Section 245D(1) of the Income Tax Act

Information disclosed in a settlement application, or found during settlement commission proceedings, can be used by the assessing officer against the assessee if there is incriminating material for the disclosure. However, if no evidence supports the disclosed income, additions cannot be made based solely on the disclosure.

The Income Tax Appellate Tribunal held that income declared by an assessee before the Settlement Commission, even if admitted under section 245D, can only be used for the limited purpose of settling tax disputes and cannot be the sole basis for additions by the Assessing Officer in the absence of incriminating material.

Confidential information disclosed to the Income Tax Settlement Commission in an application that is not admitted under section 245D(1) cannot be used by the Assessing Officer to make additions to income.

Loans or advances given by a company to shareholders are not deemed dividends under section 2(22)(e) if they are given in return for an advantage conferred on the company, such as being for business purposes like the purchase of an asset. This also applies if the payment is not out of accumulated profits or is a trade advance made as consideration for goods received or asset purchase.

Additions made under section 153A of the Income-tax Act are invalid if the assessment for the relevant years had already attained finality and no incriminating material was found during the search. The High Court confirms the Tribunal's order that such additions are not permissible.