Section 292C provides that
where any document is found in possession or control of any person in the
course of search, then it may be presumed that the contents of such documents
are true and correct. However, in the instant case, the documents (in respect
of alleged expenditure) found during the course of the search did not indicate
the name of payee and payer. Therefore, even if the presumption of Section 292C
is to be applied and the documents are accepted as true, it would not lead to
the conclusion that payments have been made so as to claim the expenditure.
Facts:
a) During
the course of search, the search party came across with documents pertaining to
alleged expenditure incurred by assessee.
b) The
assessee wants to claim deduction under Section 37(1) on basis of such seized
documents. Assessee was of the view it was not required to prove that it had
actually incurred alleged expenditure as any document found during search
presumed to be true and correct as per Section 292C.
c) Assessing
Officer (AO) disallowed such expenditure on ground that complete evidence in
support of payment was not provided.
d) The
third member bench of Tibunal affirmed the order of AO. Aggrieved by the order
of Tribunal, assessee filed the instant appeal before the High Court.
The
High Court held in favour of revenue as under-
1) Section
292C provides that where any document is found in possession or control of any
person in the course of search, then it may be presumed that the contents of
such documents are true and correct.
2) The
words 'may presume' as provided in Section 292C are in the nature of
discretionary presumption. Therefore, invocation of such presumption is at
discretion of the revenue authorities.
3) An
expenditure could be claimed under section 37(1) only when it has in fact been
incurred and that too wholly and exclusively for the purposes of business.
4) In
the instant case, the documents found during the course of the search were
inchoate. Document did not indicate the name of payee and payer. Therefore,
even if the presumption is to be applied and the documents are accepted as
true, it would not lead to the conclusion that payments have been made so as to
claim the expenditure. Hence, AO was right in disallowing the expenditure- Harish Textile Engrs. Ltd. v. DCIT
[2015] 63 taxmann.com 66 (Bombay)
