WhatsApp chats rarely hold as evidence in income tax cases, say tribunals
Dec 2, 2025
WhatsApp chats have become a common source of evidence in income-tax investigations. However, recent ITAT rulings indicate that such messages require independent corroboration to be deemed valid, as courts emphasize the need for solid evidence over mere speculation.
As digital footprints become increasingly central to financial investigations, WhatsApp chats have quietly emerged as one of the most frequently-cited forms of evidence in income-tax proceedings.
Over the past few years, smartphones seized during search operations have routinely yielded screenshots, forwarded messages and fragments of conversations that the tax department believes point toward unreported cash transactions or unrecorded business income. These chats have been used as evidence to issue notices, justify additions, initiate reassessment proceedings and, in several cases, form the basis of protective assessments. In tax parlance, an “addition" refers to the inclusion of an amount in an assessee’s taxable income when the department believes it may represent undisclosed income.
Over the past few years, smartphones seized during search operations have routinely yielded screenshots, forwarded messages and fragments of conversations that the tax department believes point toward unreported cash transactions or unrecorded business income. These chats have been used as evidence to issue notices, justify additions, initiate reassessment proceedings and, in several cases, form the basis of protective assessments. In tax parlance, an “addition" refers to the inclusion of an amount in an assessee’s taxable income when the department believes it may represent undisclosed income.
Yet, a series of recent Income Tax Appellate Tribunal (ITAT) decisions shows a decisive judicial trend: WhatsApp messages, without independent and concrete corroboration, rarely withstand legal scrutiny.
One of the most striking examples comes from the A. Johnkumar case before the ITAT Chennai. A search was conducted, during which the department extracted WhatsApp messages from the assessee’s mobile phone. These messages included cryptic phrases such as “inward" and “outward", which the assessing officer interpreted as codes for receiving and distributing cash. Relying on these messages and linking them to the seized identity cards, the officer alleged that the assessee had gifted ₹17 crore of unexplained expenditure in cash. The tribunal, however, found these conclusions entirely speculative. It noted that WhatsApp messages cannot be treated as conclusive evidence unless substantiated by independent material. The tribunal observed that the officer had simply “given his own meaning" to WhatsApp messages without forensic validation or corroboration, and it ultimately deleted the entire addition.
A similar pattern played out in Mumbai in the case of Nilesh Ramesh Toshniwal. Here, during the search of an unrelated group, the department recovered a WhatsApp conversation between a businessman and the assessee, referring to a pending cash payment of ₹1 crore. The receipt of the cash was even confirmed by the said businessman, who later retracted. Based on the businessman’s statement, which the department treated as supporting evidence, officials issued notices and made a protective addition in the assessee’s case, even though nothing incriminating was found in his own search. The tribunal rejected the addition, emphasising that a WhatsApp message recovered from a third party cannot, by itself, be used against a taxpayer. The individual who purportedly received the money later retracted his statement, no corresponding message or payment evidence was found on the assessee’s device, and the assessee was not given an opportunity to cross-examine the third party.
The ITAT reaffirmed that suspicion, however strong, cannot replace proof. WhatsApp chats cannot be treated as reliable evidence unless supported by documentation, statements, or cash movement that clearly establish the transaction.
Recently, there was a decision in the case of Niru Dhiren Shah, also before the ITAT Mumbai, which dealt with alleged underreported income on a property sale. During a search, authorities found a WhatsApp chat containing a screenshot of an Excel sheet listing market rates of nearby properties. The assessing officer used this screenshot, along with stamp-duty data, to claim that the property sold by the assessee was higher than the disclosed value, and alleged that the assessee must have received unaccounted cash. But the tribunal struck down the addition, pointing out that the WhatsApp chat did not mention the assessee, the property, or any payment details. The property had also been sold at a value higher than the stamp-duty valuation, which weakened the undervaluation theory. No cash was found, and even the statement of the buyer did not contain anything incriminating. The tribunal held that a WhatsApp screenshot exchanged between two third parties cannot be used to conclude that the assessee received unaccounted money, particularly when there is no corroboration from seized documents or statements.
These cases together highlight an emerging judicial principle.
For an addition to survive, the conversation must be directly linked to the assessee, independently verified, and substantiated by corroborative evidence such as seized documents, cash, diary entries, bank trails or credible statements. WhatsApp may be the place where private conversations unfold. But in tax law, it cannot be the place where a case concludes. Courts will not allow encrypted messages, screenshots or fragments of chats to stand in for solid, admissible, corroborated evidence.
[Mint]
