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2016 DIGILAW 1502 (GUJ)

Rajendra B. Zatakia v. Tax Recovery Officer

2016-07-27

A.J.SHASTRI, AKIL ABDUL HAMID KURESHI

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JUDGMENT : Akil Abdul Hamid Kureshi, J. 1. These petitions arise in common factual background. We may refer to facts from Special Civil Application No. 319/2014. 2. The petitioner is an individual. On 8.6.1999, search operations under section 132 of the Income Tax Act, 1961 ("the Act" for short) were carried out at the premises of the petitioner. Pursuant to such operations, notice under section 158BC of the Act was issued on 6.7.1999. When the block assessment proceedings were pending, the petitioner applied to the Settlement Commission on 4.5.2001 for settlement of his case. On 12.10.2000, the petitioner had deposited tax on disclosed income of Rs. 25 lacs with the department. Along with the application for settlement, the petitioner paid a further tax on additional disclosed income of Rs. 13.50 lacs. On 29.6.2001, the Assessing Officer passed the order under section 158BC of the Act for the block period and raised a total demand with interest at Rs. 1.39 crores (rounded off). On 16.4.2003, the Settlement Commission passed an order admitting the application of the petitioner for settlement in terms of sub-section (1) of section 245D of the Act. A copy of this order is tendered by the counsel for the petitioner which is taken on record. In the meantime, the petitioner had preferred an appeal against the order of assessment passed by the Assessing Officer on 29.6.2001. On 9.11.2004, the Commissioner (Appeals) disposed of such appeal taking note of the fact that the Settlement Commission had admitted the application for settlement and therefore, under section 245F (2) of the Act, the Settlement Commission would have exclusive jurisdiction on every aspect of the case. In the opinion of the Commissioner(Appeals) therefore, the appeal would not survive and same was accordingly disposed of. 3. The provisions contained in Chapter XIX-A of the Act pertaining to settlement of cases underwent significant amendments with effect from 1st June, 2007. In addition to the applicant for settlement of a case having to deposit the income tax on the amount offered for settlement, by virtue of such amendments, the assessee would also have to deposit interest thereon. For the pending applications, time was granted upto 31.7.2007 to clear the shortfall. On 20.7.2007, the petitioner wrote to the Assessing Officer and pointed out that in the past, he had deposited a total tax of Rs. 23,10,000/- commensurate with his disclosure of additional income of Rs. For the pending applications, time was granted upto 31.7.2007 to clear the shortfall. On 20.7.2007, the petitioner wrote to the Assessing Officer and pointed out that in the past, he had deposited a total tax of Rs. 23,10,000/- commensurate with his disclosure of additional income of Rs. 25 lacs and Rs. 13.50 lacs respectively. He further conveyed as under: "4. In view of the amended provisions, the assessee had paid interest u/s. 158BFA(1) as also the interest u/s. 245D(2C) of the I.T. Act The assessee is enclosing a statement giving the dates of payment of tax and interest, as also a statement as to how the assessee has calculated the amount of tax and interest. It is requested that you may kindly confirm that tax and interest in respect of the income disclosed in the Settlement Application has been paid by the assessee before 31.07.2007. The letter of confirmation may kindly be given before 31.07.2007. If according to you, any further payment requires to be made, we may be informed accordingly so that we can make the necessary payment well within the time allowed by section 245D(2D)." 4. Undisputedly, to the said letter dated 20.7.2007, the Assessing Officer did not respond for a considerable period of time. However, on 17.7.2009, the Assessing Officer wrote to the petitioner and pointed out that having regard to the amended provisions of section 245D(2A) of the Act, the amount deposited by the petitioner is short to the extent of Rs. 82,500/-. Along with the letter, the Assessing Officer also enclosed a statement prepared by him which indicated the relevant particulars on the basis of which such sum of Rs. 82,500/- was worked out. He conveyed as under: "2. You are hereby directed to let me know within a week of the receipt hereof whether you agree with the working enclosed herewith. 3. You may appear before me on 27.07.2009 at 11.00 AM either in person or through a representative duly authorized to make submissions in the above matter. You may, if you so like, send your response in writing in the matter, which will be taken into consideration be me. 4. If you find the calculations as done by me to be in order, you are hereby requested to make payment of Rs. 82,500/- immediately under intimation to me." 5. In response to such letter, the petitioner immediately deposited such further sum of Rs. 4. If you find the calculations as done by me to be in order, you are hereby requested to make payment of Rs. 82,500/- immediately under intimation to me." 5. In response to such letter, the petitioner immediately deposited such further sum of Rs. 82,500/- on 30.7.2009. For a very long time, thereafter, there was no further progress in the settlement proceedings concerning the petitioner. However, on 28.5.2013, the Settlement Commission conveyed to the petitioner that: "2. In this regard a letter bearing No. 10/Raj/008/2001-2002/IT/1302 dated 03.02.2009 was addressed to you wherein it was intimated that due to shortfall in payment of interest u/s. 234 Bin your case on or before 31.07.2007, no further proceedings u/s.245D(4) could be taken up, in view of the provisions of section 245D(2D) of the Income-tax Act. 3. In view of the above, you are hereby informed that there is no proceedings pending in your case before the Income-tax Settlement Commission, Additional Bench-II Mumbai since 31.07.2007." 6. Once the proceedings were disposed of by the Settlement Commission in terms of the said communication dated 28.5.2013, the Assessing Officer initiated proceedings of recovery of tax as per the original order of assessment. On 8.7.2013, the Assessing Officer pointed out to the petitioner that the settlement proceedings have abated and, therefore, no proceedings are pending. Under the circumstances, demand of Rs. 1.30 crores with interest for the entire block period has become due and payable. He was called upon to pay such tax with interest latest by 15.7.2013. 7. In response to such letter, the petitioner wrote to the Assessing Officer on 10.7.2013 pointing out that the order of assessment was passed, when the petitioner had applied for settlement. Subsequently, the application for settlement was also admitted. Even if such proceedings can be stated to have abated with effect from 31.7.2007, the Assessing Officer had to pass fresh order of assessment. 8. Ignoring such pleas of the petitioner, the Assessing Officer initiated recovery by taking coercive measures on 10.12.2013 in exercise of powers under section 226(3) of the Act, at which stage, the petitioner approached this Court by filing the present petition. 9. In the petition, the petitioner has challenged the notice dated 10.12.2013 issued by the Assessing Officer for recoveries. The petitioner has also challenged the original order of assessment dated 29.6.2001. 9. In the petition, the petitioner has challenged the notice dated 10.12.2013 issued by the Assessing Officer for recoveries. The petitioner has also challenged the original order of assessment dated 29.6.2001. By way of amendment, the petitioner has added challenge to the order dated 28.5.2013 passed by the Settlement Commission declaring that the proceedings have abated. In this context, the petitioner has added a ground contending that as per the petitioner there were no dues which remained unpaid. The sum of Rs. 82,500/- by way of shortfall was paid as soon as the petitioner was so conveyed by the Assessing Officer. 10. In view of such facts, learned counsel Shri Soparkar for the petitioner raised the following contentions: "1) In view of the amended provisions of Chapter XIX-A of the Act, the petitioner had written to the Assessing Officer on 20.7.2007 pointing out that the petitioner has already deposited tax of Rs. 2,47,500/- and no further amount is payable by the petitioner. In response to such letter, the Assessing Officer never pointed out to the petitioner within a reasonable time that the petitioner was in arrears of Rs. 82,500/-. This was conveyed by the Assessing Officer nearly two years later under a letter dated 17.7.2009, upon which, the petitioner promptly on 30.7.2009 paid the said additional sum of Rs. 82,500/-. The petitioner's application for settlement therefore, cannot be rejected only on the ground that the petitioner had not paid the full interest as per the amended provisions. (2) The original order of assessment passed by the Assessing Officer on 29.6.2001 was without authority and jurisdiction. By the time this order was passed, the petitioner had already applied for settlement by making an application on 4.5.2001. From such date, therefore, the Settlement Commission enjoyed exclusive jurisdiction over the matters before itself. (3) In any case, once the Settlement Commission decided to admit the application for settlement, abatement thereof subsequently would not automatically revive the order of assessment passed by the Assessing Officer. He had to have passed fresh order of assessment within the time permitted under the statute. The Assessing Officer having not done so, could not raise the tax demand pursuant to the order of assessment dated 29.6.2001 which did not survive in eye of law. (4) In any case, the petitioner cannot be left without any remedy. He had to have passed fresh order of assessment within the time permitted under the statute. The Assessing Officer having not done so, could not raise the tax demand pursuant to the order of assessment dated 29.6.2001 which did not survive in eye of law. (4) In any case, the petitioner cannot be left without any remedy. The Commissioner (Appeals) had dismissed the petitioner's appeal on the ground that the proceedings before the Settlement Commission were pending. Even if by virtue of subsequent abatement of proceedings before the Settlement Commission, the original order of assessment stood revived, the petitioner should be allowed to pursue the appeal before the Appellate Commissioner." 11. On the other hand, learned counsel Shri Desai for the department opposed the petition contending that the Assessing Officer had the power to frame the assessment till the application was admitted by the Settlement Commission. Despite admission of the application, the order of Assessing Officer which was passed before such event would continue to be valid. When the Settlement Commission therefore, declared the settlement proceedings as having abated, the Assessing Officer was authorised to recover the tax with interest on the basis of such order of assessment. 12. Facts are seriously not in dispute. We may iron out a few creases before adverting to the statutory provisions. Pending block assessment pursuant to notice dated 6.7.1999 by the Assessing Officer, the petitioner had made disclosure of income of Rs. 25 lacs. He subsequently approached Settlement Commission on 4.5.2001 making a further disclosure of Rs. 13.50 lacs of income. On 16.4.2003, the Settlement Commission admitted the application for settlement but granted time to pay full tax and interest on delayed deposit. It is not in dispute that the petitioner paid such sum. In the meantime on 29.6.2001, the Assessing Officer had already framed the assessment. Once the provisions of Chapter XIX-A were amended with effect from 1st June, 2007, there arose the requirement of depositing the tax with interest. The petitioner thereupon deposited a further sum of Rs. 2,47,500/- by way of his own calculation of interest under section 158BFA(1) of the Act. On 20.7.2007, the petitioner wrote to the Assessing Officer pointing out that he had paid such of interest and that according to him, no further amount is payable. The Assessing Officer did not respond to this communication for a considerable period of time. 2,47,500/- by way of his own calculation of interest under section 158BFA(1) of the Act. On 20.7.2007, the petitioner wrote to the Assessing Officer pointing out that he had paid such of interest and that according to him, no further amount is payable. The Assessing Officer did not respond to this communication for a considerable period of time. Nearly two years later on 17.7.2009, he conveyed that there was a shortfall of interest of Rs. 82,500/-. Significantly, along with this letter, he had annexed his calculation of such additional interest liability and conveyed to the petitioner that within a week, the petitioner should let him know whether he agrees to such working out or not. The petitioner could appear before him on 27.7.2009 in person or through his legal representative or may send his response in writing. Alternately, if the petitioner agreed to such calculation, he may make payment of the same immediately. Admittedly, the petitioner did not dispute this working out of the outstanding interest liability of Rs. 82,500/- conveyed to him by the Assessing Officer. He, in fact, paid up the sum on 30.7.2009. 13. This discussion was necessary because never in the past having disputed such outstanding interest liability of Rs. 82,500/- pointed out by the Assessing Officer, the petitioner through amendment in the petition, has fleetingly raised the ground that the petitioner does not admit to such computation made by the Assessing Officer. It is too late in the day for the petitioner to dispute such liability. Firstly, the petitioner has not pointed out how such computation is incorrect. Most importantly, in the letter dated 17.7.2009, the Assessing Officer called upon the petitioner to let him know within a week, if he agreed to such a computation. He offered the alternative of appearing in person or through legal representative or even in writing or to pay up the said sum immediately, if petitioner agreed to the computation. The petitioner's action of promptly depositing such sum should be seen in light of this communication by the Assessing Officer. In plain terms, the petitioner did not object to the computation but complied with the request of the Assessing Officer to deposit the sum, if the petitioner agreed to such calculation of additional interest liability. The petitioner now cannot take a stand that the Assessing Officer provided no break-up of such computation and that therefore, such liability was unascertained. In plain terms, the petitioner did not object to the computation but complied with the request of the Assessing Officer to deposit the sum, if the petitioner agreed to such calculation of additional interest liability. The petitioner now cannot take a stand that the Assessing Officer provided no break-up of such computation and that therefore, such liability was unascertained. 14. On 28.5.2013, the Settlement Commission conveyed to the petitioner that letter dated 3.8.2009 addressed to the petitioner intimated that due to shortfall in payment of interest under section 234B before 31.7.2007, no further proceedings under section 245D(4) of the Act could be taken up in view of the provisions of 245D(2D) of the Act. The petitioner was therefore, conveyed that no proceedings are pending before the Settlement Commission in respect of his case since 31.7.2007. Though this letter dated 3.8.2009 is not on record, the petitioner does not dispute having received the same at the relevant time. 15. We may examine the legal contentions raised by the petitioner in the background of such facts. Chapter XIX-A containing provisions for settlement of cases was introduced in the Act with effect from 1.4.1976. Since inception statutory provisions contained therein have undergone many changes. Section 245C of the Act pertains to application for settlement of cases. Under sub-section (1) of Section 245C, an assessee could at any stage of a case relating to him, make an application in the prescribed format for settlement of cases. The term 'case' is defined in clause (b) of section 245A. The definition contained at the relevant time reads as under: "(b) "Case" means any proceeding under this 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 may be pending before an income-tax authority on the date on which an application under sub-section (1) of section 245C is made: Provided that where any appeal or application for revision has been preferred after the expiry of the period specified for the filing of such appeal or application for revision under this Act and which has not been admitted, such appeal or revision shall not be deemed to be a proceeding within the meaning of this clause." 16. Section 245D contains procedure on receipt of an application under section 245C. Section 245D contains procedure on receipt of an application under section 245C. Relevant portion of this section as it stood when the petitioner made such an application reads as under: "245D(1)- On receipt of an application under section 245C, the Settlement Commission shall call for a report from the Commissioner and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, the Settlement Commission may, by order, allow the application to be proceeded with or reject the application: Provided that an application shall not be rejected under this sub-section unless an opportunity has been given to the applicant of being heard: Provided further that the Commissioner shall furnish the report within a period of forty-five days of the receipt of communication from the Settlement Commission in case of all applications made under section 245C on or after the 1st day of July 1995 and if the Commissioner fails to furnish the report within the said period, the Settlement Commission may make the order without such report. (2) A copy of every order under sub-section (1) shall be sent to the applicant and to the Commissioner. (2A) Subject to the provisions of sub-section (2B), the assessee shall, within thirty-five days of the receipt of a copy of the order under sub-section (1) [allowing the application to be proceeded with], pay the additional amount of income- tax payable on the income disclosed in the application and shall furnish proof of such payment to the Settlement Commission. (2B) If the Settlement Commission is satisfied, on an application made in this behalf by the assessee, that he is unable for good and sufficient reasons to pay the additional amount of income-tax referred to in sub-section (2A) within the time specified in that sub-section, it may extend the time for payment of the amount which remains unpaid or allow payment thereof by installments if the assessee furnishes adequate security for the payment thereof. (2C) Where the additional amount of income- tax is not paid within the time specified under sub-section (2A), then, whether or not the Settlement Commission has extended the time for payment of the amount which remains unpaid or has allowed payment thereof by installments under Sub-section (2B), the assessee shall be liable to pay simple interest at fifteen per cent per annum on the amount remaining unpaid from the date of expiry of the period of thirty-five days referred to in sub- section (2A). (2D) Where the additional amount of income-tax referred to in sub-section (2A) is not paid by the assessee within the time specified under that sub-section or extended under sub-section (2B), as the case may be, the Settlement Commission may direct that the amount of income-tax remaining unpaid, together with any interest payable thereon under sub-section (2C), be recovered and any penalty for default in making payment of such additional amount may be imposed and recovered, in accordance with the provisions of Chapter XVII, by the Assessing Officer having jurisdiction over the assessee. (3) Where an application is allowed to be proceeded with under sub-section (1), the Settlement Commission may call for the relevant records from the Commissioner and after examination of such records, if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary, it may direct the Commissioner to make or cause to be made such further enquiry or investigation and furnish a report on the matters covered by the application and any other matter relating to the case. (4) After examination of the records and the report of the Commissioner received under sub-section (1), and the report, if any, of the Commissioner received under Sub-section (3), and after giving an opportunity to the applicant and to the Commissioner to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner under sub-section (1) or sub-section (3)." 17. Section 245F pertains to powers and procedure of Settlement Commission. Section 245F pertains to powers and procedure of Settlement Commission. Relevant portion of this section as it stood at the relevant time reads as under: "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." 18. It can thus be seen that at the relevant time, the term 'case' with respect to which an application for settlement could be made included not only a proceeding of assessment or reassessment of any person but also appeal or revision in connection with such assessment or reassessment, which may be pending before an income-tax authority on the date on which the application under sub-section (1) of section 245C is made. Under section 245D of the Act, as it stood at the relevant time, the liability of the applicant for settlement was to pay tax on the disclosed income without interest and the Settlement Commission had the power to grant extension of time or installments for payment of such amount. 19. In the present form term 'case' as defined in clause (b) of section 245A means any proceeding for assessment under the 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. This definition is much narrower than one we noticed earlier in which even a pending reassessment or appeal or revision was included. 27.7.2016 20. With effect from 1st June, 2007, the requirement was added even to the pending cases of settlement for payment of not only the tax on disclosed income but also interest payable thereon. This definition is much narrower than one we noticed earlier in which even a pending reassessment or appeal or revision was included. 27.7.2016 20. With effect from 1st June, 2007, the requirement was added even to the pending cases of settlement for payment of not only the tax on disclosed income but also interest payable thereon. Under sub-section (1) of section 245C, therefore, an assessee could make an application for settlement of a case in the prescribed format containing true and full disclosure of his income which has not been disclosed before the Assessing Officer, providing other prescribed details, including the additional amount of income tax payable on such income. As per the proviso to sub-section (1) of section 245C, such application shall not be made unless such tax and interest thereon which would have been paid under the provisions of the Act on the income disclosed in the application been declared in the return of the income, has been paid on or before the date of making application. Sub-section (1A) of section 245C provides that for the purposes of sub-section (1), the additional amount of income tax payable in respect of the income disclosed shall be the amount calculated in accordance with the provisions of sub-sections (1B) to (1D). 21. Section 245D pertains to procedure on receipt of an application under section 245C. Relevant portion as it stands currently reads as under: "245D(1) On receipt of an application under section 245C, the Settlement Commission, shall within seven days from the date of receipt of the application, issue a notice to the applicant requiring him to explain as to why the application made by him be allowed to be proceeded with and on hearing the applicant, the Settlement Commission, shall within a period of fourteen days from the date of application, by an order in writing, reject the application or allow the application to be proceeded with; Provided that where no order has been passed within the aforesaid period by the Settlement Commission, the application shall be deemed to have been allowed to be proceeded with. (2A) Where an application was made under section 245C before the 1st day of June, 2007, but an order under the provisions of sub-section (1) of this section, as they stood immediately before their amendment by the Finance Act, 2007, has not been made before the 1st day of June, 2007, such application shall be deemed to have been allowed to be proceeded with if the additional tax on the income disclosed in such application and the interest thereon is paid on or before the 31st day of July, 2007. Explanation- In respect of the applications referred to in this sub-section, the 31st day of July, 2007 shall be deemed to be the date of the order of rejection or allowing the application to be proceeded with under sub-section (1). (2B) The Settlement Commission shall,-- (i) in respect of an application which is allowed to be proceeded with under sub-section (1), within thirty days from the date on which the application was made; or (ii) in respect of an application referred to in sub-section (2A) which is deemed to have been allowed to be proceeded with under that sub-section, on or before the 7th day of August, 2007, call for a report from the [Principal Commissioner or] Commissioner, and the [Principal Commissioner or] Commissioner shall furnish the report within a period of thirty days of the receipt of communication from the Settlement Commission. (2C) Where a report of the [Principal Commissioner or] Commissioner called for under sub-section (2B) has been furnished within the prescribed period specified therein, the Settlement Commission may, on the basis of the report and within a period of fifteen days of the receipt of the report, by an order in writing, declare the application in question as invalid, and shall send the copy of such order to the applicant and the [Principal Commissioner or] Commissioner; Provided that an application shall not be declared invalid unless an opportunity has been given to the applicant of being heard; Provided further that where the [Principal Commissioner or] Commissioner has not furnished the report within the aforesaid period, the Settlement Commission shall proceed further in the matter without the report of the [Principal Commissioner or] Commissioner. (2D) Where an application was made under sub-section (1) of section 245C before the 1st day of June, 2007 and an order under the provisions of sub-section (1) of this section, as they stood immediately before their amendment by the Finance Act, 2007, allowing the application to have been proceeded with, has been passed before the 1st day of June 2007, but an order under the provisions of sub-section (4), as they stood immediately before their amendment by the Finance Act, 2007, was not passed before the 1st day of June, 2007, such application shall not be allowed to be further proceeded with unless the additional tax on the income disclosed in such application and the interest thereon, is, notwithstanding any extension of time already granted by the Settlement Commission, paid on or before the 31st day of July, 2007. (3) The Settlement Commission, in respect of-- (i) an application which has not been declared invalid under sub-section (2C); or (ii) an application referred to in sub-section (2D) which has been allowed to be further proceeded with under that sub-section, may call for the records from the [Principal Commissioner or] Commissioner and after examination of such records, if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary, it may direct the [Principal Commissioner or] Commissioner to make or cause to be made such further enquiry or investigation and furnish a report on the matters covered by the application and any other matter relating to the case, and the [Principal Commissioner or] Commissioner shall furnish the report within a period of ninety days of the receipt of communication from the Settlement Commission; Provided that where the [Principal Commissioner or] Commissioner does not furnish the report within the aforesaid period, the Settlement Commission may proceed to pass an order under sub-section (4) without such report. (4) After examination of the records and the report of the [Principal Commissioner or] Commissioner, if any, received under- (i) sub-section (2B) or sub-section (3), or (ii) the provisions of sub-section (1) as they stood immediately before their amendment by the Finance Act, 2007, and after giving an opportunity to the applicant and to the [Principal Commissioner or] Commissioner to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the [Principal Commissioner or] Commissioner." 22. Under sub-section (2A) of section 245D, thus in case of an application made before 1st June, 2007, but where an order under sub-section (1), as it stood immediately before the amendment by Finance Act of 2007, was not made before 1st June, 2007, such application shall be deemed to have been allowed to be proceeded with if the additional tax on the income disclosed in such application with interest is paid on or before 31st July, 2007. As per the explanation, in respect of such application, 31st July, 2007, would be deemed to be the date of order of rejection or allowing the application to be proceeded under sub-section (1). In plain terms, thus with respect to an application made prior to 1st June, 2007, additional liability of paying tax with interest would have to be complied with latest by 31st July, 2007, failing which, 31st July, 2007 would be deemed to be the date of rejection of such an application. Under sub-section (2D) of section 245D even where with respect of an application under section 245C (1) which was made before 1st June, 2007, and such application was allowed to proceed with before 1st June, 2007, the assessee would have to discharge the liability of paying the additional sums as per the amendment of 1st June, 2007 before 31st July, 2007. 23. 23. Section 245HA pertains to abatement of proceeding before Settlement Commission, relevant portion of which reads as under: "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 sub-section (2A) or further proceeded with under sub-section (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 (iiia) in respect of any application made under section 245C, an order under sub-section(4) of section 245D has been passed not providing for the terms of settlement; 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 proceedings before the Settlement Commission, 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. (ca) in respect of an application referred to clause (iiia), the day on which the order under sub-section (4) of section 245D was passed not providing for the terms of settlement; (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." 24. It can thus be seen that when the petitioner filed the application for settlement under section 245C(1) of the Act, the definition of term 'case' included not only pending assessment but reassessment, appeal or revision. It can thus be seen that when the petitioner filed the application for settlement under section 245C(1) of the Act, the definition of term 'case' included not only pending assessment but reassessment, appeal or revision. Under sub-section (2) of section 245F, as it stood at the relevant time, the Settlement Commission enjoyed exclusive jurisdiction to exercise the powers and perform functions of an income-tax authority in relation to a case where an application made under section 245C has been allowed to be proceeded with under section 245D, until an order is passed under sub-section (4) of section 245D. This vesting of the exclusive jurisdiction thus envisages two terminal points. The starting point of vesting of the exclusive jurisdiction in the Settlement Commission is allowing of an application under section 245C to be proceeded with under section 245D and the end point is passing of an order under sub-section (4) of section 245D. During this period, demarcated by two terminal points, the Commission would have jurisdiction to the exclusion of any other income tax authorities. Significantly, sub-section (2) of section 245F did not vest exclusive jurisdiction to the Commission, the moment an application for settlement was made under section 245C (1), but delayed the starting point to an event when such application was allowed to proceed with under section 245D. This is significantly different from the current provision of section 245F, where under sub-section (2), where in case of an application made under section 245C on or before 1st day of June, 2007, the Settlement Commission would have the exclusive jurisdiction from the date on which the application is made. When the petitioner therefore, made the application for settlement, such mere filing of the application did not vest exclusive jurisdiction in the Settlement Commission till such application was allowed to proceed further under section 245D. Till such order was passed, the Assessing Officer continued to enjoy his normal jurisdiction to make any order of assessment. He not only had the power, but also the duty to proceed further with the assessment. In a given case, by the time the Settlement Commission allows the application for settlement to proceed under section 245D, the assessment may even become time-barred. He not only had the power, but also the duty to proceed further with the assessment. In a given case, by the time the Settlement Commission allows the application for settlement to proceed under section 245D, the assessment may even become time-barred. The Assessing Officer could not be expected therefore, in such cases, to watch further proceedings before the Settlement Commission in an application under section 245C (1) of the Act, since the exclusive jurisdiction in the Settlement Commission would vest only from the date of order allowing the application to proceed under section 245D. Till such time, the Assessing Officer would continue to enjoy his jurisdiction over the assessment proceedings. Any other view would leave a vacuum, between the date of filing of application for settlement under section 245C (1) of the Act and the date of order that the Commission may pass allowing such an application to proceed. Surely, the legislature cannot be expected to have created a vacuum where neither the Settlement Commission would have jurisdiction over an assessment nor the Assessing Officer would be allowed to proceed further with the assessment. In the present case, the petitioner filed an application for settlement on 4.5.2001. Such application was allowed to proceed under section 245D by the Settlement Commission only on 18.4.2003. Long before this, the Assessing Officer had passed the order of assessment for the block period on 29.6.2001. We do not find that this order was without authority or jurisdiction. The Assessing Officer continued to enjoy the jurisdiction over the assessment proceedings till 18.4.2003 and thus his order cannot be declared as invalid or non est on this ground. 25. Somewhat similar question came up before the Delhi High Court in case of Deen Dayal Didwania v. Union of India and others reported in 1986 (160) ITR 12. In the said case, the petitioners had moved an application before the Settlement Commission under section 245C of the Act. The assessment was pending before the Income Tax officer. The petitioners had therefore, prayed for a direction to the Settlement Commission to proceed expeditiously with application of the petitioners for settlement. The petitioners had also prayed for a direction to the Income tax officer not to proceed with the case. In context of this later prayer, the High Court held as under: "2. It is the second prayer which has led to most of the contentions before us. The petitioners had also prayed for a direction to the Income tax officer not to proceed with the case. In context of this later prayer, the High Court held as under: "2. It is the second prayer which has led to most of the contentions before us. The question is whether the income-tax authorities can proceed with the assessment proceedings while the Settlement Commission is contemplating whether to proceed with the application or reject the same. We have examined the provisions of the Act and do not find that there is any bar on the Income-tax Officer from proceeding with the assessment of any pending case. Reliance was placed mainly, if not solely, on the provisions of the first Explanation to section 153(3), which provides that certain periods have to be excluded in computing the limitation period for completing an assessment proceeding. Clause (v) of this Explanation reads: "(v) in a case where an application made before the Income-tax Settlement Commission under section 245C is rejected by it or is not allowed to be proceeded with by it, the period commencing from the date on which such application is made and ending with the date on which the order under sub-section (1) of section 245D is received by the Commissioner under sub-section (2) of that section." 3. In other words, the period calculated from the date of submission of the application to the date when the rejection of the same is received by the Commissioner is to be excluded from the period of limitation. On the basis of this provision, it is urged that the assessment proceedings should be stayed by us. 4. In answer to this, learned counsel for the respondents has urged that there are a number of circumstances showing that there will be a possible loss of revenue in case the proceedings are stayed. It is pointed out that numerous other cases in the Calcutta High Court and the Madras High Court have been filed to delay the realisation of the assets and there is a grave possibility of the assets not being available in case the assessment proceedings are delayed. We have examined the various orders submitted along with the counter-affidavit and the circumstances of the case. We find that the circumstances would not justify a stay by us. We have examined the various orders submitted along with the counter-affidavit and the circumstances of the case. We find that the circumstances would not justify a stay by us. Furthermore, the Act does not contemplate a stay of the assessment proceedings during the period when the Settlement Commission is deciding whether to proceed or not to proceed. If we grant a stay, we will be adding a provision to the statute which is not justified. 5. It is unnecessary to amplify our reasons by a full analysis of the various sections of the Act dealing with settlement. However, we are of the view that in case the Settlement Commission does proceed with the application, then the Settlement Commission will have full power to pass any order it deems fit regarding the settlement. The assessment order or orders if passed will be no impediment to the Settlement Commission in exercising its powers if it decides to exercise them. On the other hand, if the Settlement Commission decides not to proceed with the application, there is a distinct possibility of the Department not being able to realise the taxes in the circumstances of this case. So, we find that we are unable to interfere both on the ground of there being no statutory provision to justify a stay of proceedings before the income-tax authorities and also because the circumstances of the case would not justify such an act." 26. Next comes the question of requirement of petitioner to pay the shortfall of tax and interest which liability arose on account of amendments made with effect from 1st June, 2007. We have noticed the relevant statutory provisions. Under sub-section (2A) of section 245D in case of an application filed before 1st June, 2007, where no order allowing to proceed further has been made till that date, such application would be deemed to have been allowed to proceed with, if additional tax on the disclosed income with interest is paid before 31st day of July 2007. Under Sub-section (2D) of section 245D, even in a case where previously the order has already been passed under sub-section (1) of section 245D, there would be a liability to pay the tax with interest before 31st July, failing which, such application shall not be allowed to be further proceeded with. This is notwithstanding any extension of time which may already have been granted by the Settlement Commission. This is notwithstanding any extension of time which may already have been granted by the Settlement Commission. In other words, a strict liability to deposit tax with interest was attached even in case of pending applications and even in cases where the Settlement Commission might have previously granted extension of time for making such payment. This provision or any other provision noticed by us do not envisage any role of the Assessing Officer of advising the applicant as to what would be the correct liability of tax on additional income with interest. It casts, in plain terms, a duty on the applicant to make good the shortfall latest by 31st July 2007. This is a strict requirement and compliance thereof or substantial compliance, cannot be viewed from the assessee's intention or bona fide. The statute casts a duty on the assessee to make certain further payments, failing which, his application for settlement would not be allowed to proceed further. The date of 31st July, 2007, was envisaged as a last date for making such payment, notwithstanding the fact that the Commission might have previously granted extension to the assessee as per the provisions then prevailing. Under the circumstances, it is not of any importance that the assessee on 20.7.2007 not only paid the additional sum of Rs. 2,45,000/- by way of interest liability, also conveyed to the Assessing Officer that such sum has been paid and that the Assessing Officer should confirm this aspect before 31st July, 2007. If any further sum was required to be paid, the assessee may be informed so that the same can be done before the last date. 27. The fact that the Assessing Officer did not reply to this communication for nearly two years, in our opinion, would be of no significance when one peruses the statutory provisions. As noted, it was not the duty of the Assessing Officer to advise the assessee on what would be the correct computation of interest payable on tax of the disclosed income. It was the duty of the assessee to pay the same before 31st July, without fail. The fact that the assessee had short paid sum of Rs. 82,500/- is duly established on record. It was the duty of the assessee to pay the same before 31st July, without fail. The fact that the assessee had short paid sum of Rs. 82,500/- is duly established on record. The Assessing Officer on 17.7.2009 conveyed this to the petitioner giving details of the working out of the interest and calling upon the petitioner to represent either in person or in writing, if the petitioner disputed such computation. He conveyed that if the petitioner agreed to such computation, he may deposit the sum immediately. The petitioner never disputed such computation of interest and deposited Rs. 82,500/- within less than a week of the date of communication. If we therefore, proceed on the premise, as we are bound to, that the petitioner had been in arrears of interest to the extent of Rs. 82,500/- as on 31st July, 2007, the inescapable conclusion would be that in terms of the amended provisions of section 245D with effect from 1st June, 2007, the application of the petitioner for settlement could not be proceeded further with. This was, in fact, so communicated to the petitioner by the Settlement Commission as far back as on 3.8.2009. The petitioner apparently took no further action in this respect. On 28.5.2013, the Settlement Commission once again conveyed to the petitioner that as stated in the letter dated 3.8.2009, due to shortfall in payment of interest before 31st July, 2007, no further proceedings under section 245D(4) could be taken up. The petitioner was therefore, conveyed that no proceedings are pending in his case since 31st July, 2007. It is true that the petitioner was not granted any hearing before the communication dated 3.8.2009 or 28.5.2013 made by the Settlement Commission. We are prepared to accept the contention of the counsel for the petitioner that in a situation where an assessee wants to dispute shortfall in tax or interest, such hearing would be necessary and vital, since the assessee can point out the correct calculation and contend that the entire amount, as provided in the statute, has been deposited before 31st July, 2007. In the present case, however, such a situation does not arise. Hearing of the petitioner therefore, would be wholly futile. We would not set back the clock only for the purpose of completing the formality. 28. The crucial question that remains is, what would be the effect of these conclusions. In the present case, however, such a situation does not arise. Hearing of the petitioner therefore, would be wholly futile. We would not set back the clock only for the purpose of completing the formality. 28. The crucial question that remains is, what would be the effect of these conclusions. The relevant conclusions we have arrived at are that the Assessing Officer was within his power to pass the order of assessment which he did on 29.6.2001. The second important conclusion is that the petitioner not having deposited the full interest before 31st July, 2007, his application could not be proceeded further with thereafter. Section 245HA, as noted, pertains to abatement of proceedings before the Settlement Commission. Under clause (2) of sub-section (1) of section 245HA, when an application made under section 245C has not been allowed to be proceeded with under sub-section (2A) or further proceeded with under sub-section (2D) of section 245D, the proceedings before the Settlement Commission shall abate on the specified date. As per the explanation, term 'specified date' in such a case would mean 31st day of July, 2007. Under sub-section (2) of section 245HA, where a proceeding before the Settlement Commission abates, the Assessing Officer or as the case may be, any income-tax authority before whom the proceeding at the time of making of the application was pending, shall dispose of the case in accordance with the provisions of the Act, as if no application under section 245C had been made. In context of this provision of sub-section (2) of section 245HA, counsel for the petitioner vehemently contended that the proceedings for settlement before the Settlement Commission having abated, the Assessing Officer had to pass fresh order of assessment. This contention however, ignores the fact that sub-section (2) of section 245HA, as it stands in the present form, refers to a case where proceedings before the Settlement Commission abates and at the time of making of application for settlement, the proceedings were pending before the Assessing Officer or other Income tax authority. In such a case, the concerned authority would dispose of the case in accordance with the provisions of the Act as if no application was ever made. In such a case, the concerned authority would dispose of the case in accordance with the provisions of the Act as if no application was ever made. This provision therefore, obviously does not take care of a situation where on the date of making an application for settlement, case was pending before the Assessing Officer but such assessment came to be completed before the Settlement Commission allowed the application to proceed further under section 245D of the Act. What would be the effect of abatement of the proceedings before the Settlement Commission, in such a case, would have to be seen outside of the said provision. 29. In Webster's Third New International Dictionary, unabridged version, the word 'abate' has been explained as to bring entirely down, to put an end, to do away with, to decrease in force, intensity or violence. In legal parlance, this term has special connotation. In Judicial Officers Law Lexicon by Justice C.K. Thakker, the term 'abating' means extinguishment of the very right of action itself. The right of prosecution is effectually wiped out. To abate as applied to an action, is to cease, terminate, or come to an end prematurely. Thus, the term 'abatement' in legal terminology signifies pre-mature termination of proceedings and does not convey the annulment ab initio of the proceedings. The term 'abatement' has been used in various statutes. For example in Order XXII Rule 1 of Code of Civil Procedure, it is provided that the death of a plaintiff or defendant shall not cause the suit to abate if the right to sue survives. Under Order XXII Rule 4, upon death of a defendant, the plaintiff would have the right to bring his legal representatives on record, if the right to sue survives. Under sub-rule (3) thereof, however, where within the time limit provided under law, no application is made under sub-rule (1), the suit shall abate as against the deceased defendant. The Code of Criminal Procedure also recognises the concept of abatement of proceedings under certain circumstances, For example, when the accused dies, the criminal proceedings would abate. It can thus be seen that in legal parlance the term abatement of proceedings, unless so specifically provided in the statute, would not mean annulment ab initio of the entire proceedings and would ordinarily suggest pre-mature termination of the proceedings upon happening of a certain event. 30. It can thus be seen that in legal parlance the term abatement of proceedings, unless so specifically provided in the statute, would not mean annulment ab initio of the entire proceedings and would ordinarily suggest pre-mature termination of the proceedings upon happening of a certain event. 30. In plain terms, therefore, when sub-section (1) of section 245HA of the Act refers to abatement of the proceedings on the specified date, it signifies that from such date the settlement proceedings stand terminated. If under sub-section (1) itself, the concept of abatement is to be seen as annulment of the very proceedings ab initio, there was perhaps no need to refer to the specified date from which such abatement would apply. It is for this reason that under sub-section (2) of section 245HA, it is provided that where the proceedings before the Settlement Commission abate, the Assessing Officer or the other competent income-tax authority before whom the proceedings at the time of making application were pending, would dispose of the case as if no application under section 245 Chas been made. This is the effect of abatement of the proceedings as statutorily provided under sub-section (2) of section 245HA. Sub-section (2) thus creates a fiction whereby upon abatement of the proceedings, the assessment would be completed as if no application under section 245C was made. 31. If sub-section (2) of section 245HA does not apply to a given situation, the effect of abatement of proceedings before the Settlement Commission would be in plain terms as envisaged in sub-section (1) namely, of the termination of the proceedings effective from the specified date. In other words, the order of assessment which was passed by the Assessing Officer though after the application for settlement was made but before the Commission passed the order allowing to proceed further under section 245D, would in no manner lose its validity or efficacy. Such order of assessment was valid when passed and would continue to be so after the abatement of the proceedings under Sub-section (1) of section 245HA. The issue can be looked from a slightly different angle. If the order of assessment was valid when it was passed, in absence of a statutory provision declaring it invalid, it will continue to be valid and effective. We find no such provision under which such order would be effaced. The issue can be looked from a slightly different angle. If the order of assessment was valid when it was passed, in absence of a statutory provision declaring it invalid, it will continue to be valid and effective. We find no such provision under which such order would be effaced. The contention of the counsel for the petitioner that after the proceedings for settlement abated, the Assessing Officer had to pass fresh order of assessment, in the present case, cannot be accepted. 32. We are however, inclined to accept the petitioner's last and alternative contention namely, that in any case, the petitioner had a right to appeal against the order of assessment and such right was deprived when the Commissioner (Appeals) dismissed the appeal by order dated 9.11.2004 on the ground that in view of the pendency of the proceedings before the Settlement Commission, the appeal was not maintainable. Whether such appeal should have been kept pending at that stage or had to be returned is not important. At any rate, once the Settlement Commission proceedings abated, the petitioner could assert his right to appeal to challenge the validity of order of assessment on merits. The petitioner was conveyed about such abatement only under letter dated 3.8.2009 which was reiterated in a subsequent letter dated 28.5.2013 written by the Settlement Commission. We would restore the petitioner's such right of appeal. The facts of the case are quite complicated, the statutory provisions even more so. The petitioner can certainly be given benefit of doubt that in view of such complex set of facts and applicable law, the petitioner under bona fide legal impression did not prefer appeal before the Commissioner (Appeals) immediately after he was conveyed about the abatement of the settlement proceedings. In any case, the petitioner was pursuing the remedy against the order of abatement, Under the circumstances, if the petitioner files such an appeal before the Appellate Commissioner latest by 31.8.2016, such appeal shall be entertained on merits without reference to the question of limitation. 33. Facts in other cases are identical. No separate discussion would therefore, be needed. These petitions are also disposed of with similar directions. 34. All the petitions are disposed of accordingly.