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To take a decision on the above issues, an adjudication process is required to be adopted and the application field by the 1st respondent/writ petitioner could not have been thrown out at the stage of 245D (2C) of the Act. Further, by referring to the factual details, it is submitted that there were no failure on the part of the 1st respondent/writ petitioner to disclose fully and truly any of the facts or particulars of the income and the application ought to have been allowed to be proceeded under section 245D (2C). It is further submitted that in terms of sub-Section (4) of Section 245D, the Commission is entitled to adjudicate the matter and pass orders as it deems fit on the matters covered in the application.

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Section 245D of the Income Tax Act, 1961- Settlement Commission - Settlement Commission can treat the application as invalid meaning thereby non est, if the applicant is not made a full and true disclosure and further must disclose how the income has been derived.

Facts: An application under section 244C was submitted to the Settlement Commission. The Settlement Commission passed under section 245D(1) allowed the application to be proceeded with. Consequently, the Commissioner of Income-tax (International Taxation) filed his report under section 245D(2B). The Settlement Commission fixed the date of hearing for considering the application in terms of Section 245D(2C) and in the said hearing, the Authorized Representative of writ petitioner appeared and reiterated the stand taken in the settlement application that they had fully and truly disclosed all facts and that the manner in which income was earned by the 1st respondent relating to the assessment years 2015-16 to 2018-19. The Settlement Commission held that the application was not maintainable, not allowed to be proceeded with and is treated as 'invalid' under section 245D(2C).

Held, that the Settlement Commission can treat the application as invalid meaning thereby non est, if the applicant is not made a full and true disclosure and further must disclose how the income has been derived. The expression "invalid" will have to be given a meaning of "non est", in other words, as if not made on and from the inception. If on the material, it arrives at a conclusion even prima facie that there was no true and full disclosure, it has then a right to declare the application as 'invalid'. As rightly pointed out by the Hon'ble Division Bench, there is a prima facie opinion formed by the Commission at the (2C) stage and this can never substitute an order under sub-Section (4) of Section 245D. The issues, which were requested to be settled by the 1st respondent before the Commission qua, the report of the CIT cannot obviously be an issue for a prima facie decision at the (2C) stage. For all the above reasons, we find that the Revenue has not made out any ground to interfere with the order passed by the learned Single Bench. - DEPUTY CIT V/s HITACHI POWER EUROPE GMBH - [2020] 29 ITCD Online 010 (MAD)