Seized diary entries and reconciled books of account can support additions for unexplained income when unrecorded receipts are shown.

Seized diary entries recording flat-booking receipts, when reconciled with regular books of account and other search material, can validly support additions for unexplained income if they reveal unrecorded cash receipts. The Delhi High Court noted that the phrase "books or books of account" in Section 2(12A) is wide enough to include diary-form records where accounts or part of accounts are entered. On the facts, the diaries were not treated as mere dumb documents, and the search material retained evidentiary value because it bore on income. No substantial question of law arose, and the challenge to the additions failed.

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Issues: Whether additions sustained on the basis of seized diary entries, read with the regular books of account and other material found during search, gave rise to any substantial question of law; and whether such diaries could be treated as books of account or as incriminating material supporting assessment of unexplained receipts.

Analysis: The search under Section 132 of the Income-tax Act, 1961 yielded diaries recording receipts relating to flat bookings. The additions were not founded on isolated diary notings alone, but on reconciliation of the seized entries with the assessees' regular books and the identification of cash receipts that did not appear in the formal accounts. The expression "books or books of account" in Section 2(12A) is of wide import and may include records maintained in diary form where accounts or part of accounts are entered. On these facts, the diaries were not mere dumb documents, and materials found in search could validly be used where they had a bearing on income. The reliance on the cited precedent did not assist the assessees, as it did not lay down that all documents recovered in search are devoid of evidentiary value.

Conclusion: No substantial question of law arose, and the challenge to the sustained additions failed.

Ratio Decidendi: Where seized diary entries are corroborated by reconciliation with regular accounts and disclose unrecorded receipts, such material may constitute incriminating evidence and support assessment of unexplained income; diaries may qualify as books of account if they record accounts or part of accounts.

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