Section 292C carry no presumption of correctness of seized documents contents against third party

Section 292C of the Income Tax Act 1961 indeed carries presumption of correctness of such seized documents contents but only against the searched than any third party

In a recent judgment, ITAT has held that section 292C of the Income Tax Act 1961 indeed carries presumption of correctness of such seized documents contents but only against the searched than any third party

ABCAUS Case Law Citation:
5211 (2026) (08) abacus.in ITAT

In The instant case Income Tax Department had carried out a search in a group of companies and found/seized the alleged corresponding incriminating material in the nature of various documents relating to the appellant assessee indicating the corresponding interest and loan transactions etc.

The Assessing Officer of the said searched parties recorded satisfaction to the very effect in the assessee’s case which was forwarded to the jurisdictional Assessing Officer finally culminating in the impugned assessment whereby the impugned loan transactions or interest payment(s) were added as the assessee’s undisclosed income in five assessment years.

The Tribunal observed that apart from the fact that the four parties including the assessee/appellant had put in their respective signatures along with the amount, months and monthly installments details, nothing came out therefrom as to who had paid or received the loan or agreed to pay the interest component thereupon; as the case may be.

The Tribunal emphasized that section 292C of the Act indeed carries presumption of correctness of such seized documents’ contents only against the searched than any third party.

Further, the Tribunal observed that CBDT vide its landmark circular settled the issue that any addition based on an admission or confession; as the case may be, does not carry any significance as the same ought to be based on the specific seized material only.

The Tribunal placing reliance on the judgment of the Delhi High Court that dumb documents could not be relied upon, held that that both the lower authorities’ respective assessment(s) and lower appellate findings adding the assessee’s undisclosed loan and interest transaction were not sustainable in law.

Accordingly, the Tribunal deleted the same in all these assessment years.

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