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2013 (6) TMI 574 - HC - Income TaxValidity of order passed by the Settlement Commission u/s 245D - validity of application moved for settlement of cases - whether the Commission bound to consider whether there has been a full and true disclosure at the stage of a proceeding under sub-section 2C of Section 245D - Held that:- Error in the order of the Commission in the present case lies in permitting the application for settlement of cases to proceed without that satisfaction being recorded by the Commission, which is a fundamental aspect which goes to the root of its jurisdiction to entertain an application under Section 245C. The Commission has proceeded on the basis that at this stage it cannot hold a view that the income offered in the statement of facts is not a true and full disclosure. In the same vein, the Commission was of the view that the subject of true and full disclosure is open for examination in the proceedings under subsection 4 of Section 245D. In holding this, the Commission has moved over to the stage of Section 245D(4) without entering upon the fundamental issue as to whether the application was or was not invalid. This exercise had to be carried out by the Commission at the stage of the proceedings under sub-section 2C of Section 245D on the basis of the report submitted by the Commissioner and after hearing the applicant. The Commission has abdicated the discharge of that obligation at that stage, by deferring its consideration at a later stage. The Commission, thus was completely in error in holding that unless it is established by a competent authority that the purchases are all bogus, that the application at this stage could not be held to be invalid, though the department may have in its possession certain evidence indicating the fact that the income has not been truly and fully disclosed, or that the quantum of income disclosed in the application in comparison to the claim of the department is meager. The Commission could not have declined to determine as to whether the application fulfilled the requirements or prerequisites of a valid application under Section 245C(1). The Commission has to consider as to whether or not the application is invalid. Thus the impugned order of the Settlement Commission is unsustainable and would have to be quashed and set aside.
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