ITAT Bangalore: Assessee Cannot Withdraw Voluntary Income Disclosure Made During Search Assessment

The assessee, Shri C.R. Manohar, is a film producer running Golden Lion Films and also a partner in a real-estate venture. For AY 2014-15, he at first instance declared his income at Rs. 13.49 lakh. A search under section 132 on 15.03.2016 led to the first Section 153A assessment, where certain cash payments surfaced from seized documents. During those proceedings, the assessee voluntarily accepted 20% of the cash components as additional income, and later, through a detailed written letter dated 22.12.2017, agreed to offer the remaining 80% of the identified expenditure as taxable income. Therafter, the AO assessed income at Rs. 5.14 crore, and a later rectification adjusted the tax demand.

A second search followed on 01.01.2019, leading to another round of 153A proceedings. This time, the assessee filed a return repeating the same additions that had arisen earlier, and the AO simply accepted the returned income. The CIT(A) dismissed the appeal filed by the assessee. The matter then reached the Tribunal.

Main Issue: Whether the assessee could retract income voluntarily admitted in writing during the first 153A assessment on the ground that it was mistakenly re-offered in the second 153A return and unsupported by incriminating material.

Tribunal Decided: The Tribunal held that the assessee’s own written acceptance was categorical, voluntary, and decisive. Since he himself admitted both the 20% and the remaining 80% of the cash expenditure as taxable income during the earlier 153A assessment, and again reflected the same income in the second 153A return, he could not later claim that this was an error or an unintended disclosure. The Bench emphasised that no allegation of coercion was made at any stage, and the assessee’s written letter was clear in accepting liability.

The Tribunal also rejected reliance on CBDT Circular No.14 of 1955, observing that the Circular protects taxpayers only where they are genuinely unaware of their entitlements, not where they have consciously offered income after being confronted with seized material. Once income is conceded during assessment, the Tribunal ruled, it cannot be withdrawn at the appellate stage. Finding no infirmity in the order of the CIT(A), the Tribunal dismissed the appeal.

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