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2020 (9) TMI 540 - HC - Income TaxExercise of power of the Settlement Commission u/s 245D - Scope of enquiry - HELD THAT:- Commission is required to give an opportunity to the applicant, the CIT, they are entitled to be represented by an Authorized Representative and after hearing them and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission, may, in accordance with the provisions of the Act, pass such order as it deems fit. Scope of enquiry is not confined to the statements made in the application, the response filed by the applicant to the report of the CIT, but also the submissions made during the personal hearing and any further evidence as may be placed before it by the applicant or obtained by the Settlement Commission in exercise of its power and then proceed to pass orders as it deems fit. Procedure at the (2C) stage is undoubtedly summary in nature and the application filed by the 1st respondent/writ petitioner could not have been declared as invalid at the said stage, as the issue requires adjudication, which can be done only when the application is decided under Section 245D(4) of the Act. Decision relied on by the Revenue in the case of Mr.Hassan Ali Khan [2008 (1) TMI 20 - HIGH COURT, BOMBAY] would, in fact, support the conclusion, which we have arrived at in the preceding paragraph. It has been held that the Settlement Commission can treat the application as invalid meaning thereby non est, if the applicant is not made a full and true disclosure and further must disclose how the income has been derived. The expression “invalid” will have to be given a meaning of “non est”, in other words, as if not made on and from the inception. If on the material, it arrives at a conclusion even prima facie that there was no true and full disclosure, it has then a right to declare the application as 'invalid'. As rightly pointed out by the Hon'ble Division Bench, there is a prima facie opinion formed by the Commission at the (2C) stage and this can never substitute an order under sub-Section (4) of Section 245D. The issues, which were requested to be settled by the 1st respondent before the Commission qua, the report of the CIT cannot obviously be an issue for a prima facie decision at the (2C) stage. Appeal filed by the appellant-Revenue is dismissed.
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