Full and true disclosure under settlement law was upheld where later additions did not undermine the original settlement basis.

Full and true disclosure under section 245C(1) of the Income-tax Act requires disclosure of undisclosed income and the manner of its derivation, but later disclosures do not automatically show that the original settlement application was false or incomplete. The Gujarat HC distinguished cases where subsequent additions materially changed the settlement basis from cases where the extra disclosure was limited in the context of multiple assessment years. On the facts, the additional disclosure of Rs. 50 lakhs each was not treated as undermining the original applications, and the Settlement Commission's acceptance of the settlement under section 245D(4) was sustained.

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Issues: Whether the Settlement Commission was justified in accepting the settlement applications despite the assessees making further disclosures during the settlement proceedings, and whether such subsequent disclosures showed that the original disclosures were not full and true.

Analysis: The requirement under section 245C(1) of the Income-tax Act, 1961 is that the applicant must make a full and true disclosure of undisclosed income and the manner in which it was derived. The Court distinguished cases where later disclosures were massive and materially altered the settlement basis from cases where the additional amount was comparatively limited in the overall context of all assessment years under settlement. On the facts, the further disclosure of Rs. 50 lakhs each was viewed against the total disclosures made for multiple years and was not treated as showing that the original applications were false or incomplete. The Commission was therefore not found to have erred in accepting the settlement and proceeding under section 245D(4).

Conclusion: The challenge to the Settlement Commission's order failed; the further disclosures did not invalidate the settlement applications, and the Commission's acceptance of settlement was sustained.

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