Full and true disclosure in settlement applications cannot be cured by later voluntary disclosures during pendency.

A settlement application under Chapter XIX-A must contain a full and true disclosure of undisclosed income and its derivation before it is maintainable. The Settlement Commission may examine the disclosure at each relevant stage and make adjustments on the material before it, but it cannot treat a later enlarged disclosure as curing an originally defective application. Where the assessee voluntarily discloses additional undisclosed income while the application is pending, that conduct may show that the original disclosure was not full and true. On these facts, the Court held that the application was not maintainable and set aside the Commission's order.

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Issues: Whether a settlement application under Section 245C remained valid when the assessee, while the proceeding was pending, made additional disclosures of undisclosed income and whether the Settlement Commission could still proceed to determine income under Section 245D(4).

Analysis: The Court held that the scheme of Chapter XIX-A requires a full and true disclosure of undisclosed income and the manner of its derivation as a condition precedent for a valid settlement application. The Commission has power to examine the disclosure at every relevant stage and to make adjustments or additions on the material before it, but that power does not permit a revised or enlarged disclosure to cure an originally deficient application. Where the assessee voluntarily offers further undisclosed income during the pendency of the application, before any final settlement, that conduct supports the conclusion that the original disclosure was not full and true. On the facts, the later offer of additional income was not merely an acceptance of figures suggested by the Commission, but an independent disclosure beyond the original application.

Conclusion: The settlement application was not founded on full and true disclosure and the Settlement Commission ought not to have proceeded on it.

Final Conclusion: The judgment of the learned Single Judge and the order of the Settlement Commission were set aside, and the appeal succeeded for the Revenue.

Ratio Decidendi: A voluntary disclosure of additional undisclosed income made while a settlement application is pending can establish that the original application did not contain the full and true disclosure required for maintainability under the settlement scheme.

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