020-21. The ITAT pronounced its order on 21 August 2026 in ITA No. 1303/PUN/2026.
How the ₹10.52 lakh tax addition arose
The dispute originated from a search and seizure operation conducted on 30 November 2023 at the premises of the Manjeet Pride Group, Gadiya Group and their associated entities.
During the search, the mobile phone of Prakash Motwani was examined and WhatsApp data allegedly contained details of “bhisi” transactions, or chit-fund-like arrangements. The Assessing Officer found entries corresponding to payments totalling ₹10,52,450 during financial year 2019-20 and attributed them to Totala.
The taxpayer denied that the WhatsApp messages represented his transactions. However, the Assessing Officer was not satisfied with the explanation and made an addition of ₹10.52 lakh under Section 69 of the Income-tax Act as unexplained investment.
The Commissioner of Income Tax (Appeals), or CIT(A), upheld the addition, saying the taxpayer had failed to explain the source of the payment.
Why ITAT deleted the ₹10.52 lakh addition
Before the ITAT, Totala challenged the addition on several grounds, including that the WhatsApp chats were third-party material, that he had not been given complete and verifiable copies of the electronic material and that he had not been allowed to cross-examine Motwani.
The Tribunal focused on the evidentiary basis of the addition.
It noted that the entire addition was based on WhatsApp chats retrieved from Motwani’s mobile phone. While Motwani had stated during the search that the chats contained details of bhisi transactions, the ITAT found that the Revenue had not established the authenticity of the WhatsApp data by fulfilling the requirements relating to electronic evidence.
The Tribunal referred to the Supreme Court’s decision in Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal, which dealt with the requirement of a certificate under Section 65B of the Indian Evidence Act for electronic records.
The ITAT also noted that the Revenue had not demonstrated compliance with Section 79A of the Information Technology Act concerning examination of electronic evidence.
Crucially, the Tribunal found that there was no other independent evidence available with the department apart from the WhatsApp chat recovered from Motwani’s mobile phone.
The ITAT therefore held that the WhatsApp data, in the circumstances of the case, could not by itself form the basis for the ₹10.52 lakh addition. It set aside the CIT(A)’s order and directed the Assessing Officer to delete the addition.
The appeal was accordingly allowed.
What the ruling means for taxpayers
The decision highlights an important issue for taxpayers facing tax assessments based on digital evidence. A message, spreadsheet or other electronic record recovered from a third party does not automatically establish that the taxpayer made an .
The Revenue must establish the evidentiary basis for relying on such material and, where electronic records are relied upon, satisfy the applicable requirements concerning their authenticity and admissibility.
The case also shows why taxpayers should examine the source of evidence used against them and ask whether the material has been independently corroborated.
For Totala, the department’s case rested on WhatsApp data recovered from another person’s device. In the absence of the required electronic-evidence certification and independent corroboration, the ITAT found that the material could not sustain the Section 69 addition.
The ruling does not mean that WhatsApp messages can never be used in tax proceedings. Rather, it shows that where electronic chats constitute the sole basis for an unexplained-investment addition, the Revenue must establish that the digital evidence is reliable and legally usable before it can support a tax demand.