Settlement Commission jurisdiction requires full and true disclosure; incomplete disclosure makes the settlement application not maintainable.

Under Section 245(C), a valid settlement application requires a full and true disclosure of income, the manner of derivation, and the additional tax payable; this is a jurisdictional precondition for the Settlement Commission to act. Where the initial disclosure is incomplete and revised statements are later filed to offer additional income, the defect goes to maintainability and the settlement route cannot be used to bypass regular assessment. The Commission also cannot assume the Assessing Officer's role beyond a valid application. The Madras HC held that the application was not maintainable and that the Commission lacked jurisdiction to proceed, so the settlement order was interfered with in favour of the Revenue.

---

---

Issues: Whether the application before the Settlement Commission was maintainable in the absence of full and true disclosure of income and whether the Commission exceeded its jurisdiction in entertaining the settlement application.

Analysis: The statutory scheme of Section 245(C) requires an assessee, at the threshold, to make a full and true disclosure of income, the manner in which it was derived, and the additional tax payable. This disclosure is a jurisdictional precondition for the Settlement Commission to proceed. Where the departmental objection shows that the original disclosure was incomplete and the assessee later furnished revised statements offering additional income, the defect goes to the root of maintainability. The settlement mechanism is an enabling and exceptional remedy, not an absolute right, and it cannot be used to bypass regular assessment where the foundational disclosure requirement is not satisfied. The Commission also cannot assume the role of the Assessing Officer and decide undisclosed income beyond the scope of a valid settlement application.

Conclusion: The settlement application was not maintainable and the Settlement Commission lacked jurisdiction to proceed on the basis of the incomplete original disclosure. The impugned settlement order was rightly interfered with, in favour of the Revenue.

---