Income Tax Immunity Restored: Supreme Court Allows Appeal Under Section 245H(1A)

The Supreme Court of India recently delivered a significant judgment on the interpretation and application of immunity provisions under the Income Tax Act, 1961. The case involved the appellant, Sandeep Singh, who challenged the withdrawal of immunity granted under Section 245H(1A) of the Act.

Background of the Case

The appellant had been granted immunity from prosecution under Section 245H(1A), which states:

“An immunity granted to a person under sub-section (1) shall stand withdrawn if such person fails to pay any sum specified in the order of settlement passed under sub-section (4) of Section 245D within the time specified in such order or within such further time as may be allowed by the Settlement Commission, or fails to comply with any other condition subject to which the immunity was granted and thereupon the provisions of this Act shall apply as if such immunity had not been granted.”

The appellant, Sandeep Singh, failed to make payments within the deadline originally granted by the Settlement Commissioner, which was set to 31.07.2015. However, all payments were completed before the appellant approached the Supreme Court on 20.01.2016.

Arguments by the Petitioner and Respondent

The petitioner contended that since all payments were eventually made before approaching the Supreme Court, the immunity should not be withdrawn. The respondent, represented by the Additional Solicitor General, argued that the failure to comply with the originally stipulated timeline automatically triggered the withdrawal of immunity.

Supreme Court’s Observations

After considering the arguments, the Supreme Court noted:

“In case the payments are not made within the time granted by the Settlement Commissioner or in case the person fails to comply with any other conditions, subject to which the immunity was granted, the immunity shall stand withdrawn.”

The Court further stated:

“However, we find from the provision that the Settlement Commissioner is free to grant further time for payment, under Section 245H(1A) of the said Act.”

Final Judgment

The Supreme Court ruled in favor of the appellant, stating:

“Having heard the learned senior counsel for the appellant and learned Additional Solicitor General appearing for the respondents, we are of the view that in the facts and circumstances of this case, it is not necessary to relegate the appellant to the Settlement Commissioner for enlargement of time, since the payments have already been made.”

The Court held that the appellant’s payments should be considered as made within the permitted timeframe under Section 245H(1A), and therefore, immunity from prosecution remains valid. The appeal was allowed, and the case was disposed of.

Conclusion

This judgment clarifies the flexibility available under Section 245H(1A) regarding immunity from prosecution in cases where payments are delayed but eventually made. The ruling establishes that if payments are completed before legal proceedings, the immunity should not be withdrawn.

Don’t miss out on the full details! Download the complete judgment in PDF format below and gain valuable insights instantly!

Download Judgment: Sandeep Singh vs Union of India and O Supreme Court of India Judgment Dated 13-01-2017.pdf