Third-Party Chats, No Cash, No Admission: Section 69A Addition based on WhatsApp chats Struck Down

 

DCIT v. Niru Dhiren Shah (ITA No. 4294/Mum/2025)

Facts:

1.  Search u/s 132 conducted on the assessee and connected parties. Assessee sold a shop for ₹3.38 crore, which was higher than stamp duty value (₹2.56 crore).

2.  During search at purchaser’s son’s premises, WhatsApp chats were found containing an Excel screenshot estimating a market value of ₹6.55 crore, based on government circle rates.

3.  AO treated the difference of ₹3.16 crore as cash received on sale, making addition u/s 69A as unexplained money.

4.  CIT(A) deleted addition holding that chat was between third parties. There was no reference to assessee or property. No cash was found and there was no admission u/s 132(4). WhatsApp chat cannot stand alone without corroboration.

ITAT Mumbai held as below:

1.  WhatsApp chats were rough workings and merely an internal communication between buyer’s son and accountant. There was no mention of assessee or exact property.

2.  No cash was seized and there were no supporting documents. No comparable sale instances brought on record. Stamp duty value ignored without justification

3.  AO preferred online market rates over statutory stamp valuation without inquiry from registration authorities.

4.  Assessee was not found to be owner of any unexplained money. Mere inference of cash receipt is insufficient.

The copy of the order is as under:

1762513706-N8f9rr-1-TO