Settlement Commission review is limited to legality; a marginal voluntary offer during settlement did not invalidate the application.

Judicial review of a settlement order is limited to examining whether the order is contrary to the settlement scheme. The Gujarat HC held that the Settlement Commission did not commit jurisdictional error in accepting the assessee's disclosure of undisclosed income from land dealings routed through another person, because the explanation was supported by the material before it and no corroborative link was shown to require further explanation of seized mobile-phone material belonging to someone else. The Court also held that a further voluntary offer made during settlement, to resolve one aspect of the dispute, was not a revised settlement application and did not invalidate the proceedings. The writ challenge therefore failed.

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Issues: (i) Whether the Settlement Commission committed any jurisdictional error in accepting the settlement application despite the Revenue's objection that the assessee had not properly disclosed the manner in which the undisclosed income was earned and had not satisfactorily explained the seized material relating to the mobile phone of another person; (ii) Whether the assessee's further voluntary offer of Rs. 25 lakhs during the settlement proceedings amounted to an impermissible revision of the settlement application so as to invalidate the settlement.

Issue (i): Whether the Settlement Commission committed any jurisdictional error in accepting the settlement application despite the Revenue's objection that the assessee had not properly disclosed the manner in which the undisclosed income was earned and had not satisfactorily explained the seized material relating to the mobile phone of another person?

Analysis: The settlement proceedings were based on the assessee's disclosure of undisclosed income arising from land dealing routed through another person, and that factual position was accepted by the Settlement Commission on the strength of the material before it, including the affidavit of the intermediary. The Court held that, in the absence of further evidence contradicting the disclosure, the Settlement Commission was justified in accepting the explanation that the assessee was not directly dealing in the relevant transactions and could not be compelled to explain material recovered from another person's mobile phone when no corroborative linkage to the assessee was established. The Court also noted that judicial review over a settlement order is limited to examining whether the order is contrary to the Act.

Conclusion: The challenge on this ground failed and the settlement order was upheld.

Issue (ii): Whether the assessee's further voluntary offer of Rs. 25 lakhs during the settlement proceedings amounted to an impermissible revision of the settlement application so as to invalidate the settlement?

Analysis: The Court distinguished the case law relied upon by the Revenue on the basis that the assessee had not filed a revised settlement application after objection, but had only made an additional voluntary offer to put quietus to one aspect of the settlement in the spirit of compromise. The Court accepted the Settlement Commission's view that such marginal additional offer did not amount to a fresh or revised disclosure invalidating the application under the settlement provisions.

Conclusion: The additional voluntary offer did not invalidate the settlement application and the Revenue's objection was rejected.

Final Conclusion: The writ petition challenging the settlement order was found to be without merit, and the impugned settlement was allowed to stand.

Ratio Decidendi: In judicial review of a settlement order, interference is warranted only when the order is contrary to the governing provisions of the settlement scheme, and a marginal voluntary addition made to resolve an issue in the course of settlement does not by itself convert the application into an invalid revised disclosure.

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