Seized material presumption cannot justify rewriting diary entries on conjecture; unsupported interest additions were deleted.

The presumption applicable to seized material allowed the diary to be treated as belonging to the assessee and its entries as true, but it did not permit the Assessing Officer to rewrite those entries on an unsupported assumption that the figures were short by two zeros. Confirmations, affidavits, and recorded statements supported the figures as written, and no concrete material justified the estimated interest addition. As the addition depended entirely on that conjectural premise, the unaccounted interest income and consequential additions were deleted in favour of the assessee.

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Issues: Whether the addition of unaccounted interest income based on the presumption that the figures in the diary were deficient by two zeros, and the consequential additions for the relevant assessment years, could be sustained.

Analysis: The diary found during search was treated as belonging to the assessee and its contents were taken to be true under the presumption applicable to seized material. However, the Assessing Officer's assumption that the recorded figures were short by two zeros was held to be unsupported by any concrete material. The assessee had furnished confirmations and affidavits from the concerned parties, and the statements recorded during investigation also supported the figures as written. In these circumstances, the presumption under the seized-material provisions could not be inverted into a power to rewrite the entries on conjecture. The estimated interest addition, being entirely dependent on that unsupported assumption, could not survive.

Conclusion: The addition of unaccounted interest income and the related consequential additions were deleted, and the issue was decided in favour of the assessee.

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