Full and true disclosure in settlement proceedings can justify penalty, and selective challenge to the order was rejected.

Full and true disclosure is essential in settlement proceedings, and the factual finding of suppression can justify denial of complete immunity from penalty. The Madras High Court noted that the assessees had not disclosed material facts at the earliest opportunity and that the Settlement Commission found suppression of production, clandestine removal of goods, use of parallel invoices, and receipt of sale proceeds in cash. It also applied the principle that a party invoking the settlement mechanism cannot accept only favourable portions of the order while challenging the adverse part. On that basis, the court declined to interfere with the Commission's order and the challenge to the penalty failed.

---

---

Issues: Whether the Settlement Commission could be interfered with for confirming penalty after finding that the assessees had not made full and true disclosure and had suppressed material facts, and whether the writ petitions could succeed after the assessees had already invoked the settlement mechanism.

Analysis: The writ court noted that the question of full and true disclosure was essentially factual and that the assessees had not disclosed the relevant facts at the earliest opportunity. The Commission had found suppression of production and clandestine removal of goods by use of parallel invoices and receipt of sale proceeds in cash. Relying on the settled principle that an assessee who chooses the settlement route cannot thereafter accept only the favourable parts of the order and challenge the adverse part, the court held that the Commission's discretionary power to grant immunity did not compel complete immunity from penalty. The court also found support in the Supreme Court authority relied on by the Revenue, which emphasized that incomplete disclosure can justify denial of relief.

Conclusion: The challenge to the penalty failed, and the court declined to interfere with the Settlement Commission's order.

---