The presumption under section 132(4A) of the Income-tax Act is rebuttable.

1. The Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, has referred the following question of law arising out of its order dated July 10, 1981, in respect of the assessment years 1970-71 to 1973-74 :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the finding of the Commissioner of Income-tax (Appeals) that the reopening of assessment under section 147(a) was not justified ? "

2. The brief facts of the case are that the assessee has advanced large sums to Messrs. Citric India Ltd. While completing the original assessments, the Income-tax Officer held that interest at 12 per cent. on the sums advanced to Messrs. Citric India Ltd. accrued to the assessee and included it in the computation of income ignoring the assessee's contention that no such income accrued to it because of disputes with the said company. On February 13, 1975, a branch office of the assessee in Rajmahal Palace was searched and a slip of paper was seized. On this slip, interest due from Messrs. Citric India Ltd. for various periods from April 1, 1965, to June 30, 1972, was noted under the heading "Interest due from Messrs. Citric India Ltd. at 12 per cent." The Income-tax Officer felt that this amount was calculated on compound interest basis. The assessee had failed to disclose this information and consequently because of the failure on the part of the assessee to declare full and true particulars of its income, the assessments were, accordingly, reopened under section 147(a) of the Income-tax Act and the balance of the interest which was not added in the original assessment was charged to tax. In appeal, the Commissioner of Income-tax (Appeals) accepted the assessee's contention that there was no nexus between the slips seized and the interest earned by the assessee. The reassessment so framed was cancelled.

3. The Revenue challenged the order before the Income-tax Appellate Tribunal and the Tribunal came to the conclusion that an inference on the basis of the seized papers that the assessee charged interest on compound interest basis cannot be inferred. The seized paper cannot be taken as evidence that the assessee was receiving interest under the table over and above what was stipulated in the agreement.

4. The submission of learned counsel for the Revenue is that, in accordance with the provisions of section 132(4A) of the Income-tax Act, if any document is found in the possession or control of any person in the course of such search, it may be presumed that such document belongs to such person and that the contents are true. It was further submitted that, in the said paper, sums of Rs. 21,369.86 and Rs. 1,27,187.21 have been shown in respect of the financial years 1965-66 and 1966-67 and, therefore, the entries in respect of the remaining assessment years should be considered as interest earned by the assessee.

5. Learned counsel for the assessee has submitted that in D..B, I.T. References Nos. 314, 315 and 316 of 1985 decided on April 13, 1988 (CIT v. S.M.S. Investment Corporation 1988 (173) ITR 393) , this court has held that a presumption can be raised but such presumption is a rebuttable presumption and relates to a question of fact. It was held in that case that the Tribunal has held that the presumption stands duly rebutted and this being a question of fact, the application was rejected accordingly.

6. We have considered the matter. In accordance with section 132(4A), if any document is found in the course of a search, then by legal fiction, a presumption has to be drawn that such document belongs to the person from whose possession or control it was found and the contents of such documents are true. In accordance with the provisions of section 132(4A), we are of the opinion that a presumption has to be drawn that the seized documents belongs to the assessee and is a true document. The said document was found from the branch office of the assessee which was situated on Rajmahal Palace (Ho