Pending immunity application does not automatically stay criminal prosecution under the Income-tax Act.

Pending immunity proceedings before the Settlement Commission do not by themselves bar criminal prosecution under the Income-tax Act. Section 245H operates only when the Commission actually grants immunity after satisfying the statutory conditions; until then, no legal protection from prosecution arises. The mere filing or pendency of an immunity application does not divest the criminal court of jurisdiction or justify an interim stay. References to section 245K and the settlement stage under Chapter XIXA did not alter that position on the facts, so the prosecution was not to be stayed.

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Issues: Whether criminal prosecution could be stayed merely because an application for immunity had been made to the Settlement Commission under the Income-tax Act.

Analysis: Section 245H of the Income-tax Act empowers the Settlement Commission to grant immunity from prosecution only after it is satisfied that the statutory conditions are met. Until such immunity is actually granted, no protection from prosecution exists. The mere pendency of an application under that provision does not divest the criminal court of jurisdiction or justify an interim stay of prosecution. The power to grant immunity lies with the Settlement Commission and cannot be converted into a temporary stay by the criminal court. The references to section 245K and to the stage of a settlement case under Chapter XIXA did not assist the applicant on the facts.

Conclusion: The prosecution was not liable to be stayed merely because an application under section 245H was pending, and the refusal to stay the proceedings was in law.

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