ITAT Delhi Sets Aside ₹4 Crore Additions Based on WhatsApp Evidence From Third-Party Broker

The Income Tax Appellate Tribunal (ITAT), Delhi, has set aside Rs 2 crore income-tax additions based on a images allegedly found in the WhatsApp of a third-party property broker. The tribunal held that the electronic evidence relied was not in compliance with the Evidence Rules and therefore not credible.

A coram comprising Judicial Member Vimal Kumar and Accountant Member S. Rifa ur Rahman deleted additions of Rs 2 crore each made in the hands of a property buyer and seller, observing that the statutory safeguards governing the collection, certification, and chain of custody of electronic evidence had not been complied with.

The tribunal noted that the image relied upon was stated to have been recovered “from the WhatsApp of a third party broker” and that the manner in which it was collected, extracted, and used was not in compliance with the procedures prescribed under the CBDT's Digital Evidence Manual and the requirements of Section 65B of the Indian Evidence Act.

The case related to the sale of a property in Shankar Vihar, New Delhi. While the registered sale deed reflected a consideration of Rs 3.5 crore paid , the Income Tax Department alleged that the actual sale consideration was Rs 5.5 crore of which Rs 2 crore paid in cash outside the books.

The allegation was based primarily based on an image of a handwritten slip said to have been recovered from a broker's mobile phone during a search operation. This was coupled with a statement of the buyer recorded during proceedings, which was later retracted.

Before the tribunal, the taxpayers contended that the WhatsApp image could not be relied upon as admissible evidence in the absence of compliance with Section 65B of the Indian Evidence Act, 1872.

Section 65B of the Evidence Act mandates that a certificate be produced to establish the authenticity of electronic records such as WhatsApp messages.

The department, on the other hand, argued that a Section 65B certificate had been obtained and that the electronic evidence, read with the buyer's statement, was sufficient to sustain the additions under the Income-tax Act, 1961.

Rejecting the department's stand, the tribunal held that the certificate under Section 65B was not obtained at the stage mandated by law and failed to establish the integrity of the electronic record.

The tribunal observed, “The certificate under section 65B of the Indian Evidence Act, 1872 rather was needed when data of the digital device was retrieved to take out a digital image and to show that hash value recorded at the time of preparation of the section 65B certificate by Digital Forensic Examiner matched with the hash value taken at the time of retrieving or extracting the electronic evidence which is not the case here.”

The tribunal also noted that there was no material on record to show that the chain of custody of the WhatsApp data had been maintained in the manner required. Holding that the electronic evidence lacked credibility to draw conclusive inferences, the ITAT deleted the additions and allowed both appeals.

Case Title: Arti Garg Vs DCIT, Delhi

Citation: 2026 LLBiz ITAT (DEL)15

Case Number: ITA No.3143/Del/2025 (A.Y 2021-22)

Appearance for Assessee: Shri Saubhagya Agarwal, Advocate, Shri Vaibhav Srivastava, Advocate

Appearance for Revenue: Shri Dayainder Singh Sidhu, CIT DR