Voluntary disclosure immunity bars prosecution for the same declared income after valid compliance under the disclosure scheme.

Voluntary disclosure made under the Voluntary Disclosure of Income Scheme, 1997 carried immunity from prosecution in respect of the declared income. Once the income was disclosed, tax was remitted, and the amount was brought into the books in accordance with the scheme, criminal proceedings founded on the same disclosure could not be sustained because they would defeat the object of the immunity clause. On that basis, prosecution under the Companies Act, 1956 was held unsustainable and quashed.

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Issues: Whether prosecution for offences under the Companies Act, 1956 could be sustained in respect of income voluntarily disclosed and taxed under the Voluntary Disclosure of Income Scheme, 1997.

Analysis: Section 71 of the Voluntary Disclosure of Income Scheme, 1997 confers immunity against prosecution in respect of declarations made under the scheme. The scheme contemplates disclosure of income, payment of tax, and incorporation of the disclosed amount in the books of account. Once the income has been declared and tax remitted in accordance with the scheme, prosecution founded on the same disclosed matter defeats the object of the immunity clause. The proceedings initiated after such disclosure were therefore inconsistent with the protection granted by the scheme.

Conclusion: The prosecution under the Companies Act, 1956 was not sustainable and was quashed in favour of the petitioners.

Ratio Decidendi: Where a voluntary disclosure scheme expressly grants immunity from prosecution in respect of declarations made under it, criminal proceedings based on the disclosed income cannot be sustained after valid disclosure and compliance with the scheme.

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