Settlement Commission immunity cannot be severed from disclosure findings where the same basis supports the settlement order.

The settlement scheme under Chapter XIX-A rests on full and true disclosure and cooperation, and those same findings support both computation of settled income under Section 245D(4) and immunity from prosecution and penalty under Section 245H. Where the Settlement Commission accepted the disclosures, conducted joint verification, and did not find want of disclosure or cooperation, the immunity component could not be isolated and reopened separately. In view of the finality attached to settlement orders under Section 245I, interference under Article 226 remains limited to grave procedural defect, breach of natural justice, or a decision lacking rational nexus. A challenge confined only to immunity was therefore not maintainable.

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Issues: Whether a writ petition could partially challenge an order of the Settlement Commission by assailing only the grant of immunity from prosecution and penalty under Section 245H of the Income-tax Act, 1961, while leaving intact the computation of income under Section 245D(4); and whether the finding of full and true disclosure and cooperation could be reopened separately for the purpose of immunity.

Analysis: The settlement mechanism under Chapter XIX-A is founded on the applicant's full and true disclosure of income and cooperation in the proceedings. The same foundational requirements inform both the computation of settled income under Section 245D(4) and the grant of immunity under Section 245H. On the facts, the applicants' disclosures were accepted to the extent necessary for the settlement proceedings, a joint verification was undertaken with the participation of the parties, and the Commission never held that the applications failed for want of disclosure or cooperation. The statutory scheme also confers finality on orders of settlement under Section 245I, and the scope of interference under Article 226 is confined to grave procedural defects, violation of natural justice, or absence of nexus between reasons and decision. A severance of the immunity part would effectively reopen the very substratum on which the settlement order rested.

Conclusion: The challenge to the immunity component alone was not maintainable, and the Settlement Commission's grant of immunity did not warrant interference.

Ratio Decidendi: Where the same statutory findings of full and true disclosure and cooperation sustain both settlement of income and grant of immunity, those findings cannot be severed and reopened only for immunity, especially in view of the finality attached to Settlement Commission orders.

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