Law:

Section:

Where application for settlement of income-tax cases is filed before Settlement Commission prior to prosecution launched under Income-tax Act or under Indian Penal Code and Settlement Commission grants immunity, prosecution proceedings are to be quashed Section 245H of the Income-tax Act, 1961 - Settlement Commission - Power of, to grant immunity from prosecution/penalty - Assessment year 1988-89 - Whether where application for settlement is filed before prosecution is launched before Special Court and, subsequently, immunity is granted by Settlement Commission from penalty and prosecution, prosecution proceedings before Special Court are to be quashed - Held, yes FACTS The prosecution was launched against the assessee firm and its partners for alleged concealment of income and thereby wilfully attempting to evade tax and for making false statement on verification in terms of section 276C. The Special Court, Economic Offences took cognizance in the complaint instituted by the income-tax authorities. Thereafter, the assessee firm and its partners filed a petition under section 482 of the Code of Criminal Procedure, 1973, in the High Court submitting that prosecution proceeding should not continue as application for settlement were filed and pending before the Settlement Commission. The High Court did not accept the submission as no order granting any immunity had been passed by the Commission. On appeal to the Supreme Court : HELD Section 245C deals with application of settlement of cases. No immunity can be granted by the Commission in cases where the proceedings for prosecution under the Act or under the Indian Penal Code, 1860 or under any Central Act for the time being in force have been instituted before the date of receipt of application under section 245C after 1-6-1987. There is logic in the prohibition. It is intended to discourage filing of belated application after prosecution is launched. Whether grant of immunity is called for in a given case is to be decided by the Commission on the facts of each case and no straight-jacket formula for any universal application can be laid down. In the instant case, the Commission had been satisfied that grant of…

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