Admissibility of seized documents requires independent corroboration; rejection of books and extrapolation without verification disallowed.

Assessing officer's rejection of regularly maintained books and estimated additions based solely on seized papers was unjustified because the seized entries lacked dates, transaction identifiers and independent confirmation, some sheets reflected estimates or mismatched area/costs, and the AO failed to conduct available independent enquiries (market/Jantri rates or purchaser verification). Tribunal applied search-and-seizure evidentiary principles and presumptions but required corroboration before overturning books; it found impermissible extrapolation from incriminating entries relating to five units to 32 units and disallowed the uniform on money and profit-rate estimates, allowing the assessee on this issue.

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Issues: Whether the assessing officer was justified in rejecting the assessee's books of account under section 145(3) of the Income-tax Act, 1961 and making estimated additions of Rs. 3,31,44,320/- by relying on seized documents evidencing alleged 'on money'.

Analysis: The Tribunal examined (i) the contents of the seized pocket diary and hard-disk printouts vis-a-vis recorded bank transactions and statements of the assessee's partner and accountant; (ii) whether the seized papers constituted reliable, corroborative material admissible to reject regularly maintained books; (iii) whether the documents supported extrapolating on-money findings for 32 sold units when incriminating entries related to five units only; and (iv) whether independent enquiries or corroborative evidence (market rates/Jantri, purchaser confirmations) were made before estimating unaccounted income. The Tribunal applied statutory provisions governing search and seizure and presumptions (including section 292C and section 132/132(4)), and relevant legal principles on evidentiary value of seized papers, corroboration, and the impropriety of extrapolation absent reliable foundation. The seized entries lacked dates, specific transaction identifiers, and independent confirmation for the alleged cash receipts; certain seized sheets were demonstrably incommensurate (area/cost discrepancies) or related to estimates/resale quotations. The assessing officer did not undertake available independent enquiries to verify prevailing market/Jantri rates or to examine buyers before rejecting books and applying a uniform 45% on-money ratio and 20% profit rate across all units.

Conclusion: The rejection of the books of account under section 145(3) and the consequent estimated addition of Rs. 3,31,44,320/- are not justified; the assessee succeeds on the issue. The assessing officer's reliance on the seized documents without independent corroboration and impermissible extrapolation is disallowed.

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