In Brief
A senior income earner faced criminal prosecution for tax evasion (Section 276C(1)) following a 2016 search that revealed unaccounted cash. He later applied to the Settlement Commission, which found no suppression of facts and granted immunity from penalty. The Supreme Court held that departmental circulars requiring penalty confirmation by the ITAT before prosecution are binding on tax authorities. Since the Settlement Commission's findings are conclusive and no wilful evasion was established, continuing prosecution amounted to abuse of process. The Court quashed the prosecution and imposed ₹2 lakh costs on the Revenue for disregarding its own binding guidelines and the Settlement Commission's conclusive findings of no wilful tax evasion.
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