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2021 (4) TMI 1038 - MADRAS HIGH COURTSettlement Commission order - additional disclosures of income during the pendency of the Settlement Commission - HELD THAT:- Findings of the order of the Settlement Commission clearly established that there are many additions regarding the undisclosed income by the assessee. The additions are made due to the search conducted and the Department has stated that the undisclosed income are more and a regular assessment is to be made in order to scrutinise all the books of accounts and incriminating evidences for the purpose of forming an opinion and to determine the tax payable by the assessee. When such an exercise to be made under the Act is not permitted and if the issues are settled, then this Court has no hesitation in holding that the very purpose and object of the provisions of the Act is defeated. This apart, the very scope of Section 245C of the Act cannot be widened so as to permit the Settlement Commission to make a regular assessment, which is not contemplated. The very factum that there are additional disclosures of income during the pendency of the Settlement Commission, which were not made available at the time of application by the assessee under Section 254C of the Act there is a sufficient cause to reject the application under Section 245C of the Act. The very spirit of the provision is that the application must contain full and true disclosure of income. Once it is established that the application dose not contain full disclosure of income and additions are made during the pendency of the application, it is sufficient to arrive a conclusion that the application made by the assessee is not in consonance with the provisions of Section 245C of the Act and therefore, the same is liable to be rejected in limine. Contrarily, in the present case, the Settlement Commission travelled beyond the scope of Section 245C of the Act and adjudicated the additional income disclosed and further gone to the extent of settling the issues based on the additional income, which were not disclosed at the time of filing of an application under Section 245C of the Act. It is established that the assessee has not approached the Settlement Commission with clean hands. The assessee has not disclosed the true and full income and more specifically, the undisclosed income recovered during the search were not made available before the Settlement Commission along with the application and this would be sufficient to reject the application by the Settlement Commission. Contrarily, the Settlement Commission proceeded by adjudicating the issues on merits on the presumption that the Settlement Commission can pass an assessment order, which is otherwise not permissible under the provisions of Section 245C of the Act. Thus, the order passed by the Settlement Commission is perverse and not in consonance with the provisions of the Income Tax Act, 1961 and the Settlement Commission exceeded its jurisdiction by entering into the venture of a regular assessment, which is otherwise to be made by the Assessing Officer under the other provisions of the Income Tax Act, 1961.
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