Section 292C of the Income Tax Act
Income-tax Act, 2025: s.524
Section 292C of the Income-tax Act, 1961 corresponds to section 524 (Presumption as to assets, books of account, etc) of the Income-tax Act, 2025.
Read section 524 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 292C is K.P. Varghese v. ITO (131 ITR 597), cited in 989 of the 1,055 judgments on BharatTax that turn on this section.
Leading authorities on Section 292C
An addition to income cannot be made merely on the basis of a difference in valuation of assets or a Valuation Officer's report without establishing actual understatement of consideration or the source of unexplained funds through proper enquiry. The Assessing Officer must conduct proper enquiry and satisfy the conditions for making such additions.
The recording of a satisfaction note by the Assessing Officer is a jurisdictional prerequisite for assessments under Section 153C, and the six-year limitation period for such assessments is reckoned from the date this satisfaction is recorded.
Uncorroborated loose papers or documents found during a search operation have no evidentiary value and cannot be the sole basis for determining undisclosed income. Additions based on such material require independent evidence to establish trustworthiness and a direct link to the assessee.
Loose sheets of paper, excel sheets, or diaries, often referred to as 'dumb documents,' are wholly irrelevant as evidence and not admissible under Section 34 of the Evidence Act if they lack evidentiary value. Additions to income cannot be made solely based on such documents without corroborating, reliable, and admissible evidence supported by other circumstances.
Additions to income cannot be made solely based on uncorroborated third-party statements, documents, or loose sheets seized during a search, and such evidence requires the assessee to be provided with an opportunity for cross-examination.
Loose sheets of paper containing jottings, not shown to be part of regularly maintained books of accounts, do not constitute incriminating material for initiating assessment under section 153C. The satisfaction note required for 153C proceedings must specify the assessment year to which the alleged incriminating material belongs.
Additions under the Income Tax Act cannot be made solely based on entries in loose sheets, dumb documents, or mere sworn statements without independent, reliable, and cogent corroborating evidence. Uncorroborated loose papers are not admissible evidence on their own, even if the original context was criminal investigation.
Where an assessment order is merely a copy-paste of observations from an investigation wing's appraisal report without independent verification, it is not a valid basis for making additions to income.
Evidence corroborating entries of payments or loan/interest advancements found in seized material from a third party must specifically show the actual transfer of money from the third party to the recipient to be admissible.
Liability cannot be fastened solely on the basis of a self-incriminating sworn statement made during a search, as such statements are not conclusive and require corroborative evidence.
