Law:

Section:

Section 245C of the Income-tax Act, 1961 - Settlement Commission - Application for settlement of cases - Whether unless and until assessee makes full and true disclosure of income which has not been disclosed before Assessing Officer, it cannot maintain application under section 245C - Held, yes - Whether although a decision of Apex Court may not reopen a concluded decision if before a decision of court or Commission is arrived at decision of Apex Court is rendered such decision of Apex Court shall be binding on court or Commission for that matter - Held, yes - Whether once it was held that application filed for settlement of cases was not maintainable on ground that assessee had not made true and full disclosure of income, proceeding with such application and deciding issue would be outside power of Settlement Commission, as application itself was not in conformity with section 245C(1) - Held, yes - Whether merely because assessee had participated in proceedings, would not prevent assessee from questioning jurisdictional issue - Held, yes FACTS The assessee company was the cent per cent holding company of company 'E'. The assessee company availed of a loan from company 'N' for the purpose of advancing loan in turn to company 'E' on short term basis with interest at the rate of 16 per cent per annum, as against the rate of 15 per cent per annum paid by the company to its creditors, thus earring an income by one per cent margin in the payment and receipt of interest. The Assessing Officer made additions under section 68 on account of the borrowing of the company as credits of which the sources were not satisfactory explained and consequently, disallowed the interest liability thereon, i.e., no interest being treated as payable on loans which were not accepted as genuine. Questioning the said order, the assessee preferred an appeal before the Tribunal. The company also filed an application under section 245C(1) before the Settlement Commission for settlement of its case for the assessment years 1987-88 and 1988-89. The said application was admitted by the Commission under section 245D(1). The Settlement Commission found that the funds really belonged to company…

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