An intelligence officer said prime facie it looked like a "morphed" picture but "we are investigating the matter".
This is the first time a terrorist in Kashmir has been spotted with an AR-15 M4 rifle, widely used by the US Army in Iraq and Afghanistan wars.
The militants operating in Kashmir have mostly been using AK assault rifles -- both Chinese and Russian made.
A senior police official said there was nothing surprising about a Hizbul terrorist being spotted with a US rifle in the valley as weapons of all kinds are freely available in Pakistan's FATA (Federally Administered Tribal Areas) region.