2002 (4) TMI 8 - SC - Income Tax

In view of the total immunity granted by the Settlement Commission, it was totally unjustified on the part of the Commissioner of Income-tax to proceed with the complaint against the appellants. It is also not open to the criminal court to go behind the order passed by the Settlement Commission. It was not open to the High Court to say that the impugned order passed by the Settlement Commission was in any way illegal or void - orders passed by the High Court are set aside

Summary

Issues Involved:
1. Interpretation of the Settlement Commission's order granting immunity from penalties and prosecution.
2. Validity of the criminal complaint against the appellants despite the immunity granted.
3. Authority of the Settlement Commission's order and its finality.

Issue 1: Interpretation of Settlement Commission's Order
The Supreme Court analyzed the Settlement Commission's order dated March 30, 1995, which granted immunity from penalties and prosecution to the appellants. The Court noted that the order was passed under section 245H of the Income-tax Act, which empowers the Settlement Commission to grant immunity if a person makes a full and true disclosure of income. The Court highlighted that section 245-I provides finality to such orders, preventing their reopening in any proceeding under the Act or any other law. The Court emphasized that the immunity granted was not limited to reassessment for a specific year but related to fictitious transactions with a specific entity.

Issue 2: Validity of Criminal Complaint
The Court found it unjustified for the Commissioner of Income-tax to pursue a criminal complaint against the appellants despite the total immunity granted by the Settlement Commission. The Court emphasized that the criminal court cannot question the Settlement Commission's order and that the High Court erred in considering the Commission's order as illegal or void. Consequently, the Court held that the pending prosecution against the appellants would not stand in light of the Settlement Commission's order, leading to the setting aside of the impugned orders passed by the High Court.

Issue 3: Authority and Finality of Settlement Commission's Order
The Supreme Court reiterated the authority and finality of the Settlement Commission's order, emphasizing that the order's terms and conditions must be adhered to by the appellants. The Court allowed the appeals to the extent that the impugned orders by the High Court were set aside, and the respondent was directed to deposit a specified amount within a stipulated time. However, the Court clarified that its order did not exempt the appellants from complying with the terms and conditions laid down by the Settlement Commission in its order.

In conclusion, the Supreme Court upheld the Settlement Commission's order granting immunity, invalidated the criminal complaint against the appellants, and emphasized the finality and authority of the Commission's orders, directing compliance with the specified terms and conditions.