JUDGMENT 1. THE issues involved in the three writ petitions, being Writ Petition Nos. 341, 344 and 345 of 2011, being identical, the three writ petitions were heard together and are now being disposed of by this common judgement and order. 2. THESE writ petitions have been filed by the Revenue challenging orders dated 11th August, 2010 passed by the Income Tax Settlement Commission under Section 245D(2C) of the Income Tax Act, 1961 inter alia holding that the settlement applications filed by the respective private respondents in the three writ applications were not invalid. On 29th June, 2010, the respective private respondents in the three writ petitions, which are collectively referred to as Outotec Group, filed settlement applications dated 28th June, 2010 under Section 245C of the Income Tax Act, 1961 before the Income Tax Settlement Commission in respect of the Assessment Years 2004- 2005 onwards. 3. BY three several orders, all dated 2nd July, 2010, the Settlement Commission allowed the applications to be proceeded with. Thereafter, the Settlement Commission forwarded the settlement applications to the Director of Income Tax (International Taxation) under cover of letters dated 6th July, 2010 and called for report under Section 245D (2B) of the Income Tax Act. 4. THE settlement applications were filed on 29th June, 2010 and were in respect of the assessment years 2004-05 to 2009-10 and 2005-06 to 2009-10. Mr. Nizamuddin appearing on behalf of the Revenue submitted that the settlement applications were not maintainable, since there were no pending proceedings on the date on which the settlement applications were filed. Mr. Nizamuddin argued that there could be no question of proceedings, where no return had been filed; there was no direction on the assessee to file a return; and the statutory time limit prescribed by Section 153(1) of the Income Tax Act for making an assessment under Section 143 or 144 of the Income Tax Act, that is, 21 months from the end of the relevant assessment year, had expired. Mr. Nizamuddin argued that since a proceeding under Section 147 had been excluded from the definition of case under Section 245A(b) of the Income Tax Act, the time within which an order under Section 147 could be passed was not relevant. THE time limit prescribed in Section 153(2) was of no relevance. Mr. Nizamuddin argued that since a proceeding under Section 147 had been excluded from the definition of case under Section 245A(b) of the Income Tax Act, the time within which an order under Section 147 could be passed was not relevant. THE time limit prescribed in Section 153(2) was of no relevance. A settlement application could only be made within the time available under Section 153(1) of the Income Tax Act for making assessment. The relevant provisions of Chapter XIX-A of the Income Tax Act relating to settlement of cases, as amended by the Finance Act, 2010 with effect from 1st June, 2010, are set out hereinbelow for convenience : "245A.(b) "case" means any proceeding for assessment under this Act, of any person in respect of any assessment year or assessment years which may be pending before an Assessing Officer on the date on which an application under sub-section (1) of section 245C is made: Provided that ? (i) a proceeding for assessment or reassessment or recomputation under section 147; (iv) a proceeding for making fresh assessment in pursuance of an order under section 254 or section 263 or section 264, setting aside or canceling an assessment shall not be a proceeding for assessment for the purposes of the clause. Explanation. ? (i) a proceeding for assessment or reassessment or recomputation under section 147; (iv) a proceeding for making fresh assessment in pursuance of an order under section 254 or section 263 or section 264, setting aside or canceling an assessment shall not be a proceeding for assessment for the purposes of the clause. Explanation. ? For the purposes of this clause (i) a proceeding for assessment or reassessment or recomputation referred to in clause (I) of the proviso shall be deemed to have commenced from the date on which a notice under section 148 is issued; (iii) A proceeding for making fresh assessment referred to in clause (iv) of the proviso shall be deemed to have commenced from the date on which the order under section 254 or section 263 or section 264, setting aside or canceling an assessment was passed; [(iiia) a proceeding for assessment or reassessment for any of the assessme3nt years, referred to in clause (b) of sub-section (I) of section 153A in case of a person referred to in section 153A or section 153C, shall be deemed to have commenced on the date of issue of notice initiating such proceedings and concluded on the date on which the assessment is made;] (iv) A proceeding for assessment for any assessment year, other than the proceedings or assessment or reassessment referred to in clause (i) or [clause (iv) of the proviso or clause (iiia) of the Explanation], shall be deemed to have commenced from the 1st day of the assessment year and concluded on the date on which the assessment is made; 245C. [An assessee may, at any stage of a case relating him, make an application in such form and in such manner as may be prescribed, and containing a full and true disclosure of his income which has not been disclosed before the [Assessing] Officer, the manner in which such income has been derived, the additional amount of income-tax payable on such income and such other particulars as may be prescribed, to the Settlement Commissioner to have the case settled and any such application shall be disposed of in the manner hereinafter provided : Provided that no such application shall be made unless (i) in a case where proceedings for assessment or reassessment for any of the assessment years referred to in clause (b) of sub-section (1) of a person referred to in section 153A or section 153C have been initiated, the additional amount of income-tax payable on the income disclosed in the application exceeds fifty lakh rupees, 6 (ii) in any other case, the additional amount of income tax payable on the income disclosed in the application exceeds ten lakh rupees, and such tax and the interest thereon, which would have been paid under the provisions of this Act had the income disclosed in the application been declared in the return of income before the Assessing Officer on the date of application, has been paid on or before the date of making the application and the proof of such payment is attached with the application.] (1A) For the purposes of sub-section (1) of this section [***], the additional amount of income-tax payable in respect of the income disclosed in an application made under sub-section (1) of this section shall be the amount calculated in accordance with the provisions of sub-sections (1B) to (1D). [(1B) Where the income disclosed in the application relates to only one previous year, (i) if the applicant has not furnished a return in respect of the total income of that year, then, tax shall be calculated on the income disclosed in the application as if such income were the total income; (ii) if the applicant has furnished a return in respect of the total income of that year, tax shall be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggregate were the total income.] [(1C) The additional amount of income-tax payable in respect of the income disclosed in the application relating to the previous year referred to in subsection (1B) shall be, (a) in a case referred to in clause (i) of that subsection, the amount of tax calculated under that clause; (b) in a case referred to in clause (ii) of that subsection, the amount of tax calculated under that clause as reduced by the amount of tax calculated on the total income returned for that year; (c) [***].] (1D) Where the income disclosed in the application relates to more than one previous year, the additional amount of income-tax payable in respect of the income disclosed for each of the years shall first be calculated in accordance with the provisions of sub-sections (1B) and (1C) and the aggregate of the amount so arrived at in respect of each of the years for which the application has been made under sub-section (1) shall be the additional amount of income-tax payable in respect of the income disclosed in the application. 245F. (1) In addition to the powers conferred on the Settlement Commission under this Chapter, it shall have all the powers which are vested in an income-tax authority under this Act. 245F. (1) In addition to the powers conferred on the Settlement Commission under this Chapter, it shall have all the powers which are vested in an income-tax authority under this Act. (2) Where an application made under section 245C has been allowed to be proceeded with under section 245D, the Settlement Commission shall, until an order is passed under sub-section (4) of section 245D, have, subject to the provisions of sub-section (3) of that section, exclusive jurisdiction to exercise the powers and perform the functions of an income-tax authority under this Act in relation to the case : [Provided that where an application has been made under section 245C on or after the 1st day of June, 2007, the Settlement Commission shall have such exclusive jurisdiction from the date on which the application was made : Provided further that where. (i) an application made on or after the 1st day of June, 2007, is rejected under sub-section (1) of section 245D; or (ii) an application is not allowed to be proceeded with under sub-section 2(A) of section 245D, or, as the case may be, is declared invalid under sub-section (2C) of that section; or (iii) an application is not allowed to be further proceeded with under sub-section (2D) of section 245D. the Settlement Commission, in respect of such application shall have such exclusive jurisdiction upto the date on which the application is rejected, or not allowed to be proceeded with, or, declared invalid, or not allowed to be further proceeded with, as the case may be.] (3) Notwithstanding anything contained in sub-section (2) and in the absence of any express direction to the contrary by the Settlement Commission, nothing contained in this section shall affect the operation of any other provision of this Act requiring the applicant to pay tax on the basis of self assessment in relation to the matters before the Settlement Commissioner. (5) ??.. (6) ??. [(7) The Settlement Commission shall, subject to the provisions of this Chapter, have power to regulate its own procedure and the procedure of Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings.] 245HA. (1) Where ? (6) ??. [(7) The Settlement Commission shall, subject to the provisions of this Chapter, have power to regulate its own procedure and the procedure of Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings.] 245HA. (1) Where ? (i) an application made under section 245C on or after the 1st day of June, 2007 has been rejected under sub-section (1) of section 245D; or (ii) an application made under section 245C has not been allowed to be proceeded with under subsection (2A) or further proceeded with under subsection (2D) of section 245D; or (iii) an application made under section 245C has been declared as invalid under sub-section (2C) of section 245D; or (iv) in respect of any other application made under section 245C, an order under sub-section (4) of section 245D has not been passed within the time or period specified under sub-section (4A) of section 245D, the proceeding before the Settlement Commissioner shall abate on the specified date. Explanation. For the purposes of this sub-section, "specified date" means (a) in respect of an application referred to in clause (i), the day on which the application was rejected; (b) in respect of an application referred to in clause (ii), the 31st day of July, 2007; (c) in respect of an application referred to in clause (iii), the last day of the month in which the application was declared invalid; 10 (d) in respect of an application referred to in clause (iv), on the date on which the time or period specified in sub-section (4A) of section 245D expires. (2) Where a proceeding before the Settlement Commission abates, the Assessing Officer, or, as the case may be, any other income-tax authority before whom the proceeding at the time of making the application was pending, shall dispose of the case in accordance with the provisions of this Act as if no application under section 245C had been made. (2) Where a proceeding before the Settlement Commission abates, the Assessing Officer, or, as the case may be, any other income-tax authority before whom the proceeding at the time of making the application was pending, shall dispose of the case in accordance with the provisions of this Act as if no application under section 245C had been made. (3) For the purposes of sub-section (2), the Assessing Officer, or, as the case may be, other income-tax authority, shall be entitled to use all the material and other information produced by the assessee before the Settlement Commission or the results of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it, as if such material, information, inquiry and evidence had been produced before the Assessing Officer or other income-tax authority or held or recorded by him in the course of the proceedings before him. (4) For the purposes of the time-limit under sections 149, 153, 153B, 154, 155, 158BE and 231 and for the purposes of payment of interest under section 243 or 244 or, as the case may be, section 244A, for making the assessment or reassessment under sub-section (2), the period commencing on and from the date of the application to the Settlement Commission under section 245C and ending with "specified date" referred to in sub-section (1) shall be excluded; and where the assessee is a firm, for the purposes of the time-limit for cancellation of registration of the firm under sub-section (1) of section 186, the period aforesaid shall, likewise, be excluded.]" 5. SECTION 245 C of the Income Tax Act enables an assessee to make an application to the Settlement Commission, at any stage of a case relating to him, to have the case settled, subject to the conditions stipulated in the said SECTION. SECTION 245 A (b) defines case to mean any proceeding for assessment under the Income Tax, of any person, in respect of any Assessment Year or Assessment Years, which may be pending before an Assessing Officer on the date on which an application under sub-section (1) of SECTION 245C is made. SECTION 245 A (b) defines case to mean any proceeding for assessment under the Income Tax, of any person, in respect of any Assessment Year or Assessment Years, which may be pending before an Assessing Officer on the date on which an application under sub-section (1) of SECTION 245C is made. However, the proviso to SECTION 245A(b), as amended by the Finance Act, 2010, excludes proceedings for assessment or reassessment or recomputation under SECTION 147 and proceedings for fresh assessment in pursuance of any orders under SECTION 254 or SECTION 263 or SECTION 264, setting aside or cancelling an assessment, from the purview of proceedings for assessment, for the purposes of Clause (b) of SECTION 245 A. 6. AFTER the amendment of the Income Tax Act, 1961, by the Finance Act of 2007, case means any proceeding for assessment under the Income Tax Act, of any person, in respect of any assessment year or years, which may be pending before any Assessment Officer on the date on which an application under sub- section (1) of section 245C is made, except for proceedings for assessment, reassessment or computation under Section 147 or proceedings for fresh assessment in pursuance of any order under Section 254, 263 or 264 setting aside or cancelling an assessment. Explanation (iv) to Section 245A(b) provides that proceedings for assessment other than proceedings for assessment or reassessment referred to in clause (i) or clause (iv) of the proviso or clause (iiia) of the Explanation, are to be deemed to have commenced on the first day of the assessment year and concluded on the date on which the assessment is made. Before the amendment, a case was defined to mean any proceeding under the Income Tax Act for the assessment or reassessment of any person in respect of any year or years, or by way of appeal or revision in connection with such assessment or reassessment, which might be pending before an Income Tax Authority on the date on which an application under sub-section (1) of Section 245C is made. The proviso, as it stood at that time, made it clear that where any appeal or application for revision preferred after the expiry of the period specified for filing of such appeal or application for revision under the Act, had not been admitted, such appeal or revision would not be deemed to be a proceeding pending within the meaning of the said clause. 7. THE requirement of furnishing a return of income as a condition precedent for making an application for settlement, was deleted with effect from 1st June, 2007 by the Finance Act, 2007. THE proviso to Section 245C(1) having been deleted and a new clause, that is, Explanation (iv) having been introduced, the filing of a return of income is no longer a condition precedent for making an application for settlement. Mr. Nizamuddin’s argument that there cannot be any pending case, until and unless a return is filed, is not legally sustainable, in view of the clear words of Explanation (iv). As rightly argued on behalf of the assessee by Dr. Pal, a statutory fiction was introduced by Explanation (iv) to Section 245A(b), in terms whereof, a case is to be deemed to have commenced on the first day of the assessment year and concluded on the date on which the assessment is made. 8. THE fiction introduced by Explanation (iv) would not, however, apply in a case where a return had already been filed before the settlement application was filed, in which case the date of filing of the return would be the date of commencement of the proceeding. THE question is whether a proceeding in clause (i), which is deemed to have been initiated on the first day of the assessment year, is to be deemed to continue until an order of assessment is actually made, even though the time for making an order of assessment might long have expired. It is the case, both of the Revenue and of the Assessee, that the expression case in Section 245C of the Income Tax Act would not include proceedings for assessment or re-assessment or recomputation under Section 147of the said Act. As argued by Dr. It is the case, both of the Revenue and of the Assessee, that the expression case in Section 245C of the Income Tax Act would not include proceedings for assessment or re-assessment or recomputation under Section 147of the said Act. As argued by Dr. Pal, appearing on behalf of the assessee, for the purpose of clause (1) of the proviso to Section 245A(b) a proceeding for assessment or re-assessment or re-computation referred to in clause (i) of the proviso was to be deemed to have commenced from the date on which a notice under Section 148 was issued. Dr. Pal rightly argued that clause (1) of the proviso had to be read in conjunction with clause (i) of the Explanation and thus read, a proceeding for assessment or re-assessment or recomputation under Section 147 would commence once a notice under Section 148 had been issued. No settlement application could, therefore be filed after the date on which a notice under section 148 had been issued. 9. DR. Pal argued that as admittedly no notice under Section 148 had been issued for any of the assessment years in issue, before the settlement applications were made, the assessees were entitled to apply for settlement before the Settlement Commission, even though no returns had been filed and the time for making assessment under Section 143 had expired. DR. Pal argued that the Settlement Commission was fully justified in entertaining and proceeding with the settlement application. DR. Pal also referred to the definition of assessment which included re-assessment. It was argued that once a notice under Section 148 was issued for reopening an assessment, the assessee was required to file a return as if such return were required to be furnished under Section 139 and once such return was filed under Section 148 read with Section 139, all the provisions of the Income Tax Act relating to the making of an assessment would apply including the requirement of issuing notice under Section 143(2) and an assessment would be made thereafter. 10. 10. SECTION 147 read with SECTION 149 provides that in case of failure to make a return of income under SECTION 139, the Assessing Officer can issue notice within a period of six years, in stead of four years from the end of the relevant assessment year, and, therefore, assessment proceedings could be commenced by issuing a notice under SECTION 148 read with SECTION 147 of the Income Tax Act within a period of six years from the end of the relevant assessment year. The time period within which a notice might be issued under SECTION 148, in case of failure to make return of income is, in my view, not relevant since proceedings under SECTION 147 have been excluded from the purview of case under SECTION 245C read with SECTION 245A(b). Where no return of income is furnished by an assessee, in respect of any year, in which his total income exceeded the maximum amount exempted from Income Tax, income is to be deemed to have escaped assessment, and a notice under Section 147 read with Section 149 might be issued within six years from the end of the assessment year. However, a proceeding for assessment under Section 147 has clearly been excluded from the purview of pending proceedings for the purpose of making a settlement application. The question is whether an application for settlement can still be filed even though returns have not been filed, and no assessment can be made, except under Section 147 of the Income Tax Act, by reason of the statutory time limit under Section 153(1) for making an assessment under Section 143. 11. WHILE Dr. Pal rightly argued that proceedings for assessment for any assessment year had to be deemed to have commenced from the first day of the assessment year, if no return had been filed before the date of filing of the settlement application, it is difficult to accept Dr. Pals submission that the proceedings would be deemed to continue even after expiry of the statutory time limit for making an order of assessment and until such time as notice, if any, under Section 148 were issued. After the amendment only the cases pending before the Assessing Officer on the date on which an application under sub-section (1) of Section 245C is made, comes within the definition of the word case appearing in Section 245A(b). 12. After the amendment only the cases pending before the Assessing Officer on the date on which an application under sub-section (1) of Section 245C is made, comes within the definition of the word case appearing in Section 245A(b). 12. IF Parliament in its wisdom excluded proceedings under Section 147 from the purview of pending proceedings, Explanation iv to the definition of case in Section 245A(b) cannot be construed to include within the purview of pending proceedings, the requisite time period for issuance of notice for proceedings under the aforesaid section. In the case Asgarali Nazarali vs. State of Bombay reported in AIR 1957 SC 503 , the Supreme Court held as follows: "Pending":- (1) A legal proceeding is "pending" as soon as commenced and until it is concluded, i.e., so long as the Court having original cognizance of it can make an order on the matters in issue, or to be dealt with, therein. Similar are the observations of Jessel, M.R. In re Clagett’s Estate, Fordham v. Clagett (1) : "What is the meaning of the word "pending"? In my opinion, it includes every insolvency in which any proceeding can by any possibility be taken. That I think is the meaning of the word "pending”. A cause is said to be pending in a Court of justice when any proceeding can be taken in it. That is the test." There is no doubt therefore that the case of the appellant was not concluded and was pending before the learned Presidency Magistrate at the date of the commencement of the impugned Act." 13. IN the case of Rambhai Jethabhai Patel vs. CIT reported in 108 ITR 771, the Gujarat High Court held that it could safely be said that a matter could be said to be pending in a Court of Justice when any proceedings could be taken in it and that was the test which was required to be applied. If the aforesaid test is applied proceedings could only be said to be pending for as long as any proceedings could be taken, excluding proceedings under Section 147 which have consciously been excluded by Parliament in its wisdom. 14. If the aforesaid test is applied proceedings could only be said to be pending for as long as any proceedings could be taken, excluding proceedings under Section 147 which have consciously been excluded by Parliament in its wisdom. 14. AN application appended to a Section, to explain the meaning of words contained in that Section, should normally be read to harmonize with and clear up any ambiguity in the main Section and should not be construed to widen the ambit of the Section. It is difficult to accept the submission that Explanation iv to Section 245A(b) is to be construed to provide that proceedings for assessment could only conclude with the passing of an assessment order of assessment and if no order of assessment was made, such proceedings would be deemed to continue for a period of six years and nine months from the end of the relevant assessment year, within which period an assessment could be made under Section 147 after issuing a notice under Section 148. Construed literally, Explanation iv to Section 245A(b) would give rise to absurdity, for proceedings would be deemed to continue eternally, if no order of assessment were made and no notice under Section 148 were issued. The interpretation suggested by Dr. Pal that proceedings would be deemed to continue for a period of six years and nine months from the end of the relevant Assessment Year, within which period as assessment might be done under Section 147, upon notice under Section 148 would also involve some modification of the literal meaning of the Explanation iv to Section 245A(b). 15. THERE can be no dispute with the proposition that where a strict and literal interpretation produces an absurd and unjust result, which could never have been the intention of the legislature, the Court might modify the language used by the legislature or do some violence to it so as to achieve the obvious intention of the legislature and produce a rational construction. 16. AS held in K. P. Varghese Vs. Income Tax Officer reported in 131 ITR 597 (SC) and as held by Lord Denning in (1969) 2 All. 16. AS held in K. P. Varghese Vs. Income Tax Officer reported in 131 ITR 597 (SC) and as held by Lord Denning in (1969) 2 All. E. R. 912 and approved by the Supreme Court in AIR 1997 SC 1519 "whenever a statute comes up for consideration it must be remembered that it is not within the human powers to foresee the manifold sets of facts which may arise and even if it were, it is not possible to provide for them in terms free from all ambiguity. The question a Judge should ask himself is to how the makers of the Act would themselves have resolved the ruck A Judge is not to alter material of which the Act is woven and should have to iron out the creases". Since the legislature has, in its wisdom, very consciously excluded proceedings under Section 147, from the purview of a settlement application, this Court ought not to interpret the expression case in a manner that would in effect bring within the purview of a settlement application, something which has consciously been excluded by the legislature. 17. IF two reasonable constructions of a taxing provision are possible, the construction which favours the assessee must be adopted. There can be no dispute with the proposition of law laid down by the Supreme Court in CIT vs. Vegetable Products Ltd. reported in 88 ITR 192 (SC) 195. However, as observed above, literal construction of Explanation iv would give rise to absurdity. 18. THIS Court meaningfully construes the said explanation to mean that pending assessment proceedings would conclude with an order of assessment, and where no order of assessment is made, the proceedings would lapse, when an order can no longer be made, by reason of expiry of the statutory time limit under Section 153(1). This Court is constrained to hold that irrespective of whether returns were filed or not, a case would be deemed to be pending but only for twenty one months from the end of the assessing year in question, i.e. the period within which an assessment could have been made. Once the aforesaid time period expires, it cannot be said that the proceedings are pending. 19. Once the aforesaid time period expires, it cannot be said that the proceedings are pending. 19. IF the time period to make an assessment had not expired on the date on which the settlement application was made, the commission might entertain and proceed with the same, irrespective of whether income tax returns had been filed or not. 20. HOWEVER, where the period of twenty one months from the end of the assessment year expired on the date of making of the application, the settlement application cannot be proceeded with. The writ applications are disposed of accordingly. Learned Counsel appearing on behalf of the Assessee prays for stay of operation of this order. The prayer for stay is considered and rejected. Urgent certified copy of this order, if applied for, be supplied to the parties upon compliance of the required formalities.