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Issues: Whether initiation and continuance of criminal prosecution were barred because the assessee had applied to the Settlement Commission and the application had been allowed to be proceeded with, and whether the proceedings were liable to be quashed under the inherent jurisdiction on the ground that the complaint was based on false allegations and suppressed facts.
Analysis: The statutory scheme of Chapter XIX-A of the Income-tax Act shows that an order under Section 245-D(1) merely allows a settlement application to be proceeded with. Exclusive jurisdiction under Section 245-F relates to the Settlement Commission's powers in relation to the case, especially assessment and revenue-related functions, but it does not itself amount to immunity from prosecution. Immunity from prosecution can arise only if the Settlement Commission grants it under Section 245-H on satisfaction of the statutory conditions. No such application for immunity was made and no immunity order was granted. The pendency or admission of settlement proceedings therefore did not freeze or nullify a prosecution already initiated in law. As to the plea that the complaint was false or that material facts were suppressed, such questions of fact cannot ordinarily be examined in proceedings under Section 482 of the Code of Criminal Procedure, 1973 unless the defence material is of sterling and impeccable quality, which was not shown here.
Conclusion: The challenge to the criminal complaint and summoning order failed; the prosecution was not barred by the settlement proceedings and no ground for quashing was made out.
Final Conclusion: The Court declined to interfere with the pending criminal prosecution and left the complaint and summoning order undisturbed.
Ratio Decidendi: Pendency of a settlement application before the Income-tax Settlement Commission does not ipso facto grant immunity from prosecution or bar criminal action; immunity arises only by a specific order under Section 245-H, and quashing under Section 482 requires unimpeachable material that conclusively displaces the prosecution case.
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