Voluntary search disclosure based on seized material sustained where no coercion or mistake was proved

A voluntary disclosure of undisclosed income based on seized material during search proceedings retains evidentiary value where the assessee does not prove coercion, mistake, or any reliable basis for retraction. Here, the seized printout and related papers indicated unaccounted cash receipts, and the assessee failed to correlate those receipts with a lower profit rate through client-wise or job-wise evidence. The later attempt to reduce the addition was therefore rejected, and the Commissioner (Appeals)'s enhancement to the amount disclosed by the assessee was upheld.

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Issues: Whether the assessee's disclosure of undisclosed income based on seized material and the statement made during search could be retracted so as to reduce the addition, and whether the Commissioner (Appeals) was justified in enhancing the undisclosed income to the amount disclosed by the assessee.

Analysis: The seized printout and related papers showed unaccounted cash receipts, and the assessee's Managing Director made a later written disclosure offering undisclosed income at 50% of the identified unrecorded turnover. The assessee failed to establish coercion, mistake, or any reliable basis to displace that disclosure. The surrounding material also showed that the cash receipts were not fully accounted and that the assessee had not correlated the unaccounted receipts with any lower margin of profit by client-wise or job-wise evidence. In these circumstances, the disclosure and the statement recorded during search retained evidentiary value, and the later attempt to compute income at a lower rate was not accepted.

Conclusion: The enhancement made by the Commissioner (Appeals) was upheld, and the undisclosed income at Rs. 1,07,06,088 was sustained.

Final Conclusion: The addition was confirmed on the basis of the assessee's voluntary disclosure and the seized material, and the appeal failed.

Ratio Decidendi: A voluntary disclosure made on the basis of seized material during search proceedings, if not shown to have been made under coercion or mistake, can be relied upon in assessment and a bare retraction without supporting evidence will not displace it.

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