Full and true disclosure in settlement applications is mandatory; later annexures cannot cure a jurisdictional defect.

A settlement application under Chapter XIX-A of the Income-tax Act is maintainable only when the original application contains a full and true disclosure of undisclosed income and the manner of its derivation. A later revised annexure cannot substitute or cure a defective disclosure, because the statutory scheme treats the initial disclosure as the jurisdictional foundation and does not permit revision that would effectively amount to a fresh application. The High Court was justified in setting aside the Settlement Commission's order and remanding the matter where the disclosure was incomplete and procedurally defective. The assessee's challenge failed and the remand was sustained.

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Issues: (i) Whether an application for settlement under the Income-tax Act must contain a full and true disclosure of undisclosed income and the manner in which it was derived, and whether a revised annexure could validly alter that disclosure after the application had been filed. (ii) Whether the High Court was justified in setting aside the Settlement Commission's order and remanding the matter for fresh adjudication.

Issue (i): Whether an application for settlement under the Income-tax Act must contain a full and true disclosure of undisclosed income and the manner in which it was derived, and whether a revised annexure could validly alter that disclosure after the application had been filed.

Analysis: The statutory scheme of Chapter XIX-A requires the applicant to make a full and true disclosure of undisclosed income, the manner of derivation, and the additional tax payable. The disclosure in the prescribed application is the jurisdictional foundation for settlement proceedings. The procedure under Section 245D and the Rules distinguishes between the initial application and the annexure, but the annexure remains part of the same disclosure package and cannot be used to substitute or revise the original application. Permitting revision of the disclosure would amount to allowing a fresh application while the statute bars withdrawal and does not contemplate such revision.

Conclusion: The requirement of full and true disclosure is mandatory, and a revised annexure could not validly cure the original defective disclosure. The Settlement Commission could not treat the original application as maintainable on the basis of such revision, and the finding was against the assessee.

Issue (ii): Whether the High Court was justified in setting aside the Settlement Commission's order and remanding the matter for fresh adjudication.

Analysis: The High Court found material procedural and substantive defects, including non-supply of the revised annexure to the Revenue, omission to consider significant items affecting undisclosed income, and an unduly low penalty in light of the Commission's own assessment. Once the foundational requirement of full and true disclosure was found wanting, the validity of the settlement proceedings stood seriously impaired. In these circumstances, remand for fresh consideration was within the permissible scope of judicial review, and no ground was made out for interference in appellate jurisdiction.

Conclusion: The High Court was justified in remanding the matter to the Settlement Commission. This issue was against the assessee.

Final Conclusion: The appeals failed, and the Revenue succeeded in sustaining the High Court's order remitting the matter to the Settlement Commission.

Ratio Decidendi: A settlement application under Chapter XIX-A of the Income-tax Act is maintainable only on a full and true disclosure made in the original application, and the statutory scheme does not permit revision of that disclosure by a later annexure so as to cure a jurisdictional defect.

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