# AJMERA HOUSING CORPORATION & ANR. ETC. ETC v. COMMISSIONER OF INCOME TAX - **Citation:** [2010] 10 S.C.R. 183 - **Court:** Supreme Court of India - **Decided:** 2010-08-20 - **Case number:** Civil Appeal Nos. 6827-6848 of 2010 - **Bench:** D.K. Jain, H.L. Dattu - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ajmera-housing-corporation-anr-etc-etc-v-commissioner-of-income-tax-26272 - **Pages:** 34 ## Headnote Income Tax Act, 1961 - s 245C- Settlement of cases - Pre-requisites for - Held: Section 245C mandates disclosure B of 'full and true' particulars of undisclosed income and 'the C manner' in which such income had been derived - Amount of income tax payable on such undisclosed income is to be computed and mentioned in the application - Income Tax Settlement Commission has the jurisdiction to pass any order on the matter covered by the application only when it records D its satisfaction on the said aspect - There is no stipulation for ·revision of application filed uls. 245C(1) and thus, determination of income by Settlement Commission has necessarily to be with reference to the income disclosed in the application filed uls. 245C in the prescribed form - On E facts, Income Tax Settlement Commission decided to proceed with the application of the assessee u/s. 245C(1 ), disclosing additional incomes at different stages of proceedings and thereafter, passed final order uls. 2450(4), determining the total income of assessee for assessment F years - Order of High Court setting aside the final order, and remanding the matters back to Settlement Commission for consideration afresh, does not call for interference - Disclosure of Rs. 11.41 crores as additional undisclosed income in the revised annexure as against the income of Rs. 1. 94 crores, sufficient to establish that the application made G by assessee u/s. 245C(1) could not be entertained as it did not contain a 'true and full' disclosure' of their undisclosed income and 'the manner' in which such income had been 183 H 184 SUPREME COURT REPORTS [2010) 10 S.C.R. A derived - Income Tax Settlement Commission (Procedure) Rules, 1987 - r. 6 - Constitution of India, 12950 - Article 136. Interpretation of statutes - Taxing statute - Construction of - Held: Is to be construed strictly - Relevant provision is 8 to be looked at - There is no presumption as to a tax - Nothing is to be read in and nothing is to be implied - There is no equity about a tax. The appellant-assessee filed an application u/s. 245C(1) of the Income Tax Act, 1961 for settlement before C the Income Tax Settlement Commission, disclosing an additional income of Rs.1,94,33,580/- for the assessment years 1989-90 to 1993-94, in addition to the income declared in the returns of income submitted by them earlier. The Commissioner of Income Tax objected to the D entertainment of the application for settlement as not being a full and true disclosure of their income. On 19th September, 1994, the assessee filed a revised settlement application containing "confidential annexure and related papers", declaring an additional income. On 17th E November, 1994, the Settlement Commission decided to proceed with the application. During the course of hearing in the case before the Settlement Commission, ' the assessee made a further disclosure of undisclosed income. On 29th January, 1999, the Settlement F Commission passed the final order u/s. 2450(4), determining the total income of the assessee for assessment years 1989-90 to 1993-94 at Rs.42.58 crores. It imposed a 'token' penalty of Rs.50 lakhs as against the minimum leviable penalty of Rs.562.87 lakhs, as per its own assessment and graoted:-immunity-to-thectssessee G against prosecution andfo respect of other penalties under the Act. The Commissioner filed a writ petition. The High Court allowed the writ petition and set aside the order of the Settlement Commission. It declared order dated 17th November, 1994 as void ab-initio and quashed H AJMERA HOUSING CORPORATION v. 185 . COMMISSIONER OF INCOME TAX order dated 29th January, 1999. The High Court remitted A the proceedings back tp the Settlement Commission for decision afresh. Pursuant to and in furtherance of the order passed by this Court, the matter was heard afresh by the High Court. The High Court again set aside Settlement Commission's order dated 29th January, 1999 B and remitted the matter back to ·the Settlement Commission f ## Text _Characters 0–39,941 of 65,496. This is a partial read: ask again with offset=39941 for what follows._ [2010] 10 S.C.R. 183 AJMERA HOUSING CORPORATION & ANR. ETC. ETC. A v. COMMISSIONER OF INCOME TAX (Civil Appeal Nos. 6827-6848 of 2010) AUGUST 20, 2010 [D.K. JAIN AND H.L. DATTU, JJ.] Income Tax Act, 1961 - s 245C- Settlement of cases - Pre-requisites for - Held: Section 245C mandates disclosure B of 'full and true' particulars of undisclosed income and 'the C manner' in which such income had been derived - Amount of income tax payable on such undisclosed income is to be computed and mentioned in the application - Income Tax Settlement Commission has the jurisdiction to pass any order on the matter covered by the application only when it records D its satisfaction on the said aspect - There is no stipulation for ·revision of application filed uls. 245C(1) and thus, determination of income by Settlement Commission has necessarily to be with reference to the income disclosed in the application filed uls. 245C in the prescribed form - On E facts, Income Tax Settlement Commission decided to proceed with the application of the assessee u/s. 245C(1 ), disclosing additional incomes at different stages of proceedings and thereafter, passed final order uls. 2450(4), determining the total income of assessee for assessment F years - Order of High Court setting aside the final order, and remanding the matters back to Settlement Commission for consideration afresh, does not call for interference - Disclosure of Rs. 11.41 crores as additional undisclosed income in the revised annexure as against the income of Rs. 1. 94 crores, sufficient to establish that the application made G by assessee u/s. 245C(1) could not be entertained as it did not contain a 'true and full' disclosure' of their undisclosed income and 'the manner' in which such income had been 183 H 184 SUPREME COURT REPORTS [2010) 10 S.C.R. A derived - Income Tax Settlement Commission (Procedure) Rules, 1987 - r. 6 - Constitution of India, 12950 - Article 136. Interpretation of statutes - Taxing statute - Construction of - Held: Is to be construed strictly - Relevant provision is 8 to be looked at - There is no presumption as to a tax - Nothing is to be read in and nothing is to be implied - There is no equity about a tax. The appellant-assessee filed an application u/s. 245C(1) of the Income Tax Act, 1961 for settlement before C the Income Tax Settlement Commission, disclosing an additional income of Rs.1,94,33,580/- for the assessment years 1989-90 to 1993-94, in addition to the income declared in the returns of income submitted by them earlier. The Commissioner of Income Tax objected to the D entertainment of the application for settlement as not being a full and true disclosure of their income. On 19th September, 1994, the assessee filed a revised settlement application containing "confidential annexure and related papers", declaring an additional income. On 17th E November, 1994, the Settlement Commission decided to proceed with the application. During the course of hearing in the case before the Settlement Commission, ' the assessee made a further disclosure of undisclosed income. On 29th January, 1999, the Settlement F Commission passed the final order u/s. 2450(4), determining the total income of the assessee for assessment years 1989-90 to 1993-94 at Rs.42.58 crores. It imposed a 'token' penalty of Rs.50 lakhs as against the minimum leviable penalty of Rs.562.87 lakhs, as per its own assessment and graoted:-immunity-to-thectssessee G against prosecution andfo respect of other penalties under the Act. The Commissioner filed a writ petition. The High Court allowed the writ petition and set aside the order of the Settlement Commission. It declared order dated 17th November, 1994 as void ab-initio and quashed H AJMERA HOUSING CORPORATION v. 185 . COMMISSIONER OF INCOME TAX order dated 29th January, 1999. The High Court remitted A the proceedings back tp the Settlement Commission for decision afresh. Pursuant to and in furtherance of the order passed by this Court, the matter was heard afresh by the High Court. The High Court again set aside Settlement Commission's order dated 29th January, 1999 B and remitted the matter back to ·the Settlement Commission for consideration afresh. Therefore, the appellants filed the instant appeals. Dismissing the appeals, the Court c HELD: 1.1 The disclosure of 'full and true' particulars of undisclosed income and 'the manner' in which such income had been derived are the pre-requisites for a valid application u/s. 245C (1) of the Income Tax Act, 1961 for settlement. Additionally, the amount of income tax D I payable on such undisclosed income is to be computed and mentioned in the application. Section 245C(1) of the·. Act mandates 'full and true' disclosure of the particulars of undisclosed income and 'the manner' in which such income was derived and, therefore, unless the Settlement E Commission records its satisfaction on this aspect, it will not have the jurisdiction to pass any order on the matter covered by the application. [Paras 22 and 23) [205-A-C] 1.2 Even when the Settlement Commission decides to proceed with the application, it will not be denuded of its power to examine as to whether the assessee in his application u/s. 245C(1) of the Act, has made a full and true disclosure of his undisclosed income. The report(s) F of the Commissioner and other documents coming on record at different stages of the consideration of the case, G before or after the Settlement Commission has decided to proceed with the application, would be most germane to determination of the said. question. It is plain from the language of sub-section (4) of section 245D of the Act that H 186 · SUPREME COURT REPORTS [2010) 10 S.C.R. A the jurisdiction of the Settlement Commission to pass such orders as it may think fit is confined to the matters covered by the application and it can extend only to such matters which are referred to in the report of the Commissioner under sub-section (1) or sub-section (3) of 8 the said Section. A 'full and true' disclosure of income, which had not been previously disclosed by the assessee, being a pre-condition for a valid application u/ s. 245C(1) of the Act, the scheme of Chapter XIX-A does not contemplate revision of the income so disclosed in c the application against item No. 11 of the form. Moreover, if an assessee is permitted to revise his disclosure, in essence, he would be making a fresh application in relation to the same case by withdrawing the earlier application. Section 245C(3) of the Act which prohibits the 0 withdrawal of an application once made under subsection (1) of the said Section is instructive in as much as it manifests ttiat an assessee cannot be permitted ~o resile from his stand at any stage during the proceedings. Therefore, by re.vising the application, the applicant would be achieving something indirectly what he cannot E otherwise achieve directly and in the process rendering the provision of sub-section (3) ~f section 245C of the Act otiose and meaningless. The scheme of said Chapter is clear and admits no ambiguity. [Para 26] [210-B-G] " F 1.3 In the scheme of Chapter XIX-A, there is no stipulation for revision of an application filed u/s. 245C(1) of the Act and thus the natural corollary is that determination of income by the Settlement Commission has necessarily to be with reference to the income G disclosed in the application filed under the said section in the prescribed form. [Para 28] [211-D] H 1.4 A taxing statute is to be construed strictly. In a taxing Act, one has to look merely at what is said in the AJMERA HOUSING CORPORATION v. 187 COMMISSIONER OF INCOME TAX relevant provision. There is no presumption as to a tax. A Nothing is to be read in, nothing is to be implied. There is no room for any intendment. There is no equity about a tax. [Para 27] [210-H; 211-A] Cape Brandy Syndicate vs. Inland Revenue B Commissioners (1921) 1 KB 64; Federation of A.P. Chambers of Commerce and Industry and Ors. vs. State of A.P. and Ors.(2000) 6 SCC 550; Commissioner of Sa/es Tax, Uttar Pradesh vs. The Modi Sugar Mills Ltd. 1961 (2) SCR 189 - referred to. c 1.5 The view of the High Court that it would not be proper to set aside the proceedings before the Settlement Commission eve.n though it was convinced that the assessee had not made full and true disclosure of their income while making application u/s. 245C of the Act, D cannot be accepted. The High Court in its earlier order dated 28th July, 2000 while declaring order dated 17th November, 1994, as ab initio void and setting aside order dated 29th January, 1999, remitted the case to the Settlement Commission to decide the entire matter E afresh, including the question of maintainability of the application u/s. 245C(1) of the Act. The said order of the High Gourt was put in issue before this Court and was set aside and the case was remanded back to the High Court for consideration afresh. Nevertheless, all points F raised by the parties, including the plea of the revenue that the application filed by the assessee before the Settlement Commission was not maintainable as the assessee had not made a full and true disclosure of their undisclosed income were kept open. The High Court G addressed itself on the said issue and found that the assessee had not made a full and true disclosure of their income while making the application u/s. 245C(1 ), yet did not find it proper to set aside the. proceedings on that ground. Having recorded the said adverse finding on the H 188 SUPREME COURT REPORTS [2010] 10 S.C.R. A very basic requirement of a valid application u/s. 245C(1) of the Act, the High Court's opinion that it would not be proper to set aside the proceedings is clearly erroneous. [Para 30) [211-F-G; 212-A-D] 8 W T Ramsay Ltd. Vs. Inland Revenue Commissioners 1981 (1) All ER 865; Inland Revenue Commissioners vs. Duke of Westminster (1936) AC 1, (1935) All ER 259 - referred to. 1.6 In the instant case, the disclosure of Rs.11.41 C crores as additional undisclosed income in the revised annexure, filed on 19.09.1994 alone was sufficient to establish that the application made by the assessee on 30.09.1993 u/s. 245C(1) of the Act could not be entertained as it did not contain a 'true and full' disclosure of their D undisclosed income and 'the manner' in which such income had been derived. [Para 31) [213-D-E] 1.7 The submission that. the High Court failed to consider, in their correct perspective the two reports E submitted by the Commissioner on 30.08.1995 and 20.10.1997, in as much as, in the latter report the Commissioner had himself computed the undisclosed income at Rs.42.52 crores, which was equivalent to the amount finally determined by the Settlement Commission, thus there was no justification for the remand of the case F back to the Settlement Commission, does not merit acceptance. [Para 32) [213-G-H; 214-A] 1.8 In the impugned order, on a critical examination of the order passed by the Settlement Commission with G reference to the said two reports, in particular the reconciliation report submitted by the Commissioner on 20.10.1997, estimating the undisclosed income at Rs. 187.20 crores, the High Court found that only that part of the report dated 20.10.1997, which dealt with 'on money' H AJMERA HOUSING CORPORATION v. 189 COMMISSIONER OF INCOME TAX was highlighted before this Court, while other incomes, A investments, receipts or payments were not covered in that part of the statement. The High Court also observed that the manner in which expenses were shown, created a serious doubt about the expenditure of Rs.734.02 lakhs. The High Court also noted that the Se.ttlement B Commission had not properly dealt with the amount of Rs.911.51 lakhs on account of unexplained expenses, loans and surplus amount of Rs.488.98 lakhs, while assessing the total income and thus, an amount of Rs.14.49 crores was left out while determining the c undisclosed income of the assessee. Besides, the High Court also commented that having com.e to the conclusion that the penalty leviable worked out to be Rs. 562.87 lakhs, the Settlement Commission had no reason for levying a token penalty of Rs. 50 lakhs, which was not 0 even 10% of the minimum leviable penalty. Ultimately, the High Co.urt observed that since the Se~tlement Commission did not supply annexure filed on 19.09.1994, declaring additional income of Rs.11.41 crores, due opportunity had not been given to the revenue to place E its stand properly; that huge amount of unexplained expenses, unexplained loans and unexplained surplus, total of which was more than Rs.14 crores, was not taken into consideration while passing the final order and that the Settlement Commission had imposed token penalty F of Rs.50 lakhs while on its own assessment leviable penalty would have been Rs.562.87 lakhs. Further, if the amount which had not been taken into consideration while assessing the total undisclosed income was to be taken into account, the amount of leviable penalty would have been much more. In the light of these facts, the High G Court formed the opinion that it would be in the interest of justice to set aside the final order passed by the Settlement Commission and to remand the case back to it for adjudication on assessee's application afresh. It cannot be said that there was no justification for order H 190 SUPREME COURT REPORTS [2010] 10 S.C.R. A of remand by the High Court and that the order passed by the Settlement Commission should have been affirmed. The High Court was correct in making the order of remand and no good ground is made out for interference in exercise of jurisdiction under Article 136 B of the Constitution. [Para 32] [214-8-H; 215-A-C] •· 1.9 The submission that the scope of judicial review being limited, the High Court should not have interfered with the order of the Settlement Commission in exercise C of its power under Article 226 of the Constitution, cannot be accepted. Having conceded before the High Court that the assessee was not pressing the point of maintainability of the writ petition before the High Court, the assessee cannot be now permitted to resile from its earlier stand and raise the same issue before this Court. D Even otherwise, the manner in which assessee's disclosures of additional income at different stages of proceedings were entertained by the . Settlement Commission, rubbishing the objection of the Commissioner that the assessee had not made a full and E true disclosure of their income in the application u/s. 245C(1 ), leaves much to be desired. [Para 33] [215-D-F] 1.10 It is true that details of the 'full and true' disclosure of income and 'the manner' in which such F income is derived is to be given in the form of an annexure to the application, which is treated as confidential and is not to be forwarded to Commissioner for the purpose of his report under sub-section (1) of section 2450 of the Act and, therefore, prima-facie there seems to be some merit in the apellant's argument that G since the Commissioner was not entitled to receive a copy of the annexure to the application before the Settlement Commission had decided to proceed with the application, no prejudice was caused to the Commissioner because of the alleged non-supply of the H . AJMERA HOUSING CORPORATION v. 191 COMMISSIONER OF INCOME TAX revised annexure at a stage anterior to the making of A order u/s. 2450(1) of the Act. But when it is tested on the anvil of the scheme of Chapter XIX-A, the said argument fails as the ·revision of the annexure by itself was prejudicial to the interest of the revenue. Besides, revision of the annexure is tantamount to revision of the B application, not contemplated in the scheme, withholding of the information regarding filing of revised annexure, disclosing undisclosed income of Rs.11.41 crores as against the income of Rs.1.94 crores, disclosed in the annexure forming part of the application, deprived the c Commissioner of his right to object to the maintainability of assessee's application on the ground that the assessee had not made true and full disclosure of their income in the previous application, the foundational requirement of a valid application u/s. 245C(1) of the Act. 0 The Commissioner is entitled to costs quantified at Rs. 50,000/-. [Paras 34, 35] .[215-B-F] Jyotendrasinhji vs: S.I. Tripathi and Ors 1993 Supp (3) SCC 389; Mis R.8. Shreeram Durga Prasad and Fatehchand Nursing Das vs. Settlement Commission (IT & WT) and Anr. E 1989 (1) SCC 628; Shriyans Prasad Jain vs. Income Tax Officer and Ors. 1993 Supp (4) 727; Sanghvi Reconditioners Private Limited vs. Union of India and Ors 2010 (2) SCC 733; Commissioner of Income Tax, Jalpaiguri vs. Om Prakash Mittal (2005) 2 SCC 751; Mrs. Margaret Lalita Samuel vs. F The lndo Commercial Bank Ltd. (1979) 2 SCC 396 - referred to. Case Law Reference: 1993 Supp (3) sec 389 Referred to. Para 14 G 1989 (1) sec 628 Referred to. Para 14 1993 Supp (4) 727 Referred to. Para 14 201 o (2) sec 733 Referred to. Para 17 H 192 SUPREME COURT REPORTS [2010) 10 S.C.R. A (2005) 2 sec 751 Referred to. Para 17 (1979) 2 sec 396 Referred to. Para 19 (1921) 1 KB 64 Referred to. ·Para 27 B (2000) 6 sec 550 Referred to. Para 27 1961 (2) SCR 189 Referred to. Para 27 1981 (1) All ER 865 Referred to. Para 30 (1935) All ER 259 Referred to. Para 30 c CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 6827-6848 of 2010. From the Judgment and order dated 08/07/2009 of the High Court of Judicature at Bombay.in WP No. 57/2000 & WP. D No. 63/2000 & WP No. 64/2000 & WP No. 65/2000 & WP No. 6612000 & WP No. 73/2000 & WP No. 92/2000 & WP No. 93/ 2000 & WP No.161/2000 & WP No.177/2000 & WP No.192/ 2000 & WP No.193/2000 & WP No.1965/2000 & WP No. 2191/1999 & WP No. 2742/1999 & WP No. 2778/1999 & WP E No. 2779/1999 & WP No. 2780/1999 & WP No. 2832/1999 & WP No. 2833/1999 & WP No. 2834/1999 & WP No. 2835/ 1999. Dr. A.M. Singhvi, P.H. Parekh, Sameer Parekh, F Carmichael Martin, Pallavi Srivastava, Ashish Vaid, Nitin Thukral, Parekh & Co., for the Appellants. H.P. Raval, Kunal Bahri, T.A. Khan, Amoy Nargolkar, B.V. Balramdass, Varun Sarin for the Respondent. G The Judgment of the Court was delivered by D.K. JAIN, J. 1. Leave granted. 2. These appeals, by special leave, arise out of the judgment and order dated 8th July, 2009 delivered by the High H AJMERA HOUSING CORPORATION v. 193 COMMISSIONER OF INCOME TAX [D.K. JAIN, J.] Court of Judicature at Bombay in a batch of 22 writ petitions: A By the impugned common judgment, the High Court has set aside order dated 29th January, 1999 passed by the Income Tax Settlement Commission (for short "the Settlement Commission") under Section 2450(4) of the Income Tax Act, 1961 (for short "the Act"), and has remanded all the B proceedings back to the Settlement Commission for a fresh consideration in the light of the observations made in the impugned judgment. 3. Since the case has had a chequered history and, in fact, C the present appeal is the second round of litigation between the parties before this Court, in order to appreciate the questions raised, it would be necessary to take notice of the foundational facts in greater detail. The Ajmera Group of firms, consisting of mainly 4 firms and their partners are engaged in the business of land development and building/construction. For D the sake of convenience, facts relating to the main firm viz. M/ s. Ajmera Housing Corporation, Bombay (hereinafter referred · to as "the assessee"), in which other firms and partners have stakes, are being noticed. These are: E In January, 1989 and again in December, 1992, searches were conducted at the premises of the Group under Section 132(1) of the Act and voluminous books of account, loose papers and other documents were seized during the second search. Files, loose papers and a computer together with its F hard disk were seized from the residence of one B.L. Vora, Accountant of Ajmera Group. In his statement B.L. Vora admitted that he was managing secret books and documents in code words as per the instructions given to him by one Chhotalal Ajmera, who was controlling the whole Ajmera Group. G On the basis of the seized documents, assessment for the assessment year 1989-90 was completed, determining the total income at Rs.18.93 crores as against the returned income of Rs.70 lakhs. Similarly, assessment for the assessment year H 194 SUPREME COURT REPORTS (2010) 10 S.C.R. A 1990-91 was completed at Rs.4.01 crores as against the returned income of Rs.4 lakhs. An addition of Rs.90 lakhs was also made to the returned income for the assessment year 1991-92. Prior to the completion of assessment for the said assessment years, an order under Section 132(5) of the Act B was passed determining the concealed income of the group at Rs.200.60 crores for the assessment year 1993-94 4. On 30th September, 1993 the assessee filed an application under Section 245C(1) of the Act before the C Settlement Commission, disclosing an additional income of Rs.1,94,33,580/- for the assessment years 1989-90 to 199394, in addition to the income declared in the returns of income submitted by them earlier. The Settlement Commission called for a report from the Commissioner of Income Tax, (for short "the Commissioner") in terms of Section 2450(1) of the Act 0 read with Rule 6 of the Income Tax Settlement Commission (Procedure) Rules, 1987 (for short "the 1987 Rules"). On 27th January, 1994, the Commissioner, while objecting to the entertainment of the application for settlement submitted by the assessee, as not being a full and true disclosure of their E income, suggested that, at any rate, the income of the group should not be settled at less than Rs. 223.55 crores. 5. Arguments on the question of whether or not the Settlement Commission should proceed with the application F were concluded on 12th September. 1994 and orders were reserved. However, on 19th September, 1994, the assessee filed a revised settlement application containing "confidential annexure and related papers", declaring therein an additional income of Rs.11.41 crores. On 17th November, 1994, the G Settlement Commission ·passed an order under Section 2450(1) of the Act deciding to proceed with the application. Accordingly, the Settlement Commission asked the Commissioner to submit a further report, as required under Rule 8 of the 1987 Rules. The Commissioner in his elaborate H report dated 30th August, 1995, while observing that the AJMERA HOUSING CORPORATION v. 195 COMMISSIONER OF INCOME TAX [D.K. JAIN, J.] income disclosed by the assessee should not be treated as A true and correct, reported that the total unaccounted income of the assessee was to the tune of Rs.187.09 crores. A yearwise summary of unaccounted receipts and investments made by the assessee, compiled on the basis of the seized books of account and documents, was submitted with the report. It s appears that on 20th October, 1997, the Commissioner sent to the Settlement Commission a general note on reconciliation of various annexures to the earlier report, submitted on 30th August, 1995. 6. Hearing in the case commenced before the Settlement C Commission on 6th October, 1998 and various hearings took place thereafter, but some time in the year 1999 the assessee made a further disclosure of undisclosed income of Rs.2.76 crores, apparently during the course of hearing, as no application/letter to that effect is on record. Hearings concluded D on 14th October, 1998. 7. Vide his letter dated 6th January, 1999, ·.the departmental representative furnished to the Settlement Commission some clarifications regarding the taxability of E advance booking amounts received by the assessee. In the said letter, the Commissioner requested the Settlement Commission to examine the question of identifying the "so called" persons who had booked the flats because this information would be necessary in order to locate them. Instead F of responding to the said issue raised by the Commissioner, the assessee, by their letter dated 25th January, 1999, revised their statement of facts and offered an "ad-hoc income of Rs.1 crore for the assessment year 1992-93 and Rs.6 crores for the assessment year 1993-94 to cover up any discrepancies and/ G or any unforeseen contingencies". On 29th January, 1999, the Settlement Commission passed the final order under Section 2450(4), ·determining the total income of the assessee for assessment years 1989-90 to 1993-94 at Rs.42.58 crores. Observing that the assessee had co-operated during the H 196 SUPREME COURT REPORTS [2010] 10 S.C.R. A proceedings before it, the Settlement Commission imposed a "token" penalty of Rs.50 lakhs as against the minimum leviable penalty of Rs.562.87 lakhs, as per its own assessment. The Settlement Commission also granted immunity to the assessee against prosecution and in respect of other penalties under the B Act. 8. Dis-satisfied with the order by the Settlement Commission, the Commissioner challenged it by preferring a writ petition in the High Court of Bombay. Holding that the C Settlement Commission had not given any finding as to whether there was full and true disclosure of the income by the assessee, by a strongly worded order, dated 28th July, 2000, the High Court allowed the writ petition and set aside the order. It would be useful to extract the relevant observations in the judgment: D E F G H "In the instant case, if we look at the facts in the light of the legal canvass, in our opinion, the Commission at the very inception ought to have addressed itself on the question as to whether the application was in compliance with the first and foremost requirement of Section 245C( 1 ). The Commission ought to have noticed that in the application made under Sectio]l 245-C(1) disclosure was to the extent of Rs. 1.94 crores. The report of the Commissioner as envisaged under Section 245-0(1) was called for and submitted and thereafter just before the order could be passed under Section 245-0(1) the assessee respondent No. 2 declared additional income of Rs. 11.41 crores. At this stage itself, it was obligatory on the part of the Settlement Commission to apply his mind to the issue as to whether full and true disclosure of the income and the manner in which it was derived, has been made or not. We find no material in the order dated 17.11.1994 in this behalf. Had the Settlement Commission applied its mind to the said facts and had addressed itself on this aspect of the matter regarding subsequent disclosure of Rs. 11.41 AJMERA HOUSING CORPORATION v. 197 COMMISSIONER OF INCOME TAX [D.K. JAIN, J.] crores and had it dealt with the question of maintainability A of application under Section 245C(1 ), then it would not have been open for this Court to sit in appeal over the finding recorded by the Settlement Commission in this behalf. B On the fact of the record, we find fault with decision taken by the Settlement Commission to allow the application to c be proceeded with without determining the basic facts on which further jurisdiction of the Tribunal depended. We, therefore, find that the said order of the Settlement Commission suffers from non-application of mind of the facts available on record." o Dealing with the grievance of the Commissioner that he was not apprised of the revised settlement application filed by the assessee on 19th September, 1'994, i.e. after the hearing on the question of whether or not the assessee's application is to be proceeded with in terms of Section 2450(1) of the Act had concluded, disclosing additional income of Rs. 11.41 crores, the High Court observed that order dated 17th November, 1994 was bad, illegal and ab-initio void being in breach of principles of natural justice. Accordingly, the High Court held that all subsequent proceedings and orders passed therein would be of no consequence and they had to be set aside because the subsequent order under Section 2450(4) of the Act could survive only subject to the validity of the order required to be passed under Section 2450(1) of the Act. Even on the merits E F of the quantification of the total undisclosed income of the G assessee, the High Court held that the final order was clearly perverse and could not stand the scrutiny of law. Finally declaring order dated 17th November, 1994 as ab-initio void and quashing order dated 29th January, 1999, the High Court remitted the proceedings back to the Settlement Commission, H 198 SUPREME COURT REPORTS [2010) 10 S.C.R. A keeping all the questions open, with a direction to decide the application afresh in accordance with law. 9. Aggrieved by the decision of the High Court, the assessee challenged the same before this Court. By order 8 dated 11th July, 2006, this Court set asid~ the order of the High Court solely on the ground that the second report submitted by the Commissioner on 20th October, 1997, estimattng the undisclosed income at Rs. 42.5 crores, which approximately coincided with the figures arrived at by the Settlement Commission, and accepted by the assessee, had not been C taken into consideration by the High Court, which fact was also conceded by learned counsel appearing for the revenue. The special leave petition was disposed of in the following terms: D E "Without expressing any opinion on the merits of the dispute, the findings recorded on the first report or the effect of not recording a finding on the second report, we set aside the impugned order and remit the case back to the High Court for a fresh decision, leaving the parties to raise all points including the point raised before us on behalf of the assessee that the High Court should not have entertained the revenue's writ petitions in exercise of its discretionary jurisdiction under Article 226 of the Constitution of India, and the stand taken by the revenue that the application filed by the assessee for settlement before the Settlement Commission was not entertainable as the assessee had not made, inter alia, true and complete disclosure of its undisclosed income, as provided under the law. All contentions of the parties are left open to be agitated before the High Court." G (Emphasis supplied by us) 10. Pursuant to and in furtherance of the order passed by this Court, the matter was heard afresh by the High Court. By the impugned judgment and order, the High Court has again H set aside Settlement Commission's order dated 29th January, AJMERA HOUSING CORPORATION v. 199 COMMISSIONER OF INCOME TAX [D.K. JAIN, J.) 1999 and has remitted the matter back to it for fresh A adjudication, observing thus: "In view of the facts and the legal position noted above, even though we find that the respondents had not made full and true disclosure of their income while making 8 applications under Section 245C, it would not be proper to set aside the proceeding. However, at the same time, the Commission appears to have misdirected itself on several important aspects while passing the final order. The Settlement Commission had not supplied the annexure C dated 19.9.1994 declaring additional income of Rs.11.41 crore and thus, due opportunity was not given to the Revenue to place (sic) its stand properly. Huge amount of unexplained expenses, unexplained loans and unexplained surplus, total of which is more than Rs.14 crore, was not taken into consideration while passing the D final order. Thirdly, the Settlement Commission has imposed token penalty of Rs.50 lakh while· in its own assessment leviable penalty would be 562.87 (sic Rs.562.87). In fact the amounts, which were not taken into consideration while assessing the total undisclosed E income, are also taken into consideration, the amount of leviable penalty may be much more. Taking into consideration the multiple disclosures and the fact that the respondents had failed to make true and full disclosure initially as well as at the time of second F disclosure, we do not find any justifiable reasons to reduce or waive the amount of penalty so drastically. Taking into consideration all these circumstances, in our considered opinion, it will be in the interest of justice to set aside the final order passed by the Settlement Commission and to G remand the matter back to the Settlement Commission for hearing parties afresh and to pass orders as per law. Facts and circumstances noted in respe