Rebuttable presumption from seized documents cannot sustain undisclosed income addition without corroborative evidence and enquiry.

A presumption arising from seized documents is rebuttable, and the addition could not stand where the assessee produced confirmations and ledger details showing that the cash entries represented client collections for expenses, not its income. Once that explanation was furnished, the burden shifted to the revenue to make enquiries and produce corroborative material; no effective enquiry was shown, and the addition rested mainly on a loose paper. In the absence of supporting evidence, a seized loose document alone was insufficient to sustain an addition of undisclosed income, so the addition was deleted.

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Issues: Whether the addition made on the basis of seized cash entries in a loose document, after applying a presumptive profit element, was sustainable when the assessee furnished confirmations and supporting ledger details to rebut the presumption arising from the seized material.

Analysis: The seized document attracted the statutory presumption that its contents belonged to the assessee and were correct. That presumption, however, is rebuttable. The assessee produced client confirmations and ledger material to explain that the cash represented amounts collected for expenses to be incurred on behalf of clients and not income of the assessee. Once such explanation was furnished, the burden shifted to the revenue to disprove it by making enquiries and bringing corroborative material on record. No effective enquiry under the available powers was shown to have been made, and the addition rested substantially on the seized paper without supporting evidence. A loose paper by itself could not justify an addition of undisclosed income in the absence of corroboration.

Conclusion: The addition was not sustainable and was deleted. The issue was decided in favour of the assessee.

Ratio Decidendi: A presumption arising from seized documents is rebuttable, and where the assessee offers a plausible explanation supported by confirmations and account material, the revenue must bring corroborative evidence before making an addition of undisclosed income.

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