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SetCom can’t declare application invalid citing non-disclosure of full & true income if issue needs to be settled

September 16, 2020[2020] 119 173 (Madras)

INCOME TAX : Section 245D(2C) does not spell out an adjudicatory process and procedure to be adopted by Settlement Commission is summary in nature Therefore, if in opinion of Settlement Commission, based on report, issue needs to be adjudicated, the application can not be declared as invalid and each case which comes before Commission has to be decided on own facts Where applicant, a foreign company had entered into a contract with NTPC for supply and installation of steam generators in India and after passing draft assessment order, assessee-company approached Settlement Commission and while considering application under section 245D(2C), Commission being guided by report of CIT that composite contract of offshore and onshore supplies were artificially bifurcated, declared application as invalid for non-disclosure of true and full facts, since to decide whether a contract is a composite or a separate contract a deeper probe in a factual scenario as well as legal position is required, application of assessee can not be declared as invalid on account of failure to fully and truly disclosed his income and, thus, application should be proceeded with under section 245D(2C) and Settlement Commission should take up matter for consideration under section 245D(4) and take decision after adjudicating claim
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