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2011 (7) TMI 1166 - ITAT KOLKATASeized Documents were Dumb Documents - Presumption u/s 292C - Rebuttable Presumption u/s 132 - Onus of Rebutting the Presumption - CIT(A) held that seized documents recording purchases and sales of diamonds, gold and paintings are dumb documents and rejected the same by stating - it is for the discretion of the Court to make or not to make the presumption u/s 292C HELD THAT:- Presumption in context of Sec. 132 - We find that the term 'used' in the provision of sec. 292C, "may be presumed" is discussed, but in the context of sec. 132(4A), by Hon'ble Apex Court in the case of PR. METRANI VERSUS COMMISSIONER OF INCOME-TAX [2006 (11) TMI 136 - SUPREME COURT] said term implies that the presumption is rebuttable. The provisions of sec. 292C does not confer discretionary power on the Department to presume or not to presume the correctness of seized documents as held by CIT(A). We are of the view that the provision of Sec. 292 will equally apply to both assessee as well as Department and such section only creates a legal fiction, whereby in case of search and seizure, contents of seized material are presumed to be true unless rebutted by the party claiming contrary. Onus of rebutting presumption - In present case, since seized documents were found from possession and control of the assessee during the search in his case, a presumption u/s 292C had to be drawn that the said documents belonged to the assessee and the contents thereof were true unless disproved by cogent evidence. The onus to prove that what was apparent from these books was not real was on the party which claimed it to be so. Thus, the onus was on the Department, to bring on record some acceptable evidence to prove that what was stated in the seized documents did not depict the actual state of affairs. The AO and CIT(A) failed to discharge such onus by bringing on record some cogent evidence to disprove notings in the seized papers. Documents seized are Dumb Documents or Not? - In the present case, to give a finding that the documents are dumb and such a finding can be reviewed on the ground that there is no evidence to support it or it is perverse. Hence, we consider documents found from the possession of the assessee was real and declaration made by assessee on the basis of entry recorded in these documents of long-term capital gain are true and there is no basis not to accept the same. Accordingly, we delete the addition made by CIT(A) - Decision in favour of Asseessee Unexplained Investment of Shares - Since we have already held that seized documents are correct financial statements prepared after incorporation the entries from the seized documents are also true explaining the investment in shares. Accordingly, we delete the addition - Decision in favour of Assessee Addition on account of Unexplained Cash - Since total undisclosed income arising from the seized documents were already offered for taxation by assessee and cash found in course of search stood explained from the entries recorded in seized documents, no separate addition can be made in respect to cash found. We have already accepted the seized documents as genuine documents explaining away the entries, the cash explained by assessee cannot be treated unexplained. Accordingly, this issue of assessee's appeal is allowed. Addition on account of Undisclosed income - Since we have already accepted seized material as true, automatically the expenditure recorded in these documents is explained and the assessee has also made disclosure to cover up the same. Accordingly, this addition is not warranted and hence, deleted.
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