Retracted disclosure needs corroboration; telescoping fails once the foundational addition is deleted and bank credits remain unexplained.

A retracted declaration under the Voluntary Disclosure of Income Scheme is only a starting point and cannot, by itself, justify an income addition without independent corroborative evidence; once the assessee withdraws the declaration, the revenue must prove taxable income by positive material. The note also explains that telescoping relief for bank deposits depends on the existence of the related declared cash, so if the main addition based on that cash is deleted, the telescoping basis falls away and the bank credits must be tested separately as unexplained income.

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Issues: (i) Whether additions for undisclosed income could be sustained solely on the basis of a retracted declaration made under the Voluntary Disclosure of Income Scheme, 1997 without corroborative evidence. (ii) Whether the telescoping relief granted in respect of bank deposits could survive after deletion of the main addition based on the declaration.

Issue (i): Whether additions for undisclosed income could be sustained solely on the basis of a retracted declaration made under the Voluntary Disclosure of Income Scheme, 1997 without corroborative evidence.

Analysis: A declaration or admission may be relevant evidence, but it is not conclusive proof of taxable income once it is retracted. Where the assessee withdraws the declaration, the revenue must still establish the existence of taxable income by positive material. A retracted declaration can support an addition only when it is shown to have been made voluntarily and is corroborated by independent evidence. In the absence of such corroboration, the declaration remains only a starting point for inquiry and cannot itself substitute for proof of income.

Conclusion: The addition based only on the retracted declaration could not be sustained, and the finding was in favour of the assessee.

Issue (ii): Whether the telescoping relief granted in respect of bank deposits could survive after deletion of the main addition based on the declaration.

Analysis: The deposits in the bank account were separately found and remained unexplained on the assessee's own showing. The telescoping granted by the first appellate authority depended on the existence of the cash declared under the scheme. Once the addition representing that declared cash was deleted, the basis for telescoping disappeared. The bank credits therefore had to be examined on their own footing and, in the absence of a satisfactory explanation, were liable to be added back.

Conclusion: The deletion of the bank deposit additions could not be sustained, and the finding was in favour of the revenue.

Final Conclusion: The assessee succeeded on the primary additions made only on the basis of the retracted disclosure, while the revenue succeeded on the unexplained bank deposits, resulting in allowance of both cross-appeals.

Ratio Decidendi: A retracted admission cannot, by itself, justify an income addition unless supported by independent corroborative evidence, and telescoping cannot be retained once its foundational addition is deleted.

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