The main legal point established in the judgment is the requirement of full and true disclosure of income in settlement applications under Section 245C of the Income Tax Act, 1961, and the Commission's jurisdiction to re-hear a matter if necessary.

Headnote:
Income Tax - Settlement Order - Income Tax Act, 1961, Section 245D(4) - Summary of Acts and Sections: The court discussed the provisions of Section 245D(4) and Section 245D(6) of the Income Tax Act, 1961, which pertain to settlement orders and the power to declare a settlement void if obtained by fraud or misrepresentation of facts. The court emphasized the requirement of full and true disclosure of income and the jurisdiction of the Settlement Commission in dealing with undisclosed income. The court also highlighted the statutory mandate for the Commission to re-hear a matter if necessary, without expressing any opinion on the facts of the case.
Fact of the Case:

A search was conducted in the premises of the respondent (assessee) and certain seizures were made. The assessee filed an application for settlement under Section 245C of the Income Tax Act, 1961. The Settlement Commission passed an order on 18.9.1990 in terms of Section 245D(4). The Commissioner of Income Tax (CIT) sought to declare the settlement order void and withdraw the benefits granted, alleging fraud and misrepresentation of facts.
Finding of the Court:

The court held that the Commission's decision to reject the CIT's prayer was legally tenable. It emphasized the requirement of full and true disclosure of income in settlement applications and the Commission's jurisdiction to re-hear a matter if necessary. The court directed the Commission to re-hear the matter, allowing the parties to present further material for consideration.
Issues: The issues involved the validity of the settlement order under Section 245D(4) and the power of the Commission to declare a settlement void if obtained by fraud or misrepresentation of facts.
Ratio Decidendi: The court emphasized the statutory mandate for full and true disclosure of income in settlement applications and the Commission's jurisdiction to re-hear a matter if necessary. It highlighted the purpose of the provision to declare a settlement void when obtained by fraud or misrepresentation of facts.
Final Decision: The appeal was disposed of, and the Commission was directed to re-hear the matter, allowing the parties to present further material for consideration.

ARIJIT PASAYAT, J.

Challenge in this appeal is to the order passed by the Income Tax Settlement Commission, Additional Bench Calcutta (in short the `Commission). By the impugned order it was held that the prayer made by the Commissioner of Income Tax, West Bengal-VIII, Calcutta (in short `CIT) to declare the settlement order passed by the Commission on 18.9.1990 to be void and for withdrawing the benefits and immunities granted to the respondent-assessee was not acceptable. The order dated 18.9.1990 was passed under Section 245D(4) of the Income Tax Act, 1961 (in short the `Act). The application by the CIT for declaration of the said order to be void was made purportedly under Section 245D(6) of the Act.

2. The controversy in the present appeal has arisen in the following factual background:

A search was conducted in the premises of the respondent (hereinafter referred to as the `assessee) on 8.2.1989 and 9.2.1989 and certain seizures were made. The assessee filed an application for settlement in terms of Section 245C of the Act on 13.1.1989. It is relevant to note that application for settlement was made was the financial year 1985-86. The Settlement Commission passed an order on 18.9.1990 in terms of Section 245D(4). It is to be noted that in the application for settlement before the Commission the assessee claimed to have received Rs.1.5 crores from seven persons on 31.3.1985 in cash. All these seven persons were claimed to be residents of Sikkim and that the amounts were received by way of loan. The details of the receipts are as follows:

(i) Rs. 20,00,000 From Shri Srinivas Agarwal, Singtam, Sikkim.

(ii) Rs. 20,00,000 From Shri Hari Krishan Agarwal, Singtam, Sikkim.

(iii) Rs. 20,00,000 From Shri Keshu Ram Agarwal, Melli, Sikkim.

(iv) Rs. 20,00,000 From Shri Subhas Ch. Minda, Melli, Sikkim.

(v) Rs. 20,00,000 From Shri Vinod Kr. Minda, Melli, Sikkim.

(vi) Rs. 25,00,000 From Shri Gauri Shankar Agarwal, Melli, Sikkim.

(vii) Rs. 25,00,000 From Shri Chandulal Agarwal, Melli, Sikkim.

3. Certain documents were produced before the Commission to prove the genuineness of the aforesaid loans. The Commission accepted the stand of the assessee and did not cast any doubt on the credibility of sum of Rs.1.5 crores to have been advanced as loans. It appears that enquiries were conducted by the Central Bureau of Investigation (in short the `CBI) at the request of the revenue regarding the aforesaid loans, at Jorthang, Melli and Singtam. In the opinion of the CBI the alleged lenders had no means or financial capacity to advance huge loan to the assessee and were mere name lenders. When the investigating officer contacted the so called lenders, they denied having advanced any loan. Some of the certificates purportedly issued were not authentic. One of the persons i.e. the then Commissioner of Siliguri municipality Mr. Rabin Paul admitted that he had no direct knowledge of the transaction and, therefore, the assessee had obtained the certificate by practising fraud. The further fact is that some of the lenders i.e. S/Shri Gauri Shankar Agarwal, Subhas Ch. Minda and Vinod Kr. Minda had made payment of tax to the Sikkim authorities after the order of settlement. It was projected before the Commission at the first instance as if they were tax payers. Enquiries revealed that Shri Subhas Ch. Minda was not assessed to income tax up to the period 1985-86. Therefore, the submission made before the Commission that he was assessed regularly before the Sikkim authorities was false.

4. In the aforesaid background prayer was made by the CIT for declaration of the order passed by the Commission to be void and for withdrawal of the benefits granted. The motion was opposed by the assessee according to whom the order of the Commission was final in terms of Section 245I. There was no power for any review of the earlier order and in any event the Commission had analysed the factual position. Fresh analysis would amount to sitting in judgment over the earlier decision whic

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