HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Ashirwad Enterprises and Others v. State of Bihar and Another
Criminal Appeal Nos. 736-737 of 1998
[2004] 3 SCR 300 ·
Income-tax Act, 1961: sections 245C, 245H and 276C · Code of Criminal Procedure, 1973: section 482
Sources & disclosures includedDownload original judgment / order
Two-judge bench; judgment delivered by Arijit Pasayat, J. · Doraiswamy Raju, J. · Arijit Pasayat, J.
Assessment years: 1988-89
01 · Facts of the case
Income-tax authorities prosecuted the assessee-firm and a partner for alleged concealment, wilful tax evasion and false verification for assessment year 1988-89. Their applications under section 245C had been filed on 27 May 1991; prosecution began on 27 February 1992. The Patna High Court declined to quash while the settlement applications were still pending. During the Supreme Court proceedings, the Settlement Commission made its 20 September 1999 order granting immunity from penalty and prosecution (SCR pp.300-303; PDF pp.1-4).
02 · Discussion by the Hon’ble Court
Section 245H permitted immunity where the applicant made full and true disclosure and cooperated, but its proviso barred immunity when prosecution had already been instituted before receipt of the section 245C application. The prohibition discouraged belated settlement applications after prosecution. Here the settlement application preceded prosecution, the Commission granted immunity, and Revenue had not challenged that order. A merely pending settlement application would not itself justify quashing, but the later final immunity order changed the position. The Court also preserved the consequences of non-compliance and the Commission's power to withdraw immunity (SCR pp.303-305; PDF pp.4-6).
03 · Judicial decision
The prosecution before the Special Court was quashed because a final immunity order had been made on an application filed before prosecution. The Court clarified that the tax authorities could seek restoration if the settlement order was not complied with or immunity was withdrawn (SCR p.305; PDF p.6).
04 · Outcome / in whose favour
In favour of the assessee-appellants at that stage: the criminal proceedings were quashed. The relief remained conditional because statutory consequences could follow non-compliance with the settlement or withdrawal of immunity.
05 · AKHB REVIEW POINT
AKHB analysis: distinguish three procedural states - a settlement application merely pending, a final immunity order in force, and immunity later withdrawn or lost for non-compliance. The first did not itself terminate prosecution; the second justified relief here; the third could restore exposure. For present matters, verify the exact statutory regime and transition provisions rather than assuming the former settlement route remains available.
Source & verification
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Statutory scope
The note records the historical section 245H framework applied in 2004. It does not represent the present statutory position or continuing availability of the former settlement mechanism.
Later treatment
Source checked 2026-10-11. Later judicial treatment, amendments and current statutory applicability were not comprehensively checked; no current-law or citator clearance is represented.
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