R. JAYASIMHA BABU, J.

A right to be dishonest is the right that is asserted by the petitioner herein. It is his contention that the Settlement Commission has a duty to entertain the offer made by the petitioner even if found to be falling short of full and true disclosure required of an applicant under section 245C of the Income-tax Act, 1961 (hereinafter referred to as "the Act") and not to reject the same under section 245D(1) of the Act The petitioner set up a factory near Coimbatore for the manufacture of synthetic gems. He promoted a private limited company for that purpose. The shares of that company are held by the petitioner, his wife and daughter. The total investment made is Rs. 75.5 lakhs. The only source from which that investment was made was claimed by the assessee to be income derived from agriculture and dairy farming by himself, his wife and daughter. He claimed that besides 15 acres of agricultural lands owned by his wife, she had taken on lease 100 acres of land and had derived substantial income therefrom. It is not in dispute that the petitioner, his wife and his daughter are not assessees under the Agricultural Income-tax Act of the State and there was also no evidence of their having compounded their liability if any, for tax under the Tamil Nadu Agricultural Income-tax Act. The Assessing Officer as also the Commissioner rejected the claim of the petitioner that the entire investment came from that source and had held that well over Rs. 50 lakhs out of that investment was not attributable to that source at all and was unexplained.

The petitioner applied to the Settlement Commission in that background seeking settlement in respect of the assessment years 1976-77 to 1986-87 offering to pay tax on the sum of Rs. 30 lakhs which sum he was willing to have treated as investments made by the applicant from his own resources and not as investment made by his wife and daughter. The offer so made was subject to several conditions. The conditions as enumerated by him in this application were(i) Tax shall be levied on the aforesaid income for the assessment years 1976-77 to 1986-87.

(ii) No interest under any of the provisions of the Income-tax or the Wealth-tax Act shall be levied.

(iii) No penalty under any of the provisions of the Income-tax Act shall be levied.

(iv) No penal action including prosecution shall be initiated against the applicant in respect of the aforesaid assessments under the Income-tax Act or the Wealth-tax Act.

(v) The applicant, his wife and daughter shall be assessed to wealth-tax in respect of the investments. The investments in the respective names shall be treated as belonging to each of them.

(vi) The applicant is willing to pay the tax remaining due after adjusting the payment already made within a reasonable time as may be allowed by the Settlement Commission.

When that application came up before the Settlement Commission, the Commission rejected the same after finding that the assessee had failed to make a full and true disclosure of his income which had not been disclosed before the Assessing Officer. Such rejection was supported by the Settlement Commission, by the reasons stated by it in paragraph 4 of its order read as under,

"We further find that the Assessing Officer has already made elaborate enquiries which reveal that the applicant and his wife would not have derived any substantial agricultural income. The applicant himself does not own any agricultural lands. His wife owns only 15 acres of land. It is claimed by the applicant that he had taken on lease from his brother-in-law, agricultural lands of 100 acres by paying lease rent of Rs. 20, 000 per annum. The Assessing Officer, however, found that the applicant's brother-in-law, owned only 33 acres of land and, therefore, could not have possibly leased agricultural lands to the extent of 100 acres. It is further seen that the lessor was held to be not liable to agricultural income-tax since the income was below the taxabl