The Income Tax Settlement Commission can grant immunity from prosecution if the applicant makes full and true disclosures and cooperates during proceedings, with the court affirming the Commission's findings as unchallenged.

JUDGMENT :

AVNEESH JHINGAN, J.

1. The revenue has filed writ petition assailing the order of the Income Tax Settlement Commission (for short ‘the Commission’) dated 31.03.2013 only to the extent of granting immunity to the private respondents from prosecution and penalty.

2. On 04.12.2009 search was conducted on premises of Career Point Group, respondent No. 2 (hereinafter referred to as ‘company’). The respondent Nos.3, 4 & 5 are the directors of the company. The incriminating material was seized during the search indicating that the company was claiming bogus expenses, not complying with the provision of TDS and siphoning-off the funds for purchase of immovable property. There was evidence with regard to bogus payments to facility member. Statement of Shri Om Maheshwari was recorded. Consequent to the search proceedings, the private respondents filed an application under Section 245C(1) of the Income Tax Act, 1961 (hereinafter ‘the Act’) before the Commission. Vide order dated 31.03.2013 the Commission finalized terms and conditions of settling cases of the company and the directors. Immunity was granted from the prosecution and penalty. The present writ petition is filed aggrieved only of immunity granted for prosecution and penalty.

3. Learned counsel for the petitioner submitted that the figures offered by the private respondents were not accepted by the Commission and were enhanced. Contention is that the private respondents failed to make full and true disclosure of the income and the Commission erred in granting immunity for prosecution and penalty.

4. As per contra, the private respondents had made true & full disclosures, cooperated during the settlement proceedings and the immunity was rightly granted.

5. The relevant portion of Section 245C(1) of the Act and245H of the Act are quoted below:-

“245C(1). An assessee may, at any stage of a case relating to him, make an application in such form and in such manner as may be prescribed, and containing a full and true disclosure of his income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived, the additional amount of income-tax payable on such income and such other particulars as may be prescribed, to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided.

245H(1). The Settlement Commission may, if it is satisfied that any person who made the application for settlement under section 245C has co-operated with the Settlement Commission in the proceedings before it and has made a full and true disclosure of his income and the manner in which such income has been derived, grant to such person, subject to such conditions as it may think fit to impose for the reasons to be recorded in writing, immunity from prosecution for any offence under this Act or under the Indian Penal Code (45 of 1860) or under any other Central Act for the time being in force and also (either wholly or in part) from the imposition of any penalty under this Act, with respect to the case covered by the settlement.”

6. Chapter XIXA of the Act deals with settlement of cases by providing a forum of Commission. An assessee by making full and true disclosure of undisclosed income and the manner it was derived can settle the matter without going through the procedure of assessment or reassessment and appeals.

7. Under section 245C(1) of the Act by making an application in a prescribed form, the assessee at any stage of the case by making full and true disclosure of the income not disclosed to Assessing Officer (hereinafter ‘AO’) and also the manner of deriving the income now disclosed, may get the case settled before the Commission:

As per sub-section (2) the application should be accompanied by a prescribed fee.

Sub-Section (3) provides an application made under sub-section (1) cannot be withdrawn.

Under sub-section (4) the assessee is obligated to intimate the AO in a prescribed manner of h