Immunity From Prosecution

Bansal Tool Co. vs. ITO

186 ITR 104 (P&H) (1990)

Criminal proceedings are not competent where matter is pending before Settlement Commission.

Kewal Krishan Gupta vs ITO

104 CTR 321 (P&H)(1992)

While an application for grant of immunity is pending before the Settlement Commission, the prosecution may be stayed.

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Ashvin Kumar Vadilal Patel vs. S.Rajguru and Another

165 ITR 583 (Guj)

Section 245H of the Income-tax Act, 1961, which deals with the power of the Settlement Commission to grant immunity from prosecution and penalty, includes immunity not only for offences punishable under the Income-tax Act but also for offences under the Indian Penal Code. However, the prosecution is not required to be stayed merely because an application u/s 245H is made and is pending. Till such application is granted, there is no immunity and merely because an application is made about the merits of which there is nothing before the court and regarding the merits of which the Criminal Court has no jurisdiction, the prosecution cannot be stayed.

Moreover, the power to grant immunity by the Settlement Commission is to be exercised sparingly. The Criminal Court cannot grant even temporary immunity by granting stay of prosecution. Therefore, until immunity is granted, the criminal prosecution need not be stayed.

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R.I. Chadha and Others vs. Income-tax Officer

168 ITR 591(P&H)

In the light of section 245F of the Income-tax Act, 1961, it is patent that the Settlement Commission, during the pendency of proceedings before it, enjoys all the powers which are vested in an income-tax authority under the Act sub-section (2) makes it manifest that till the culmination of those proceedings, with the passing of an order under sub-section(4) of section 245D of the Act, it has exclusive jurisdiction to exercise the powers and perform the functions of an income-tax authority under the Act in relation to that case. Sub-section(4) further makes it clear that the authorities under the Act, including the Commissioner and the Income-tax Officer, may continue to exercise their jurisdiction under the Act with regard to any matters other than those which are before the Settlement Commission but that too is subject to any direction by the Commission to the contrary.

In February, 1983, the assessee company moved an application under section 245C of the Act before the Settlement Commission for the settlement of its tax liability and all related matters in respect of the assessment years 1969-70, 1970-71 and 1978-79 to 1982-83. This application included a prayer under section 245H of the Act for the grant of immunity from prosecution under the Act or the Indian Penal Code or under any other Central Act for the time being in force. The Settlement Commission forwarded a copy of it to the Commissioner for his report and on receipt of the same with no objection allowed the application to be proceeded with. While the application was pending with the Commission, prosecution was launched against the assessee for false verification of returns u/s 276C and 277 of the Income-tax Act. An application u/s 245(2) of the Criminal Procedure Code was dismissed on a petition u/s 482 of the Criminal Procedure Code;

Held that in view of the provisions of section 245F, the Settlement Commission had exclusive jurisdiction to launch a prosecution against the assessee. The Commissioner could not direct or authorise the filing of the complaint against the petitioners during the course of the pendency of the proceedings before the Settlement Commission.

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Shakti Metal Box and Another vs. Union of India and Others

204 ITR 450 (P&H)

The Commissioner of Income-tax instituted a complaint under sections 276C and 277 of the Income-tax Act, 1961, against the petitioner - firm on the ground that it had concealed an income of Rs. 3 lakh while filing its return. The petitioner - firm claimed that they had filed a petition under section 245C of the Act before the Income-tax Settlement Commission, that the Settlement Commission had admitted the petition and the proceedings before the Commission were allowed to be proceeded with, that all the proceedings including the prosecution should be stayed and that the criminal complaint of the Commissioner should be quashed :

Held that, when the complaint was instituted, the Commission had not yet allowed the proceedings on the application of the petitioner to proceed further. In this situation, it could not be said that the Settlement Commission was seized of the matter when the prosecution was launched under the orders of the Commissioner. There was no bar on the powers of the Commissioner to order the launching of the prosecution on the day the complaint was filed. While allowing the prayer of the petitioners to proceed with the application, the Settlement Commission did not give a direction for stay of the criminal proceedings. The mere allowing of the proceedings on the application of the petitioner by the Settlement Commission did not operate as a bar to the prosecution already instituted under the orders of the Commission.

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