Power to grant immunity from prosecution and penalty [Section 245H] :

(i) The Settlement Commission may, if it is satisfied that any person who made the application for settlement under section 245C has co-operated with the Settlement Commission in the conduct of the proceedings before it and has made a true disclosure of his income, and the manner in which such income has been derived, grant to such person immunity from prosecution for any offence under the Income-tax Act, 1961 or under the Wealth-tax Act, 1957. However, the Settlement Commission, while granting immunity to any person from prosecution shall record the reasons in writing in the order passed by it.

(ii) Such an immunity may also be granted in the matter of imposition of any penalty under the Income-tax Act, 1961 in respect of the case which is covered by the settlement.

(iii) The Commission can grant partial immunity from imposition of penalty to the applicant.

(iv) The power of the Settlement Commission to grant immunity from prosecution and the imposition is, however, subject to such conditions as the commission may think fit to impose in the circumstances of the case.

(v) No such immunity shall be granted by the commission in cases where the proceedings for the prosecution for any such offence have been instituted before the date of receipt of the application for settlement.

(vi) Under section 245H, the Settlement Commission may grant immunity f rom prosecution for any offence under the Indian Penal Code, Income-tax Act, 1961 and any other Central Act. This power has now been restricted in respect of application made under section 245C on or after 1.6.2007. In respect of such cases, the Settlement Commission shall not grant immunity from prosecution for any offence under the Indian Penal Code or under any Central Act other than the Income-tax Act, 1961 and Wealth-tax Act, 1957. However, in respect of applications pending as on 1.6.2007, the Sett lement Commission has the power to grant immunity from prosecution for any offence under the Indian Penal Code and other Central Acts also.

(vii) An immunity granted under this section shall stand withdrawn if such person fails to pay any sum specified in the order of settlement within the time specified in the order or within such further time as may be allowed by the 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.

(viii) An immunity granted by the Settlement Commission to any person may, at any time, be withdrawn by it in cases where it is satisfied that the person concerned had, in the course of the settlement proceedings concerned may be tried for the offence with respect to which the immunity was granted or for any other offence in respect of which he has been found guilty in connection with the settlement.

(ix) After the withdrawal of the immunity from prosecution, the person concerned may also become liable to the imposition of the penalty under the Income-tax Act, 1961 to which he would otherwise have been liable in the absence of the immunity given to him under section 245H.