Settlement Commission jurisdiction stayed income-tax prosecution while immunity application remained pending

Where a settlement application covering determination of income, waiver of penalty and interest, and immunity from prosecution was pending, section 245F(2) vested exclusive jurisdiction in the Settlement Commission over the case until it passed the required order. Because the Commission was already seized of the material on which the prosecution depended, continuing criminal proceedings was considered inappropriate while the statutory settlement process remained undecided. The court also noted that the petitioner should not be prejudiced by delay in the Commission's decision-making and used inherent jurisdiction to prevent further prosecution in the meantime. The criminal proceedings were therefore stayed until the Settlement Commission decided the matter.

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Issues: Whether prosecution for alleged offences under the Income-tax Act could proceed when an application before the Settlement Commission covering the same case, including immunity from prosecution, was pending consideration.

Analysis: The pending settlement application covered determination of income, waiver of penalty and interest, and immunity from prosecution. In that situation, section 245F(2) conferred exclusive jurisdiction on the Settlement Commission in relation to the case until it passed the requisite order. Since the Commission was seized of the basic material on which the prosecution rested, the proper course was to avoid continuing the criminal proceedings while the statutory settlement process remained undecided. The Court also held that the petitioner should not suffer for delay in the Commission's own decision-making and exercised inherent jurisdiction to prevent continued prosecution in the meantime.

Conclusion: The criminal proceedings were directed to remain stayed until the Settlement Commission decided the matter, granting relief to the petitioner against continuation of prosecution for the present.

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