Voluntary Disclosure of Income Cannot Be Retracted Without Proof of Coercion: High Court

The appellant, Shri Narayan Rao Hebri, a 71-year-old individual, was subjected to a survey operation under Section 133A of the Income-tax Act. During the survey, the assessee voluntarily offered an additional income of Rs. 1.25 Crores for the Assessment Year 2017-18 through a formal letter dated September 29, 2016. This income was later included in his return of income.

During the assessment proceedings, the taxpayer attempted to argue that this additional income should be taxed at normal slab rates rather than the stringent 60% rate prescribed under Section 115BBE. The Assessing Officer rejected this, applying the higher tax rate. The assessee’s appeals before the CIT(A) and the ITAT were dismissed, leading to this appeal before the High Court.

Main Issue: Whether a taxpayer can retract a voluntary disclosure of income made during a survey and whether the Revenue is obligated to prove the evidentiary basis of income that the assessee themselves admitted in a valid return of income.

HC’s Order: The Hon’ble High Court dismissed the appeal, ruling in favor of the Income Tax Department. The Court emphasized that the admission made by the assessee in the letter dated September 29, 2016, was never retracted. Also, the assessee consciously filed a return of income including this amount and verified it, which constitutes a “self-assessment.”

The Bench held that in cases of admitted income, the burden does not lie on the AO to establish the evidentiary basis; rather, the taxpayer is bound by their own voluntary disclosure. The Court found no evidence of perversity in the lower authorities’ decisions and confirmed that the additional income was correctly taxed at the special rate under Section 115BBE.

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