No immunity from prosecution of offences undergoing trial before application to Income Tax Settlement Commission

No immunity from prosecution of offences undergoing trial before application to Income Tax Settlement Commission in view of the proviso to Section 245H(1)

ABCAUS Case Law Citation:
ABCAUS 2283 (2018) (04) TC

The petitioners in the instant revision petitions had been facing trial before Additional Chief Metropolitan Magistrate (ACMM) for an offence u/s 277 of Income Tax Act, 1961 (the Act) and Section 181 of Indian Penal Code (IPC), on two separate complaints filed by the Income Tax Department.

Section 277 of the Act deals with prosecution for giving false statement in verification, etc. According to the section, a person knowingly making a false statement in any verification shall be punishable with both rigorous imprisonment and fine. Similar provision exists in section 181 of IPC which deals with giving false statement on oath or affirmation to public servant or person authorised to administer an oath or affirmation.

Prosecution for giving false statement in respect of lockers 

The allegations levelled against the petitioners was that they made a false statement on oath to the Assessing Officer (AO)/public servant knowing or having reasons to believe the same to be false in respect of lockers in their names but the enquiry conducted subsequently revealed that actually they were having lockers, which led to recovery of valuables.

During the pending of the complaint, the petitioners filed an application before the Trial Court with prayer for dismissal of the complaints, on the ground that the petitioners had been granted immunity from prosecution by order passed by Income Tax Settlement Commission, on the basis of their application filed u/s 245(C) (1) of the Act.

However, vide impugned order, ACMM dismissed the applications filed. Hence, the instant revision petition was filed in the court of the Special Judge.

The petitioners referred to the provisions of Section 245H and 245I of the Act and also to the procedure that is followed in the proceedings before the Settlement Commission and submitted that immunity having been granted by the Settlement Commission to the petitioners vide order u/s 245(D)(4) of the Act. It was prayed that in view of decision of the Hon’ble Supreme Court and High Courts, the Trial Court was required to allow the application filed by the petitioner and dismiss the complaint.

It was also contended that the order passed by Settlement Commission could be challenged only by way of writ petition under Article 227 of Constitution of India, but having not been so challenged attained finality.

The Income Tax Department submitted that even if the order passed by Settlement Commission was not challenged by the Department, in view of the proviso to Section 245H(1), it cannot be said that immunity came to be granted by Settlement Commission while the proceedings for prosecution were instituted even before the date of submission of application u/s 245 (C) of the Act before the Settlement Commission.

The learned Special Judge observed that undisputedly, application u/s 245C(1) was filed before the Income Tax Settlement Commission and criminal complaints were filed much earlier.

The learned Special Judge opined that proceeding for prosecution of the complainant having been instituted even before the date of receipt of the application u/s 245C of the Act, in view of proviso to Section 245H (1), it cannot be said that Income Tax Settlement Commission granted immunity from prosecution in respect of the two offences, for which they have already been facing trial. Therefore, when the Trial Court passed the impugned order which was perfectly in consonance with proviso to 245H(I), it cannot be said that while doing so the Trial Court sat over appeal against the order passed by Income Tax Settlement Commission.

With respect to the Supreme Court decision relied upon by the petitioners, the learned Special Judge observed that therein application before Settlement Commission was filed prior to the complainant alleging offences under IPC and Income Tax Act was filed. Therefore, the decision does not  not come to the aid of the petitioner.

It was observed that in another case, the Hon’ble Delhi High Court had observed that where search and seizure conducted subsequently i.e. after passing of the order by Settlement Commission, throws light on material that was suppressed from the Commission, it would be logical that the Commission itself should be approached for declaration that the order of settlement was a nullity. Therefore, this decision was also of no help to the petitioners.

In view of the above, the learned Special Judge dismissed the petitions.

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