Voluntary disclosure is inadmissible in assessment proceedings, and unproved deductions alone do not establish deliberate concealment.

A voluntary disclosure made under section 24 of the Finance (No. 2) Act, 1965 could not be used in assessment proceedings because the statute barred it as evidence against the declarant. The Revenue therefore could not sustain action under section 23A on the basis of that letter. The remaining material only showed that certain claimed deductions, including wastage, interest and director-related credits, were not proved. That, by itself, did not establish deliberate concealment or suppression of distributable commercial profits, which was required for section 23A action.

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Issues: Whether an order under section 23A could be sustained on the basis of a voluntary disclosure letter, and whether disallowance of claimed deductions for want of proof amounted to deliberate concealment of income justifying action under section 23A.

Analysis: The letter of voluntary disclosure contained an admission that income had remained undisclosed up to the relevant assessment years, but section 24(11) of the Finance (No. 2) Act, 1965 barred use of the declaration as evidence against the declarant in assessment proceedings. The Revenue therefore could not rely on that letter to support the section 23A order. The remaining material showed only that certain claimed deductions were not proved, including wastage, interest, and credits in the name of a director. Such disallowances did not establish a deliberate omission of income from the accounts. The rule applicable to section 23A required proof of circumstances warranting the conclusion that distributable commercial profits had been suppressed by deliberate non-disclosure, which was not shown on the facts found.

Conclusion: The order under section 23A could not be sustained on the basis of the voluntary disclosure letter or on the material relied upon by the Revenue, and the question was answered in favour of the assessee and against the Department.

Ratio Decidendi: A voluntary disclosure made under section 24 of the Finance (No. 2) Act, 1965 is inadmissible in assessment proceedings, and disallowance of claims for want of proof does not by itself establish deliberate concealment for sustaining action under section 23A of the Indian Income-tax Act, 1922.

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