Voluntary disclosure income before search can be adjusted against block assessment additions as available real income

Income disclosed under the Voluntary Disclosure of Income Scheme, 1997 before a search was treated as real income available with the assessee for explaining additions in block assessment. The analysis considered the scheme's charging provision, exclusion clauses for certain search or survey situations, the requirement to credit the disclosed amount, and the bar on reopening completed assessments or claiming set-off under the scheme. On that basis, the disclosed income was held available for adjustment against the block assessment additions, and the issue was answered in favour of the assessee.

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Issues: Whether income disclosed under the Voluntary Disclosure of Income Scheme, 1997 prior to the search could be treated as available to the assessee for explaining additions made in block assessment and for claiming set-off or relief in respect of the same income.

Analysis: The scheme was examined in the light of its charging provision, the exclusionary provisions barring disclosure in certain search or survey situations, the requirement of crediting the disclosed amount, and the bar against reopening completed assessments or claiming set-off under the scheme. The disclosure had been made before the search, and the Court treated the disclosed amount as real income available with the assessee. The Court also relied on the principle that an undisclosed or estimated addition represents real income and may be used as a source for explaining further additions. On that basis, the disclosed amount was held to be available for adjustment against the additions made in the block assessment.

Conclusion: The issue was answered in favour of the assessee and against the Revenue.

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