Documents seized during a search can be valid basis for additions, even if they are in the form of personal diaries or informal records.
Recently, Delhi HC has held that the documents seized during a search can be valid basis for additions, even if they are in the form of personal diaries or informal records.
Let us have a Short Overview of the case:
Judgment Insight | Delhi High Court | May 2025
Shri Om Sai Infrapromoters (P.) Ltd. vs. DCIT
Citation: [2025] 175 taxmann.com 155 (Delhi)
Date: 22 May 2025
Bench: Justice Vibhu Bakhru & Justice Tejas Karia
The Delhi High Court has reaffirmed a key principle under the Income-tax Act, 1961-documents seized during a search can be valid basis for additions, even if they are in the form of personal diaries or informal records.
Core Facts:
During a search under Section 132, handwritten diaries were seized from the assessee (a real estate co-developer).
These diaries recorded cash receipts related to flat bookings.
The Assessing Officer made additions under Section 69A, treating these as unexplained money.
The assessee argued these diaries were dumb documents and could not form the basis of assessment.
High Court’s Observations:
The Court held that incriminating documents found during a valid search, including informal diaries, can be relied upon if they bear a nexus with real income.
The entries were not standalone or isolated-they were cross-verified with formal books and banking transactions, and showed consistency.
Even if some cash transactions were not recorded in Tally, their presence in seized diaries provided credible evidence.
Importantly, the Court clarified that the definition of ‘books of account’ under Section 2(12A) is inclusive and flexible-diaries can qualify, depending on content and context.
Legal Significance:
This judgment was delivered after considering the landmark Supreme Court ruling in Common Cause v. Union of India, where the Apex Court held that loose sheets/diaries without corroborative evidence cannot alone justify additions.
However, in this case, the High Court distinguished the facts and ruled that where entries are corroborated with real transactions and bank records, they can be relied upon.
Key Takeaway for Tax Professionals & Real Estate Sector:
“Where informal records (like diaries) are backed by cross-verification and reconciliation with formal books or real evidence, they gain legal reliability. Dismissing them as ‘dumb documents’ without full examination may not be legally sustainable.”
Final Judgement:
Appeals dismissed. Addition under Section 69A upheld. No substantial question of law found.
A timely reminder that bookkeeping transparency and aligning all records-formal and informal-is vital, especially in sectors like real estate
The copy of the order is as under:
