Settlement Commission proceedings do not by themselves bar prosecution for tax offences unless criminal action is expressly stayed.

Mere pendency or admission of settlement proceedings before the Settlement Commission does not, by itself, bar prosecution for income-tax offences. The controlling consideration is whether the Commission has actually become seized of the matter and whether criminal proceedings have been expressly stayed or otherwise precluded. As those conditions were not shown on the facts, the complaint could not be quashed on the ground that the petitioners had sought settlement and payment of tax on disclosed income. The challenge to continuation of the prosecution therefore failed, and the complaint was allowed to proceed.

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Issues: Whether the complaint for offences under the Income-tax Act could be quashed on the ground that the petitioners had approached the Settlement Commission and sought payment of tax on the disclosed income.

Analysis: The petitioners relied on their settlement proceedings to contend that prosecution should not have been launched. The Court held that this contention was already covered by the cited precedent, which laid down that mere admission of proceedings before the Settlement Commission does not by itself create a bar to prosecution already instituted. The relevant consideration was whether the Commission had actually become seized of the matter and whether any stay of criminal proceedings had been ordered. On the facts, those conditions were not shown so as to prohibit continuation of the complaint.

Conclusion: The plea for quashing failed, and no interference with the complaint was warranted.

Final Conclusion: The writ petition was not maintainable on the pleaded ground and the prosecution was allowed to continue.

Ratio Decidendi: Mere pendency or admission of settlement proceedings does not bar prosecution for tax offences unless the Settlement Commission has expressly stayed the criminal proceedings or has otherwise become seized of the matter in a manner that legally precludes launch of the complaint.

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