REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE/ORIGINAL JURISDICTION CIVIL APPEAL Nos. 516-527 OF 2004 <NAME> & Ors. ... Appellants versus Commissioner of Income Tax, Jalandhar ... Respondents with Civil Appeal Nos. 280-286/2005, Civil Appeal No. 8324/2004, Civil Appeal Nos.8325- 8328/2004, Civil Appeal No. 603/2005, Civil Appeal No. 990/2005, Civil Appeal No. 925/2005, Civil Appeal No. 924/2005, Writ Petition (C) No. 556/2004, Writ Petition(C)No. 555/2004, Civil Appeal Nos. 2247-2250/2005, Civil Appeal No. 923/2005, Civil Appeal No. 995/2005, Civil Appeal No. 994/2005, Writ Petition (C) No. 63/2005, Writ Petition (C) No. 61/2005, Writ Petition (C) No. 62/2005, Writ Petition (C) No. 60/2005, Civil Appeal No. 2246/2005, Civil Appeal Nos. 3231- 3232/2005, Civil Appeal No. 3091/2004, Civil Appeal No. 3087/2004, Civil Appeal No. 3092/2004, Civil Appeal Nos.4599- 4601/2004, Civil Appeal Nos. 528-531/2004, Writ Petition (C) No. 325/2004, Writ Petition (C) No. 324/2004, Writ Petition (C) No. 326/2004, Civil Appeal No. 992/2007, Civil Appeal No.9174/2010 @ SLP (C) No. 20373/2009, Civil Appeal No. 532/2004, and Civil Appeal No. 604/2005. JUDGMENT

<NAME>, CJI

1. Leave granted.

2. Vide referral orders dated 14.12.2004 and 20.1.2005 the following questions have been referred to <ORG> of this Court:

(i) Whether sections 234A , 234B and 234C of the Income Tax Act, 1961 (for short "the Act") are at all applicable to proceedings of <ORG> under Chapter XIX-A of the Act?

(ii) Whether <ORG> can reopen its concluded proceedings by

having recourse to section 154 of the Act so as to levy interest under sections 234A , 234B and 234C of the Act, though it was not so done in the original proceedings?

(iii) Whether in the absence of period of limitation prescribed for making the order of the Settlement, the relevant date for determining the quantum of interest could be the date of the said order?

3. For the sake of convenience, after hearing learned counsel on both sides, we reframe the above questions.

(I) Whether section 234B applies to proceedings of the Settlement

Commission under Chapter XIX-A of the said Act?

(II) If answer to the above question is in the affirmative, what is the terminal point for levy of such interest - Whether such interest should be computed up to the date of the Order under section 245D(1) or up to the date of the Order of the Commission under section 245D(4) ?

(III) Whether <ORG> could reopen its concluded proceedings by invoking section 154 of the said Act so as to levy interest under section 234B , though it was not so done in the original proceedings?

Relevant provisions of the Income Tax Act , 1961:

4. In order to answer the reframed questions, quoted above, it would be necessary for us to cite the relevant provisions of the Act and the Income Tax Rules, as they stood at the material time, which are as under:

Definitions 2(40) "regular assessment" means the assessment made under sub-section (3) of section 143 or section 144 ;

2(45) "total income" means the total amount of income referred to in section 5 , computed in the manner laid down in this Act; Chapter XIV - Procedure for Assessment Self-assessment 140A. (1) Where any tax is payable on the basis of any return required to be furnished under section 139 or section 142 or as the case may be, section 148 , after taking into account the amount of tax, if any, already paid under any provision of this Act, the assessee shall be liable to pay such tax together with interest payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, before furnishing the return and the return shall be accompanied by proof of payment of such tax and interest.

Explanation.--Where the amount paid by the assessee under this sub-section falls short of the aggregate of the tax and interest as aforesaid, the amount so paid shall first be adjusted towards the interest payable as aforesaid and the balance, if any, shall be adjusted towards the tax payable.

(2) After a regular assessment under section 143 or section 144 has been made, any amount paid under sub-section (1) shall be deemed to have been paid towards such regular assessment. Assessment

143. (1)(a) Where a return has been made under section 139 , or in response to a notice under sub-section (1) of section 142 , -

(i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub- section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly;

*** *** *** Provided also that an intimation for any tax or interest due under this clause shall not be sent after the expiry of two years from the end of the assessment year in which the income was first assessable.

(b)Where as a result of an order made under sub-section (3) of this section or section 144 or section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 , or any order of settlement made under sub- section (4) of section 245D relating to any earlier assessment year and passed subsequent to the filing of the return referred to in clause (a), there is any variation in the carry forward loss, deduction, allowance or relief claimed in the return, and as a result of which, -

(i)if any tax or interest is found due, an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly, and

(ii)if any refund is due, it shall be granted to the assessee:

Provided that an intimation for any tax or interest due under this clause shall not be sent after the expiry of four years from the end of the financial year in which any such order was passed.

(4) Where a regular assessment under sub- section (3) of this section or section 144 is made,

(a) any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment ;

Rectification of mistake.

154. (1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may,--

(a) amend any order passed by it under the provisions of this Act ;

(b) amend any intimation sent by it under sub-section (1) of section 143 . or enhance or reduce the amount of refund granted by it under that sub-section. (1A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided. (2) Subject to the other provisions of this section, the authority concerned--

(a) may make an amendment under sub-section (1) of its own motion, and

(b) shall make such amendment for rectifying any such mistake which has been brought to its notice by the assessee, and where the authority concerned is the Deputy Commissioner (Appeals), or the Commissioner (Appeals) by the Assessing Officer also. (3) An amendment, which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this section unless the authority concerned has given notice to the assessee of its intention so to do and has allowed the assessee a reasonable opportunity of being heard.

Chapter XVII - Collection and Recovery of Tax Liability for payment of advance tax.

207. Tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 (both inclusive), in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following the financial year, such income being hereafter in this Chapter referred to as "current income". Computation of advance tax.

209. (1) The amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3), be computed as follows, namely:--

(a) where the calculation is made by the assessee for the purposes of payment of advance tax under sub-section (1) or sub- section (2) or sub-section (5) or sub-section (6) of section 210 , he shall first estimate his current income and income-tax thereon shall be calculated at the rates in force in the financial year;

Payment of advance tax by the assessee of his own accord or in pursuance of order of Assessing Officer.

210. (1) Every person who is liable to pay advance tax under section 208 (whether or not he has been previously assessed by way of regular assessment) shall, of his own accord, pay, on or before each of the due dates specified in section 211 , the appropriate percentage, specified in that section, of the advance tax on his current income, calculated in the manner laid down in section 209 . (2) A person who pays any instalment or instalments of advance tax under sub-section (1), may increase or reduce the amount of advance tax payable in the remaining instalment or instalments to accord with his estimate of his current income and the advance tax payable thereon, and make payment of the said amount in the remaining instalment or instalments accordingly. Interest payable by assessee.

215. (1) Where, in any financial year, an assessee has paid advance tax under section 9  209A or section 212 on the basis of his own estimate (including revised estimate), and the advance tax so paid is less than seventy-five per cent of the assessed tax, simple interest at the rate of fifteen per cent per annum from the 1st day of April next following the said financial year up to the date of the regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls short of the assessed tax:

Provided that in the case of an assessee, being a company, the provisions of this sub-section shall have effect as if for the words "seventy- five per cent', the words "eighty-three and one- third per cent" had been substituted. (2) Where before the date of completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise,--

(i) interest shall be calculated in accordance with the foregoing provision up to the date on which the tax is so paid; and

(ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax as so paid (in so far as it relates to income subject to advance tax) falls short of the assessed tax.

(3) Where as a result of an order under section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of <ORG> under sub- section (4) of section 245D , the amount on which interest was payable under sub-section (1) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and--

(i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee, a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly;

(ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded.] (4) In such cases and under such circumstances as may be prescribed, the Assessing Officer may reduce or waive the interest payable by the assessee under this section.

(5) In this section and sections 217 and 273 , "assessed tax" means the tax determined on the basis of the regular assessment (reduced by the amount of tax deductible in accordance with the provisions of sections 192 to 194 , section 194A , section 194C , section 194D , section 195 and section 196A so far as such tax relates to income subject to advance tax and so far as it is not due to variations in the rates of tax made by the Finance Act enacted for the year for which the regular assessment is made.

(6) Where, in relation to an assessment year, an assessment is made for the first time under section 147 , the assessment so made shall be regarded as a regular assessment for the purposes of this section and sections 216 , 217 and 273 .

Interest for defaults in furnishing return of income.

234A. (1) Where the return of income for any assessment year under sub-section (1) or sub-section (4) of section 139 , or in response to a notice under sub-section (1) of section 142 , is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of two per cent for every month or part of a month comprised in the period commencing on the date immediately following the due date, and,--

(a) where the return is furnished after the due date, ending on the date of furnishing of the return; or

(b) where no return has been furnished, ending on the date of completion of the assessment under section 144 , on the amount of the tax on the total income as determined under sub-section (1) of section 143 or on regular assessment as reduced by the advance tax, if any, paid, and any tax deducted or collected at source;

Explanation 1.--In this section, "due date" means the date specified in sub-section (1) of section 139 as applicable in the case of the assessee.

Explanation 2.--In this sub-section, "tax on the total income as determined under sub- section (1) of section 143 " shall not include the additional income-tax, if any, payable under section 143 .

Explanation 3.--Where, in relation to an assessment year, an assessment is made for the first time under section 147 , the assessment so made shall be regarded as a regular assessment for the purposes of this section. Explanation 4. - In this sub-section, "tax on the total income as determined under sub- section (1) of section 143 or on regular assessment" shall, for the purposes of computing the interest payable under section 140A , be deemed to be tax on total income as declared in the return.

(2) The interest payable under sub-section (1) shall be reduced by the interest, if any, paid under section 140A towards the interest chargeable under this section.

*** *** *** (4) Where as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of <ORG> under sub-section (4) of section 245D , the amount of tax on which interest was payable under sub-section (1) or sub-section (3) of this section has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and--

(i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly;

(ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded.

(5) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years.

Interest for defaults in payment of advance tax.

234B. (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of two per cent for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of section 143 and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax.

Explanation 1.--In this section, "assessed tax" means

(a) for the purposes of computing the interest payable under section 140A the tax on the total income as declared in the return referred to in that section;

(b) in any other case, the tax on the total income determined under sub-section (1) of section 143 or on regular assessment, as reduced by the amount of tax deducted or collected at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income.

Explanation 2.--Where, in relation to an assessment year, an assessment is made for the first time under section 147 , the assessment so made shall be regarded as a regular assessment for the purposes of this section. Explanation 3.--In Explanation 1 and in sub- section (3) "tax on the total income determined under sub-section (1) of section 143 " shall not include the additional income-tax, if any, payable under section 143 .

(2) Where, before the date of determination of total income under sub-section (1) of section 143 or completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise,--

(i) interest shall be calculated in accordance with the foregoing provisions of this section up to the date on which the tax is so paid, and reduced by the interest, if any, paid under section 140A towards the interest chargeable under this section;

(ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax so paid together with the advance tax paid falls short of the assessed tax.

(3) Where, as a result of an order of reassessment or recomputation under section 147 , the amount on which interest was payable under sub-section (1) is increased, the assessee shall be liable to pay simple interest at the rate of two per cent for every month or part of a month comprised in the period commencing on the day following the date of determination of total income under sub- section (1) of section 143 and where a regular assessment is made as is referred to in sub- section (1) following the date of such regular assessment and ending on the date of the reassessment or recomputation under section 147 , on the amount by which the tax on the total income determined on the basis of the reassessment or recomputation exceeds the tax on the total income determined under sub-section (1) of section 143 or on the basis of the regular assessment aforesaid.

(4) Where, as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of <ORG> under sub-section (4) of section 245D , the amount on which interest was payable under sub-section (1) or sub-section (3) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and--

(i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly;

Interest for deferment of advance tax. 234C. (1) Where in any financial year,--

(a) the company which is liable to pay advance tax under section 208 has failed to pay such tax or--

(i) the advance tax paid by the company on its current income on or before the 15th day of June is less than fifteen per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of September is less than forty-five per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less than seventy-five per cent of the tax due on the returned income, then, the company shall be liable to pay simple interest at the rate of one and one-half per cent per month for a period of three months on the amount of the shortfall from fifteen per cent or forty-five per cent or seventy-five per cent, as the case may be, of the tax due on the returned income;

(ii) the advance tax paid by the company on its current income on or before the 15th day of March is less than the tax due on the returned income, then, the company shall be liable to pay simple interest at the rate of one and one-half per cent on the amount of the shortfall from the tax due on the returned income:

Explanation.--In this section, "tax due on the returned income" means the tax chargeable on the total income declared in the return of income furnished by the assessee for the assessment year commencing on the 1st day of April immediately following the financial year in which the advance tax is paid or payable, as reduced by the amount of tax deductible or collectible at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income;

(2) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years.

Chapter XIX-A - Settlement of Cases Definitions 245A. In this Chapter, unless the context otherwise requires,--

(b) "case" means any proceeding under this Act for the assessment or re- assessment of any person in respect of any year or years , or by way of appeal or revision in connection with such assessment or re- assessment, which may be pending before <ORG> on the date on which an application under sub-section (1) of section 1  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 pending within the meaning of this clause;

Application for settlement of cases. 245C. (1) An assessee may, at any stage of a case relating to 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 <ORG> 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,--

(a) the assessee has furnished the return of income which he is or was required to furnish under any of the provisions of this Act; and

(b) the additional amount of income tax payable on the income disclosed in the application exceeds one hundred thousand rupees.

(1A) For the purposes of sub-section (1) of this section and sub-section (2A) to (2D) of Section 245D , 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 (whether or not an assessment has been made in respect of the total income of that year), then, except in a case covered by clause (iii), 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 (whether or not an assessment has been made in pursuance of such return), 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;

(iii) if the proceeding pending before <ORG> is in the nature of a proceeding for reassessment of the applicant under section 147 or by way of appeal or revision in connection with such reassessment, and the applicant has not furnished a return in respect of the total income of that year in the course of such proceeding for reassessment, tax shall be calculated on the aggregate of the total income as assessed in the earlier proceeding for assessment under section 143 or section 144 or section 147 and the income disclosed in the application as if such aggregate were the total income.

FORM NO. 34B [See rules 44C and 44CA] Form of application for settlement of case under section 245C(1) of the Income-tax Act, 1961 IN THE SETTLEMENT COMMISSION................................................. Settlement application No. .............................19.......-19..........

1. Full name and address of the applicant .........................

2. Permanent Account Number ........................

3. Status [See Note 4] ........................

4. The Commissioner having jurisdiction over the applicant ........................

5. Assessment year(s) in connection with which the application for settlement is made ........................

6. Date of filing the return of income for assessment year(s) referred to in column 5 ........................

7. Proceedings to which application for settlement relates, the date from which the proceedings are pending and the income-tax authority before whom the proceedings are pending [See Note 6] ........................

8. 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, as the case may be, whether such appeal or revision has been admitted. ........................

9. Date of seizure, if any, under section 132 of the Income-tax Act ........................

10. Particulars of the issues to be settled, nature and circumstances of the case and complexities of the investigation involved [See Note 7] ........................

11. Full and true disclosure of income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived and the additional amount of income-tax ........................ payable on such income [See Notes 9 and 10] .......................

Signed (Applicant) Verification I, ................................, son/daughter/wife of .................................. do hereby solemnly declare that to the best of my knowledge and belief, what is stated above and in the Annexure [including the statement(s) and documents accompanying such Annexure] is correct and complete. I further declare that I am making this application in my capacity as ...... ...........(designation) and that I am competent to make this application and to verify it.

Verified today the ...................................... day of ....................19 Place .............. .......................

Signed (Applicant) Procedure on receipt of an application under section 245C .

245D. (1) On receipt of an application under section 245C , <ORG> 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, <ORG> 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 <ORG> 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, <ORG> may make the order without such report. (2B) If <ORG> 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 instalments 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 <ORG> has extended the time for payment of the amount which remains unpaid or has allowed payment thereof by instalments 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).

(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, <ORG> 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). (6) Every order passed under sub-section (4) shall provide for the terms of settlement including any demand by way of tax, penalty or interest, the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective and shall also provide that the settlement shall be void if it is subsequently found by <ORG> that it has been obtained by fraud or misrepresentation of facts.

(6A) Where any tax payable in pursuance of an order under sub-section (4) is not paid by the assessee within thirty-five days of the receipt of a copy of the order by him, then, whether or not <ORG> has extended the time for payment of such tax or has allowed payment thereof by instalments, 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 aforesaid. (7) Where a settlement becomes void as provided under sub-section (6), the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by <ORG> and the income-tax authority concerned, may, notwithstanding anything contained in any other provision of this Act, complete such proceedings at any time before the expiry of two years from the end of the financial year in which the settlement became void.

<ORG> to reopen completed proceedings.

245E. If <ORG> is of the opinion (the reasons for such opinion to be recorded by it in writing) that, for the proper disposal of the case pending before it, it is necessary or expedient to reopen any proceeding connected with the case but which has been completed under this Act by any income-tax authority before the application under section 245C was made, it may, with the concurrence of the applicant, reopen such proceeding and pass such order thereon as it thinks fit, as if the case in relation to which the application for settlement had been made by the applicant under that section covered such proceeding also :

Powers and procedure of <ORG>.

245F. (1) In addition to the powers conferred on <ORG> 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 , <ORG> 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 :

(3) Notwithstanding anything contained in sub-section (2) and in the absence of any express direction to the contrary by <ORG>, 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 <ORG>.

(4) For the removal of doubt, it is hereby declared that, in the absence of any express direction by <ORG> to the contrary, nothing in this Chapter shall affect the operation of the provisions of this Act in so far as they relate to any matters other than those before <ORG>.

Order of settlement to be conclusive. 245-I. Every order of settlement passed under sub-section (4) of section 245D shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force.

5. At this stage, it may be noted that section 245C stood substituted by Finance Act , 2007, w.e.f. 1.6.2007. Prior to its substitution, the proviso to section 245C(1) , as substituted by the Finance Act , 1987, w.e.f. 1.6.1987 and later on amended by Finance Act , 1995, w.e.f. 1.7.1995, read as under:

"Provided that no such application shall be made unless,--

(a) the assessee has furnished the return of income which he is or was required to furnish under any of the provisions of this Act; and

(b) the additional amount of income tax payable on the income disclosed in the application exceeds one hundred thousand rupees."

6. Section 245C(1) read with the proviso thereto, as substituted by Finance Act , 2007 w.e.f. 1.6.2007, reads as under:

Provided that no such application shall be made unless,--

(i)the additional amount of income tax payable on the income disclosed in the application exceeds three lakh rupees; and

(ii) 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.

Analysis of the Act

7. Liability to pay advance tax arises under section 207 . The said section is based on the principle "pay as you earn". It requires tax to be paid during the financial year. It has to be in respect of the total income of the assessee which would be chargeable to tax under the Act. The said total income is not as understood in section 2(45) but it is equated to "current income" for the purposes of Chapter XVII. After the Amending Act of 1987, advance tax is to be paid on the current income which would be chargeable to tax for the assessment year immediately following the financial year. Section 210 casts the responsibility of payment of advance tax on the assessee without requiring the assessee to submit his estimate of advance tax payable. Provision for payment of advance tax is mode of quick collection of tax. Thus, section 207 defines liability to pay advance tax in respect of incomes referred to in section 208 . However, advance tax paid is adjustable towards the tax due. Advance tax is collected even before the income tax becomes due and payable. By its very nature, advance tax is pre-assessment collection of taxes either by deduction of tax at source or by payment of advance tax which has to be adjusted towards income tax levied on the total income. The above two methods of realization even before any assessment is authorized by section 4(2) are incorporated in Chapter XVII which deals with "collection and recovery". In fact, section 190(1) clarifies that this method of payment of tax will not prejudice the charge of tax under section 4(1) nor will it modify the liability of the assessee to pay income tax pursuant to an assessment order. [ <CITATION> , 216 ITR 759 at 780] At one point of time, section 209(1)(a)(iii) (relating to computation of advance tax) provided that the income tax calculated on the total income with reference to which the demand for advance tax was made should be reduced by the amount of income tax deductible in accordance with sections 192 to 194 , 194A and 195 on any income included in the total income. The levy of interest under section 215 is part of the process of assessment. If the income tax liability on the first day of the assessment year is larger than the amount of advance tax standing to the credit of the assessee then interest will have to be paid under section 215 on 75% of the deficit amount of tax from the first day of the assessment year to the date of computation of total income vide assessment order. Interest under section 215 is chargeable from the first day of April next following the financial year wherein the advance tax was paid up to the date of regular assessment, if no tax has been paid under section 140A or otherwise. However, section 215(2) provides that where advance tax paid is less than 75% of the "assessed tax", but the assessee has paid tax under section 140A or otherwise before the date of completion of regular assessment then the interest shall be limited to the interest on the shortfall between the "assessed tax" and the advance tax paid for the period from the first April next following the financial year up to date of payment under section 140A plus interest on the shortfall between "assessed tax" and "total tax paid" for the period from the day following the date of such payment under section 140A up to the date of regular assessment. Coming to section 140A , as a result of the amendment of section 140A(1) by Direct Tax Laws Amendment Act, 1987 w.e.f. 1.4.1989 and vide Finance Act of 1999, the assessee is required to calculate the tax payable on the basis of the return to be furnished under section 139 or under section 142 or under section 148  after taking into account the amount of tax paid under the Act; to calculate also interest payable under section 234A or under section 234B / 234C for any default or delay in payment of advance tax; to pay such tax with interest before the assessee furnishes his return. The Explanation to section 140A(1) inter alia provides that where the amount paid by the assessee under section 140A(1) falls short of the aggregate of the tax and interest thereon the amount so paid is first adjusted towards interest payable and the balance, if any, is adjusted towards the tax payable. Thus, amount(s) paid under section 140A is deemed to have been paid towards regular assessment.

8. The liability to pay income tax is founded on sections 4 and 5 which are the charging sections. Sections 143 , 144 and 147 are machinery sections to determine the amount of tax payable. Thus, whereas section 143(3) signifies computation of income, section 147 signifies computation of escaped income. As held in the case of <CITATION> [(1961) 41 ITR 425 (SC)], the expression "assessment" in a given provision must be determined on an examination of the relevant provisions in question and the fact that it is used in the narrower sense elsewhere will not mean that it is so used in the provision under examination. The word can be used to cover the whole procedure to ascertain the liability and the machinery for enforcement. Prior to 1.6.1999, section 143(1A)(a) inter alia provided that where the total income as a result of any adjustments made exceeded the total income declared in the return by any amount then it was open to the A.O. to increase the amount of tax payable under section 143(1) by additional income tax calculated at the specified rate. In brief, section 143(1A) provided for the levy of additional income tax of an amount equal to 20% of the tax payable on the amount of difference between the total income determined under section 143(1) and total income declared in the return. Where the additional income tax was increased, the A.O. had to serve a notice under section 156 . Even under section 143(1B) , as it stood before 1.6.1999, where an assessee furnished a revised return under section 139(5) after service of intimation, the assessee was liable to pay additional income tax in relation to adjustments made under section 3  143(1)(a) read with the proviso.

9. Now, Chapter XVII deals with "collection and recovery". It covers Tax Deduction at Source and Advance Payment of taxes (see section 190 ). Section C deals with advance payment of taxes. Section 207 refers to liability to pay advance tax whereas section 209 deals with computation of advance tax. Section 215 refers to interest payable by the assessee. Section 210(1) inter alia provides that every person who is liable to pay interest under Section 208 , shall of his own accord pay, on each of the due dates specified in section 211 , the appropriate percentage of advance tax on his current income calculated in the manner under section 209 . Under section 209(1)(a) , the amount of advance tax payable by the assessee in any financial year is as follows:

(a) where calculation is made by the assessee for the purposes of payment of advance tax under section 209(1) , he shall first estimate his current income and the tax shall be computed at the rates in force in the financial year. Thus, liability and computation of advance tax is done under section C of Chapter XVII. On the other hand, interest for defaults in payment of advance tax falls under section 234B , apart from  sections 234A and 234C , in section F of Chapter XVII. Thus, levy of interest is incidental to the liability and computation of advance tax. It is interesting to note that section 234A(4) in turn refers to the increase or reduction of interest subsequent to the Order of the Commission under section 245D(4) increasing or reducing the amount of tax payable and so also section 234B(4) . Under section 234B , where in any financial year an assessee who is liable to pay advance tax under section 208 fails to pay such tax or where the advance tax paid under section 210 is less than 90% of the assessed tax the assessee shall pay interest from the first day of April next following such financial year to the date of determination of total income under section 143(1) or to the date of regular assessment on the amount equal to the assessed tax which has been defined in Explanation 1 to mean tax on the total income as determined under section 143(1) as reduced by the amount of tax deducted at source in accordance with Chapter XVII on income which is subject to deduction and which is taken into account in computing total income. By Explanation 3, it is clarified that for default of short payment interest will be charged on the difference between "assessed tax" (as defined) and the advance tax paid by the assessee and that for the above purpose "additional income tax" if any payable under section 143 is not to be taken into account. However, section 234B(2) covers a situation where, before the date of determination of total income under section 143(1) or completion of regular assessment, tax is paid by the assessee under section 140A or otherwise, interest shall be calculated under section 234B(1) up to the date on which tax was so paid and reduced by the interest, if any, paid under section 140A towards interest chargeable under section 234B .

10. Coming to Chapter XIX-A which deals with Settlement of Cases, it may be stated that the word "case" is defined under section 245A(b) . It is an exhaustive definition. The definition makes it clear that an application for Settlement shall lie only when any proceedings for assessment or re- assessment is pending or an appeal or revision in connection with such assessment or re-assessment is pending before <ORG>. Under section 245C(1) , such application for settlement will not be maintainable without full and true disclosure of the income by the applicant, the manner in which such undisclosed income was derived and that the applicant had furnished his return of income and that the additional tax payable on such income exceeds the specified amount. This was the position prior to Finance Act of 2007. However, section 245C(1A) inter alia provides that additional amount of income tax payable in respect of the income disclosed shall be calculated in accordance with the provisions of section 245C(1B) . Under sub-section (1B) if the applicant has furnished his return in respect of his total income and no assessment is made, the tax shall be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggregate was the total income. The words "regular assessment" are not there in section 245C(1B)(ii) . However, under section 245C(1C)(b) , it is provided that the additional tax calculated under section 245C(1B)(ii) shall be reduced by the aggregate of the tax deducted at source or tax paid in advance and the amount of tax paid under section 140A . The resultant amount is the additional tax payable by the assessee. Thus, section 245C incorporates within it the provisions of Chapters XVIIB, XVIIC and section 140A of the Act. It may be noted that section 245C(1B)(iii) , as it stood before 1.6.1987, required income tax to be calculated on the aggregate of the total income as assessed plus the income disclosed in the application as if such aggregate was the total income. But after 1.6.1987, the tax is required to be worked out on the returned total income plus the income disclosed in the application as if the aggregate is the total income. Under section 245D(2A) the applicant is required to pay the additional amount of income tax payable on the income disclosed in the application within 35 days of the receipt of the copy of the order passed by <ORG> under section 245D(1) allowing such application to be proceeded with. Under section 245D(2A) the applicant shall, within 35 days of the receipt of the order under section 245D(1) allowing the application to be proceeded with, pay the additional amount of income tax payable on the income disclosed. Under section 245D(4) on compliance of sections 245D(2A) and (2C) and on examination of relevant records and reports, <ORG> may pass such orders as it thinks fit on the matters covered by the application and any other matter relating to the "case" referred to in the report of the Commissioner of Income Tax. If one carefully analyses the provisions of sections 245D(1) and 245D(4) , one finds two distinct stages - one allowing the application to be proceeded with (or rejected) and the other of disposal of the application by appropriate orders being passed by <ORG>. In between the two stages, we have provisions which require the applicant to pay the additional income tax and interest. Even under section 245D(7) it is provided that where the settlement becomes void under section 245D(6) the proceedings with respect to the matters covered by the settlement shall be deemed to have revived from the stage at which the application was allowed to be proceeded with by <ORG> and the income tax authority may complete the proceedings within the period mentioned therein. Thus, section 245D(7) brings out the difference between section 245D(1) stage and section 245D(4) stage. Under section 245D(6) , it is laid down that every order under section 245D(4) shall provide for the Terms of Settlement including any demand by way of tax, penalty or interest. In the case of <CITATION> reported in 259 ITR 475, a 3- Judge Bench of this Court, while analyzing the scheme of Chapter XIX-A, has held that section 234B , section 245D(2C) and section 245D(6A) operate in different fields. Section 234B  comes into operation when there is default in payment of advance tax whereas liability to pay interest under section 245D(2C) arises when the additional amount of income tax is not paid within time specified under section 245D(2A) . Section 245D(6A) , on the other hand, imposes liability to pay interest only when the tax payable in pursuance of an order of <ORG> under section 245D(4) is not made within the specified time. Consequently, section 234B , section 245D(2C) and section 245D(6A) in Chapter XIX-A operate in different fields. To this extent, we agree with the view expressed in <ORG> case (supra). Descriptively, it can be stated that assessment in law is different from assessment by way of settlement. If one reads section 245D(6) with section 245I , it becomes clear that every order of settlement passed under section 245D(4) shall be final and conclusive as to the matters contained therein and that the same shall not be re-opened except in the case of fraud and misrepresentation. Under section 245F(1) , in addition to the powers conferred on <ORG> under Chapter XIX-A, it shall also have all the powers which are vested in the income tax authority under the Act. In this connection, however, we need to keep in mind the difference between "procedure for assessment" under Chapter XIV and "procedure for settlement" under Chapter XIX-A (see section 245D ). Under section 245F(4) , it is clarified that nothing in Chapter XIX-A shall affect the operation of any other provision of the Act requiring the applicant to pay tax on the basis of self-assessment in relation to matters before <ORG>. The point to be noted on the basis of the above analysis is that several provisions of the Act like section 140A ; furnishing of the return of income by the applicant as indicated in the proviso (a) to section 245C(1) ; provisions of the Act governing liability and computation to pay additional income tax as indicated by proviso (b) to section 245C(1) ; aggregation of total income inter alia in terms of sections 143 , 144 or 147 as indicated by section 245C(1B)(iii) ; aggregation of total income as returned plus income disclosed in the application for settlement as indicated in section 245C(1B)(ii) ; the deductions in section 245C(1C) ; increase of interest under section 215(3) pursuant to the orders of <ORG> and the levy of interest under sections 234A(4) and 234B(4) all bring into Chapter XIX-A various provisions of the Act. Thus, when we read the provisions of Sections 245C and 245D one has to keep in mind various above provisions of the Act and the concepts of self-assessment, assessment, regular assessment and computation of total income which have been engrafted in Chapter XIX-A. (I) Whether Sections 234A , 234B and 234C are applicable to Chapter XIX-A proceedings?

11. Our detailed analysis shows that though Chapter XIX- A is a self-contained Code, the procedure to be followed by <ORG> under sections 245C and 245D in the matter of computation of undisclosed income; in the matter of computation of additional income tax payable on such income with interest thereon; the filing of settlement application indicating the amount of income returned in the return of income and the additional income tax payable on the undisclosed income to be aggregated as total income shows that Chapter XIX-A indicates aggregation of incomes so as to constitute total income which indicates that the special procedure under Chapter XIX-A has inbuilt mechanism of computing total income which is nothing but assessment (computation of total income). To elaborate, under section 4  245C(1B) , if the applicant has furnished a return in respect of his total income, tax shall be calculated on the aggregate of total income returned and the income disclosed in the settlement application as if such aggregate were total income. Under the Act , tax is payable on the total income as computed in accordance with the provisions of the Act. Thus, section 143(3) provision is sought to be incorporated in section 245C . When <ORG> uses the words "as if such aggregate would constitute total income", it presupposes that under the special procedure the aggregation of the returned income plus income disclosed would result in computation of total income which is the basis for the levy of tax on the undisclosed income which is nothing but "assessment". Similarly, section 245C(1C) provides for deductions from the total income computed in terms of section 245C(1B) . Thus, the special procedure under sections 245C and 245D in Chapter XIX-A shows that a special type of computation of total income is engrafted in the said provisions which is nothing but assessment which takes place at section 245D(1) stage. However, in that computation, one finds that provisions dealing with a regular assessment, self-assessment and levy and computation of interest for default in payment of advance tax, etc. are engrafted. [See sections 245C(1B) , 245C(1C) , 245D(6) , 245F(3) in addition to sections 215(3) , 234A(4) and 234B(4) ] (II) Terminal point for the levy of interest - Whether interest is payable under Chapter XIX-A up to the date of the order under section 245D(1) or up to the date of the order under section 245D(4) ?

12. In our view the answer to the above question lies in the provisions of the proviso to Sections 245C(1) , 245C(1B) and 245C(1C) , 245D(4) and 245F(3) which bring in the concepts of returned income, self-assessment, aggregation of income returned and income disclosed as if it is total income; levy of interest under section 215(3) read with section 245D(4) ; increase of interest under sections 234A(4) and 234B(4) read with section 245D(4) as also sections 140A(1A) and (1B) read with sections 234A and 234B . For example, section 140A deals with self-assessment which is different from regular assessment. Under section 140A(1) where tax is payable on the basis of any return furnished by the assessee [see proviso

(a) to section 245C(1) ], after taking into account tax paid, the assessee shall be liable to pay such tax with interest payable for default under section 234B in payment of advance tax before furnishing the return. This position is clarified by sections 140A(1A) and (1B) under which inter alia interest payable for default in payment of advance tax under section 234A shall be computed on the amount of tax on the total income as declared in the return minus the advance tax paid. Similarly, it is clarified vide sub-section (1B) to section 140A that interest payable under section 234B for default in payment of advance tax shall be computed on an amount equal to the assessed tax [same words are used in section 234B(1) ] or on the amount by which the advance tax falls short of the assessed tax. However, what is "assessed tax" for the purposes of section 140A is explained by Explanation. It says that assessed tax will be tax on the total income as declared in the return minus the amount of tax deducted at source or collected at source in accordance with the provisions of Chapter XVII (which covers sections 207 , 209 and 215 of the Act). Now, section 245C(1) is voluntary disclosure by the assessee of his undisclosed income. Under section 245C(1) , the assessee has to mention in his settlement application the additional amount of tax payable by him on such undisclosed income. Under proviso (a), the application for settlement shall not be entertained till the assessee has furnished the return of income which he was required to file under the Act to the extent of his income. Under proviso (b), the assessee has to declare the additional amount of tax payable. Thus, the two provisos to section 245C(1) show that Chapter XIX-A, which prescribes a special procedure for assessment by settlement, contemplates a pre-assessment collection of tax. With the filing of the settlement application and after such application is allowed to be proceeded with under section 245D(1) , intimation under section 143(1) , regular assessment under sections 143(3) / 144 and re-assessment under section 147 lose their existence as under sections 245C(1A) and (1B) it is only the income disclosed in the return of income before the A.O. alone which survives for consideration by <ORG> for settling the amount of income which is not disclosed in the return. Under section 245C(1B)(ii) , if the applicant has furnished a return in respect of the total income, whether or not assessment is made in pursuance of the return, the additional amount of income tax payable in respect of the total income disclosed shall be on the aggregate of the total income returned and the income disclosed in his application for settlement as if such aggregate was his total income. This is pre-assessment collection of tax. Such pre- assessment is based on the estimation of the current income and tax thereon by the applicant himself. Now, when <ORG> accepts the Voluntary Disclosure vide the application for settlement, section 234B(2) steps in. It is important to remember that the assessee is liable to pay advance tax, he commits default in payment to the extent of the undisclosed income but he offers to pay additional income tax then interest has to be calculated in accordance with sections 207 , 208 and 234B(2) up to the date on which such tax is paid. This is not the interest which assessee has to pay after assessment under section 245D(4) . Under sections 245C(1B) and (1C) the additional amount of income tax payable on the undisclosed income shall be on the total income as calculated under section 245C(1B) . On computation of total income under sections 245C(1B) and (1C), interest follows such computation. It is important to note that interest follows computation of total income. Once such computation takes place under section 245C(1B) then  section 234B(2) applies. The said sub-section deals with the situation where before determination of total income under section 143(1) or 143(3) tax is paid under section 140A or otherwise interest shall be calculated in accordance with section 234B(1) up to the date on which tax is so paid. In that sense an application under section 245C(1) is a return. Section 245C(1) deals with computation of total income. There is one more way of looking at the Act. Chapter XIX-A refers to procedure of settlement (see section 245D(1) ). As stated above, section 245D(1) provides for expeditious recovery of tax by way of pre-assessment collection. Interest on default in payment of advance tax comes under sections 234A , 234B , 234C , which fall in Chapter XVII which deals with collection and recovery of tax. It is important to note that interest follows computation of additional payment of income tax under sections 245C(1B) and (1C). This is how sections 234A , 234B and 234C get engrafted into Chapter XIX-A at the stage of section 245D(1) . As stated, till <ORG> decides to admit the case under section 245D(1) the proceedings under the normal provisions remain open. But, once the <ORG> admits the case after being satisfied that the disclosure is full and true then the proceedings commence with <ORG>. In the meantime, applicant has to pay the additional amount of tax with interest without which the application for settlement would not be maintainable. Thus, interest under section 234B would be payable up to the stage of section 245D(1) . Our view is supported by the amendment made by Finance Act of 2007 w.e.f. 1.6.2007 in which interest is required to be paid for maintainability of the Application for Settlement.

13. The question is - what happens in cases where 90% of the assessed tax is paid but on the basis of the <ORG>'s order under section 245D(4) the advance tax paid turns out to be less than 90% of the assessed tax as defined in the Explanation to Section 234B(1) ?

14. As held hereinabove, under section 245C(1) read with section 245C(1B)(ii) and section 245C(1C)(b) , the additional amount of income tax payable is to be calculated on the aggregate of total income returned and the income disclosed in the settlement application as if such aggregate is the total income. Thus, the scheme of the said sections is based on computation of total income and in that sense we have stated that such application for settlement is akin to a return of income. The said provision deals with "total income". Thus, as stated above, sections 234A , B and C are applicable up to the stage of section 245D(1) order passed by <ORG>. However, <ORG> has not extended the provisions and the liability to pay interest beyond the date of application for settlement. This is the position even after Finance Act of 2007. Once this position is taken, section 140A is attracted. When an assessee has paid interest under sections 234A , B and C in self-assessment under section 140A , which is similar to the scheme of section 245C(1) , and once <ORG> admits the application for settlement, one finds that even under section 140A(1B) interest payable under section 234B has to be computed on an amount equal to the assessed tax as defined in the Explanation to mean tax on the total income as declared in the return. Under sub-section (1B) to Section 140A interest payable under section 234B can also be computed on an amount by which the advance tax paid falls short of the assessed tax as defined in the Explanation thereto. Thus, there is no provision under Chapter XIX-A or even under  section 140A (dealing with self-assessment) to charge interest beyond the date of application for settlement after the same is admitted by the <ORG> under Section 245D(1) . Moreover, as stated above, under the Act, there is a difference between assessment in law [regular assessment or assessment under section 143(1) ] and assessment by settlement under Chapter XIX-A. The order under section 245D(4) is not an order of regular assessment. It is neither an order under section 143(1) or 143(3) or 144. Under sections 139 to 158 , the process of assessment involves the filing of the return under section 139 or under section 142 ; inquiry by the A.O. under sections 142 and 143 and making of the order of assessment by the A.O. under section 143(3) or under section 144 and issuing of notice of demand under section 156 on the basis of the assessment order. The making of the order of assessment is an integral part of the process of assessment. No such steps are required to be followed in the case of proceedings under Chapter XIX-A. The said Chapter contemplates the taxability determined with respect to undisclosed income only by the process of settlement/ arbitration. Thus, the nature of the orders under sections 4  143(1) , 143(3) and 144 is different from the orders of <ORG> under section 245D(4) . Even in <CITATION> [252 ITR 1] there is no finding by this Court that the order of Settlement <ORG> under section 245D(4) is an order of assessment under section 143(3) or under section

144. In <NAME>'s case the only question decided by this Court is that the interest under section 234B is mandatory in nature and that <ORG>, therefore, had no authority to waive it. Further, as stated above, the jurisdiction of the A.O. is not fettered merely because the applicant has filed the Settlement Application. The Act does not contemplate stay of the proceedings during that period, i.e., when the <ORG> is deciding whether to proceed or reject the settlement application. The jurisdiction of the <ORG> to proceed commences only after an order is passed under section 245D(1) . That, after making an application for settlement the applicant is not allowed to withdraw it [see section 245C(3) ]. Once the case stands admitted, the <ORG> shall have exclusive jurisdiction to exercise the powers of <ORG>. The order of <ORG> under section 245D(4) shall be final and conclusive under section 245I subject to two qualifications under which it can be recalled, viz., fraud and misrepresentation but even here it is important to note that under section 245D(7) where the settlement becomes void on account of fraud and misrepresentation the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by the <ORG>. This further supports our view that there are two distinct stages under Chapter XIX- A and that the <ORG> has not contemplated the levy of interest between order under section 245D(1) stage and section 245D(4) stage. Thus, interest under section 234B will be chargeable till the order of the <ORG> under section 245D(1) , i.e., admission of the case. Lastly, the expression "interest" in section 245(6A) fastens the liability to pay interest only when the tax payable in pursuance of an order under section 245D(4) is not paid within the specified time and which levy is different from liability to pay interest under section 234B or under section 245D(2C) . [See Damani Brothers (supra) at page 485] III. Whether the <ORG> can re-open its concluded proceedings by having recourse to Section 154 of the Act so as to levy interest under section 234B , if it was not done in the original proceedings?

15. As stated, proceedings before <ORG> are similar to arbitration proceedings. It contemplates assessment by settlement and not by way of regular assessment or assessment under section 143(1) or under section 143(3) or under section 144 of the Act. In that sense, it is a Code by itself. It does not begin with the filing of the return but by filing the application for settlement. As stated above, under the Act, procedure for assessment falls in Chapter XIV (in which section 154 falls) which is different from procedure for settlement in Chapter XIX-A in which sections 245C and 245D fall. Provision for levy of interest for default in payment of advance tax under section 234B falls in Chapter XVII [Section F] which deals with collection and recovery of tax which as stated above is incidental to the liability to pay advance tax under section 207 (which is also in Chapter XVII) and to the computation of total income in the manner indicated under Chapter XIX-A vide sections 245C(1B) and 245C(1C) read with the provisos to section 245C(1) on the additional income tax payable on the undisclosed income. Further, if one examines the provisions of sections 245C(1B) and 245C(1C) , one finds that various situations are taken into account while computing the additional amount of tax payable, viz., if the applicant has not filed his returns, if he has filed but orders of assessment are not passed or if the proceedings are pending for re-assessment under section 147 (again in Chapter XIV) or by way of appeal or revision in connection with such re-assessment and the applicant has not furnished his return of total income in which case tax has to be calculated on the aggregate of total income as assessed in the earlier proceedings for assessment under section 143 or under section 144 or under section 147 [see section 245C(1B) ]. The point to be noted is that in computation of additional income tax payable by the assessee, there is no mention of section 154 . On the contrary, under section 245I the order of the <ORG> is made final and conclusive on matters mentioned in the application for settlement except in the two cases of fraud and misrepresentation in which case the matter could be re- opened by way of review or recall. Like <ORG>, the <ORG> is a quasi-judicial body. Under section 254(2) , the <ORG> is given the power to rectify but no such power is given to the <ORG>. Thus, we hold that <ORG> cannot reopen its concluded proceedings by invoking section 154 of the Act. Lastly, one must keep in mind the difference between review/ recall of the order and rectification under section 154 . The Schedule of Chapter XIX-A does not contemplate invocation of section 154 otherwise there would be no finality to the assessment by settlement which is different from assessment under Chapter XIV where there is an appeal, revision, etc. Settlement of liability and not determination of liability is the object of Chapter XIX-A. Even otherwise, invocation of section 154 on facts of this batch of cases is not justified. In this batch of cases, the situation which prevailed when the <ORG> waived or reduced interest chargeable under sections 234A and 234B was that a debate was on as to whether the <ORG> has the power to reduce or waive interest. It is only after <NAME>'s case that the law got settled that the nature and the character of the interest was compensatory and mandatory and that the <ORG> had no such power. But even in <NAME>, the question as to whether such interest under section 234B should run up to the order under section 245D(1) or up to the date of the order under section 234D(4) was not decided. In fact, that was the reason for the Orders of Reference to the Constitution Bench of this Court vide orders dated 14.12.2004 and 20.1.2005. There is one more reason for this Reference. In the case of <C<ORG>ION> [(2003) 259 ITR 449], a 3- Judge Bench of this Court, by majority, held that where, upon the Order of the <ORG> under section 245D(4) , there arises a deficit in the payment of advance tax under section 208 , the end point or the terminus of the period for which interest has to be paid under section 234B on the deficit is the date on which the <ORG> passes the order under section 245D(4) . This decision was delivered on 17.12.2002 after the judgment of this Court in <NAME> (supra). On the same day, the same Bench in the case of <ORG> (supra) held that interest charged under  section 234B becomes payable on the income disclosed in the return and the income disclosed before the <ORG>; that, such interest is chargeable till the <ORG> acts in terms of section 245D(1) and that after the <ORG> allows the application for settlement to be proceeded with there will be no further charge of interest under section 234B . Thus, even on the question of terminus there was lot of controversy and in the circumstances, we are of the view that invocation of section 154 (held to be inapplicable to Chapter XIX-A proceedings) cannot be justified.

Conclusions :

16. (1) Sections 234A , 234B and 234C are applicable to the proceedings of <ORG> under Chapter XIX-A of the Act to the extent indicated hereinabove.

(2) Consequent upon conclusion (1), the terminal point for the levy of interest under section 234B would be up to the date of the order under section 245D(1) and not up to the date of the Order of Settlement under section 245D(4) .

(3) <ORG> cannot re-open its concluded proceedings by invoking section 154 of the Act so as to levy interest under section 234B , particularly, in view of section 245I .

17. Accordingly, Reference to <ORG> vide orders dated 14.12.2004 and 20.1.2005 stands duly answered and the matters are accordingly disposed of.

.................................CJI (<NAME>) ...................................J. (<NAME>) ...................................J. (<NAME>) ...................................J. (<NAME>) ...................................J. (<NAME>) New Delhi;

October 21, 2010.


PETITIONER: <NAME> Vs. RESPONDENT: THE TRUSTEES OF THE PORT OF BOMBAY DATE OF JUDGMENT: 27/02/1962 BENCH: HIDAYATULLAH, M. BENCH: HIDAYATULLAH, M. DAS, S.K. SHAH, J.C. CITATION: 1963 AIR 468 1962 SCR Supl. (3) 461 CITATOR INFO : R 1988 SC 832 (8) D 1988 SC1313 (11) D 1990 SC2053 (4) ACT: Ejectment--Suit by <ORG> or local <ORG> against assignees of leased land and building--Applicability of Rent Act--Jurisdiction of <ORG>--joint tenancy--Notice on one tenant, if sufficient--Suit if bad for non-joinder of legal representative of the deceased joint tenant--Assignee of tenancy if bound by the terms of the original lease--Where enviction of sub-tenant not Possible under statute, whether a ground to defeat the rights of the Local Authorities--Bombay Rents. Hotel and Lodging Houses Rates (Control) Act, 1947 (Bom. 57 of 1947), ss. 4, 5(8), 15. HEADNOTE: In 1924, <ORG> granted a lease of land for ten years to a partnership firm, with the covenant that the lessee would, at their own expense construct upon the said land, certain buildings to the specification. of the trustees. It was provided inter alia that the lessee would be at liberty to remove the buildings, erected by them, within three months after the expiration of the term. It is not clear what happened actually after the expiration of the term of ten years. In 1942, the Trustees granted to M/s. D and 0 their respective heirs, executors, administrators and assigns, a mnthly tenancy of the and together with the buildings standing thereon. It was agreed with them that on the 462 determination of the tenancy, they would have to remove such buildings as were standing upon the demised land. In 1947 M Is. D and 0 assigned then rights in the lease to one R and the appellant K which was accepted by the trustees. After due notice in 1956, the Trustees filed a suit for ejectment against <NAME>, in <ORG>. R had died before the filing of the suit and the plaint was amended by striking out the name of R. The appellant as defendant took a number of pleas; (a) notice was invalid as 'it had been served only upon one of the lessees, (b) suit was bad for non-joinder of the heirs and the legal representatives of R, (c) jurisdiction of <ORG> was challenged as the suit was governed by Rent Act , (d) and lastly, that the contract to deliver vacant possession was impossible of performance and the said impossibility rendered the' claim of the plaintiffs incompetent. Held, that once it is held that the tenancy was joint a notice to one of the joint tenants was sufficient, and the suit for the same reason was good. Held, further, that the suit as laid for vacant possession of the site and in the <ORG> was competent. Held, that in view of the definition "premises" in s.5.(8) and the events leading to the amendment of s. 4 , the amend- ment was enacted to cut down by a definition the operation the words "any premises belonging to the <ORG> or a local authority" by excluding buildings which were occupied by sub-tenants even though the building belonged to the <ORG> or continued to belong to it and any action of the <ORG> or local authority in respect of the land falls to be governed by usb-s. (1) and not sub-s (4.) (a) of the Rent-control Act. Held, therefore, if the <ORG> or a local authority wants to evict a person from the land, the provisions of the Bombay Rents, Hotel and Lodging Houses Rates (Control) Act, 1947, (lo not come in the way. For the same reason, the suit for ejectment does not have to be filed in the court of small causes, as requirtd by a Rent Control Act but in <ORG>. If the 'original lessees took on lease not only the land but also the building, it is not open to their assignees to claim that the ownership of the <ORG> extended only to the land and not to the buildings. If the appellant cannot evict his tenant so as to be able to remove the building, in exercise of the right conferred on him, that is an unfortunate circumstance, which does not serve to entitle him to defeat the rights of <ORG>. 463 Quere :-The Port Trust Authorities, whether can evict the sub-tenants ? <ORG> <CITATION> , (1953) S.C.R. 185 and <NAME> v. <ORG>, A.I.R. 1956 Bom. 364, referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 302 of 1961.

Appeal by special leave from the judgment and order dated September 24, 1959, of <ORG> in F.A. No. 731 of 1959.

<NAME> and <NAME>, for the appellant.

<NAME>, Attorney General of India, <NAME>, <NAME>, <NAME> and <NAME>, for the respondents.

1962. February, 27. The Judgment of the Court was. delivered by HIDAYATULLAH, J.-This appeal arises out of a suit tried in <ORG> at Bombay:. filed by the respondents, <ORG>, for the ejectment of the appellant, <NAME>, and one <NAME> who had 'died even before the suit was filed, from a plot situated at Haji Bunder Mazgaon, Sewri Reclamation Estate, Bombay. and for possession of the land. There was a claim for Rs. 10,871-14-0 being the arrears of water charges and property taxes, with which we are not concerned. The suit was decreed by <ORG> and the appellant was ordered to, vacate the suit premises add to deliver vacant possession thereof. An appeal was filed against the decree in <ORG> at Bombay, but it was dismissed summarily on September 24, 1959. <ORG> also refused an application for a certificate, but the appellant applied for special leave, and having obtained it, filed the present appeal. In 1924, <ORG> granted a lease of the said land to five persons, who were trading in partnership under the name and style of <ORG>. This lease was for a term of 10 Commencing from December 14, 1923. For the first six months, the conventional rent of pepper corn, if demanded, was payable, and thereafter for the remainder of the term, a monthly rent of Re. 633-5-4 was payable on the first day of every month. The lessees were also to pay all rates, taxes, assessments, etc. One of the covenants of the lease was that the lessees would, at their own expense and during the first six months period, construct upon the said piece of land buildings for us as bullock stables and offices according to the specification given to them by the said Trustees and to be approved by them. It was provided, inter alia, that upon the expiration of the term, if the lessees had observed and performed all the covenants, they would be at liberty, at their own expense, to remove the buildings erected by them upon the demises on condition that the removal would be completed within three months after the expiration of the term. During this period of three months, the lessees were to pay the monthly rent and also to pay all rates and taxes etc. and if they failed to remove the buildings within the period of three Calendar months from the expiration of the term and within like period to fill up all excavations and to level up and restore the land, the right to remove the buildings would stand determined, and the buildings would belong to the Trustees, who would be entitled to remove them and to clear, level and restore the land and recover the costs from the lessees. It is not clear from the record as to what happened actually after the expiry of the term. But on August 11, 1942, <ORG> granted to <NAME> and <NAME>, carrying on business under the name and style of Messrs. <NAME> and Company and their respective heirs, executors administrators and assigns, a monthly tenancy of the land together with the buildings standing thereon and all the rights, easements and appurtenances belonging to the premises on payment of monthly rent of Rs. 300/ , clear of all deductions on the first day of each Calender month and payment of all rates, taxes etc. The lessees covenanted not to add to, or alter the said buildings and conveniences etc., without previous consent, in writing, of the Trustees and to maintain the property in good repair at their own cost. They further agreed :

"to peacefully leave and, yield up the demised premises together with all buildings thereon as prepared and kept at the expiration or sooner determination of the tenancy hereby created or in the event of the Tenants becoming entitled to remove the buildings standing on the demised land at the expiration or sooner determination of the tenancy hereby created pursuant to the proviso in that behalf hereafter contained to peaceably leave and yield up the demised land cleared and leveled to the satisfaction in all respects of the Trustees."

The provisos, inter alia, include the following covenants binding the lessees :

"(2) Either party to these presents may terminate the tenancy hereby created by giving to the other of them one, calendar month's notice in writing to expire on the 1st day of any calendar month.

(4) The Tenants may during the period of notice for determination of tenancy hereby in accordance with proviso No. 2 herein before contained remove such buildings as have been standing upon the demised land provided that the Tenants shall have paid all rent hereby reserved up to the determination of this tenancy and shall have performed and observed all the covenants on the part of the Tenants and the conditions herein contained or referred to."

On February 28, 1947, <NAME> and <NAME> assigned their rights in the lease to <NAME> and <NAME> who, according to the deed of assignment (Ex.D) paid Rs. 22,250/- to the assignors, and this assignment appears to have been accepted by the lessors. On January 25, 1956, the Trustees of the port of Bombay sent a notice to <NAME> and <NAME> requiring them to vacate the premises and deliver. vacant and peaceful possession of the land on February 29, 1956. This notice was not complied with, and the suit was filed for their ejectment, as stated already. In the plaint, the first relief claimed was that "the defendant be ordered and decreed to forthwith deliver vacant and peaceful possession of the demised premises situate at Mazagaon Sewri Reclamation Estate and more particularly described in Ex. A hereto." Exhibit A mentioned the following:

"All that piece or parcel of land situate at Haji Bunder, Mazagaon Sewri Reclamation Estate, Bombay, admeasuring 5066 619 square yards or thereabouts bearing Cadastral Survey No. 272/145 of Parel-Sewree Division.' The suit, as stated was filed against both <NAME> and <NAME>, but later, the plaint was amended by striking out the name of <NAME>, who had died much earlier.

The appellant, as defendant, raised a number of pleas. His main contention was that the notice dated January 25, 1956 was invalid, inasmuch as it had been served only upon one of the lessees (<NAME>) and not upon the heirs and legal representatives of <NAME>. He also contended that the suit was bad for non-joinder of the heirs and legal representatives of <NAME>, who were necessary parties. He raised a plea #of jurisdiction alleging that the suit had to be filed in <ORG>, Bombay, inasmuch as it was governed by the Bombay Rents, Hotel and Lodging Houses Rates (Control) Act, 1947. He further claimed the protection of a. 4, sub-a. 4 (a) of this Act which, he said, applied to him and not subs. (1) of the same section. He contended that, in view of the prohibition contained in the Act the could not evict his sub-tenants and that the con- tract that he must deliver vacant possession was impossible of performance, and the said impossibility rendered the claim of the plaintiffs incompetent.

All those pleas were found against the appellant. It was held that the tenancy was a joint tenancy that a notice to one of the joint tenants was sufficient, and that the suit,also was not bad for non-joinder of the legal representatives of <NAME>. The trial Judger held that the present agreement was enforceable, inasmuch as this case was governed by sub-s. the(1) and not sub- s. 4 (a) of s. 4 of the Act. For same reason, the trial Judge also held that the suit was properly laid in <ORG> at Bombay, The same contentions were raised before us, and we shall deal with them in the same order.

The argument about notice need not detain us long. By the deed of assignment dated February 28, 1947, the tenants took the premises as joint tenants. The exact words of-the assignment were that........ the Assignors do and each of them both hereby assign and assure with the Assignees as Joint Tenants......... The deed of assignment was approved and accepted by the Trustees of <ORG>, and <NAME> and the appellant must be regarded as joint tenants. The trial Judge therefore, rightly held them to be so. Once it is held that the tenancy was joint, a notice to one of the joint tenants was sufficient, and the suit for the same reason was also good. Mr. <NAME>, in arguing the 'case of the appellant, did not seek to urge the opposite. In our opinion, the notice and the frame of the suit were, therefore, proper, and this argument has no merit.

The real controversy in this case centers round the applicability of the Bombay Rents, Hotel and Lodging Houses Rates (Control) Act, 1947 (shortly called the Rent Control Act in the judgment) to the present suit., and from that also arises the question of the jurisdiction of <ORG>. The latter argument about the juris- diction of the <ORG> can only arise, if the Rent Control Act applies to the present facts. We shall, therefore, consider these two points together.

It must not be overlooked that the suit was for eviction from the land only Under the Rent Control Act, the word "premises " is defined by s.5 (8) inter alia, as follows:

"Premises" means-

(&) any land-not being used for agricultural purposes.

The Act , prior to its amendment in 1953 by the Bombay Act IV of 1953, provided by s.4(1) as follows:

" This Act shall not apply to any premises belonging to the Government or a local authority or apply as against the Government to any tenancy or other like relationship created by a grant from the Government in respect of premises taken on lease or requisitioned by the Government; but it shall ,apply in respect of premises let to the Government or a local authority........

This sub-section was considered by <ORG> in a case, which was brought up in appeal to this <ORG> by special leave. The judgment of this <ORG> is reported in <CITATION> (1). In that case, building sites were auctioned in 1908 by <ORG>, Bombay. One of the conditions of the sale was that the bidder should construct a building, on the site, of a certain value and according to a plan approved by <ORG>. One <NAME> was the highest bidder, and he constructed a building. as agreed. He was then granted a lease of the land together with the building for 999 years. Subsequently in 1925, the Bombay Municipality succeeded <ORG>, and <ORG> acquired the lessee's interest. A suit was filed by <ORG> against its own tenants in <ORG>. The plea was that the suit ought to have been filed in <ORG>, as required by the Rent Control Act. The plaintiff relied upon sub-s. (1) of s. 4 to show that the Act did not apply to such a suit. This contention of the plaintiff was accepted by the Trial Judge, who decreed the claim. <ORG>, however, on appeal, held that sub-s.(1) of s. 4 did not apply, and that as between <ORG> and its sub-tenants, the suit was governed by the Rent Control Act and ought, to go before <ORG>. <ORG>, therefore ordered that the plaint be returned for presentation to the proper <ORG>.

This <ORG>, on appeal by special leave, reversed the decision of the 'High <ORG>, and restored that of the Trial Judge. This <ORG> pointed out that sub-s. (1) of s. 4 had three parts viz.

"(1) this Act shall not apply to premises belonging to the Government or a local authority;

(1) [1953] S. C. R. 185, (2) this Act shall not apply as against the Government to any tenancy or other like relationship created by grant from the Government in respect of premises taken or lease or requisitioned by the Government; and (3) this Act shall apply in respect of pre- mises let out to the Government or a local authority."

This court further held that the first part of the sub- section mentioned as part No.(1) above had no reference to any tenancy or other like relationship as in the latter part, and was general in character. In framing it in that way, the intention was obviously different, and it was to exempt premises of a particular type from the operation of the Act altogether, and the exemption attached to the premises. Reasons were given by this <ORG> why it thought that this exemption was general and the immunity absolute. Into these reasons we are not now required to go. As between <ORG> and the lessee, it was held that the land and the buildings belonged to the former as owners and not to the lessee. This <ORG>, therefore, observed at p. 196:

"The truth is that the lessor after the building was erected became the owner of it and all the time thereafter the demised pre- mises which include the building have belonged to him subject to the right of enjoyment of the lessee in terms of the lease."

The Act was thus held not to apply to such suits, and the order of <ORG> was reversed.

At first, an Ordinance and later, an Act were passed to nullify the effect of this ruling by the addition of sub- s.4(a). That sub-section now reads as follows ;.

"(4)(a). The expression "premises belonging to the <ORG> or a local au- thority" in sub-section (1) shall, notwith- standing anything contained in the said sub- section or in any judgment. decree or order of a <ORG>, not include a building erected on any land held by any person from the <ORG> or a local authority under an agreement, lease or other grant, although having regard to the provisions of such agreement, lease or grant the building so erected may belong or continue to belong to the <ORG> or the local authority, a,-, the case may be; and

(b) notwithstanding anything contained in section 15 , such person shall be en led to ,tit create a tenancy in respect of such building or a part thereof."

The amendment achieved two different things. It enabled the lessee of the particular kind of building described in el.

(a) to create sub-tenancies in spite of the ban against sub- tenancies contained in s.15). It also excluded from the operation of sub-s.(1) the buildings specified in cl. (a) of the subsection. The amendment said nothing about the relationship of the <ORG> or the local. authority, on the one hand, and the lessee, on the other, in respect of the land. The word "premises" in subs.(2) could mean the land or the buildings or both. Sub-section (4)(a) dealt only with the buildings, and did not deal with the land, because it used the word "buildings" and not the more general word "premises". The import of sub-s.(4)(a) of s.4 was thus limited to buildings, and did not extend to land. The sub-section, however, was drafted somewhat inartistically, and the obscurity of the language presents some difficulty. The Trial Judge following a decision of <ORG> reported in <CITATION> (1). In that case, one <NAME> had A.I.R, 1956. Bow. 364.

<NAME>

taken lease of certain plots some 30 years back., and constructed some structures upon the open plot, and rented them out as tenements. In 1947, Irani sold them to one <ORG>. In 1951, <ORG> filed a suit to eject <ORG> from the plots, and by a consent decree, <ORG> agreed to deliver up vacant and peaceful possession of the plots clear of all structures. <ORG> failed to remove the structures, and <ORG> sought to execute the decree. The tenants thereupon filed a suit under 0. 21, 103 of the Civil Procedure Code against <ORG>, but the suit was dismissed. In the appeal which was filed in the <ORG>, it was conceded that <ORG> was the owners of the plots in question, but protection was claimed on the basis of sub- s.(4)(a) of s.4 of the Rent Control Act. <NAME>, C. J. in dealing with the history of the amending Act, pointed out that the legislature was seeking to protect by that sub- section tenants who occupied buildings put upon land belonging to a local authority, if the buildings occupied by them were constructed under an agreement under which the lessee was under an obligation to construct buildings. He pointed out that the protection of sub-s.(4) (a) was to buildings and not to land, and that the phrase "under an agreement, lease or other grant" modified not only "held by any person from Government or local authority" but also "erected on any land'. He, therefore, held that the words "erected on any land held by any person from a local authority" were descriptive of the building and did not emphasise the point of time when the building was erected. By that phrase, what was emphasised was ",that the nature of the building must be such as to satisfy the test that it was erected on land hold by a person from a local authority and the test must be applied at the time when the protection is sought."

In this case, it is contended, as it was contended in <ORG>, that so long as a building was erected under an agreement with <ORG> or a local authority, the benefit of sub-a. (4)(a) of s. 4 would be available, no matter how many hands the property might have changed. this argument was considered by the learned Chief Justice, and was rejected.

In our opinion, though the section is far from clear, the meaning given by the learned Chief Justice is the only possible meaning, regard being had to the circumstances in which this sub-section came to be enacted. Those circumstances were : In a case in which the holder of the land from a local authority was seeking to evict his sub- tenants, it was held by <ORG> that the matter was governed by the Rent Control Act. This Court held that sub-s.(1) applied and the suit was not governed by the Rent Control Act. The amendment was enacted to cut down by a definition the operation of the words "any premises belonging to the <ORG> or a local authority", by excluding only buildings which were occupied by sub-tenants even though the buildings belonged to the <ORG> or continued to belong to it. Clause (b) of sub-s.(4) excluded also s. 15 , which prohibited subjecting by a tenant. That, however, was limited to the case of buildings only, and did not apply to the case of land. In this situation, any action by the <ORG> or the local authority in respect of land falls to be governed by sub-s.(1) and not sub-s.(4)

(a), and sub-s.(1) puts the case in relation to land, entirely out of the Rent Control Act. The net result, there fore, is that if <ORG> or a local authority wants to evict a person from the land, the provisions of the Rent Control Act do not come in the way. For the same reason, the suit for ejectment does not have to be filed in the Court, of Small Causes, as required by the Rent Control Act but in <ORG>. as has been done in this case.

There is one more reason in this case for reaching the same conclusion, because at the time of the lease in 1942, the lessees, from whom the appellant claims assignment, were given a lease not only of the land but of the buildings. 'The whole tenor of the agreement shows that the title of the lessees wag precarious. It was a monthly tenancy liable to be terminated with a notice under the Transfer of Property Act , and there was only a grace that the lessees, when evicted, might remove buildings within one month of their eviction. This precarious interest was obtained by the assignee by an assignment, and the same thing applies to them. If the original lessees took on lease not only the land but also the buildings, it is not open to their assignees to claim that the ownership of the <ORG> extended only to the land and not to the buildings By the admissions in the deed of lease and the. various clauses, it is quite clear that these buildings cannot now be described as buildings constructed under an agreement with the <ORG>, but rather as buildings belonging to <ORG> which were leased out with the land but in respect of which by a concession, the lessees were entitled to remove the buildings within one month after eviction, In our opinion, the suit as laid for vacant possession of the site and in <ORG> was competent.

It was contended that the contract was incapable of being performed, because at least between the present appellant and his sub-tenants the provisions of the Rent Control Act would apply, and he would not be able to evict them in his turn. It was, therefore, argued that this impossible on the part of the appellant to fulfill his, obligations to deliver vacant possession rendered that portion of the lease deed unenforceable and void. It is to be noticed that the appellant does not claim that by reason of the impossibility the whole of the lease deed becomes void, because if he did so, the suit of the <ORG> authorities would be perfectly justified without any more He only seeks to show that portion of the deed dealing with delivery of vacant possession has become impossible of performance. Such a situation had also arisen in the case of <ORG> in <CITATION> (1), and the assignee of the lessee was unable 'to deliver vacant possession. Whether or not the <ORG> authorities would be able hereafter to evict the sub-tenants of the appellant is a matter, on which we need not express any opinion. If the appellant cannot evict his subtenants so as to be able to remove the buildings, in exercise of the right conferred on him, that is an unfortunate circumstance , which does nor, serve to entitle him to defeat the rights of the <ORG> authorities. The are only claiming vacant possession of the sited, and under the agreement, if the appellant does not remove the buildings within one month, then they would be entitled to take possession of the land with the buildings, whatever might be the rights of the sub-tenants, and as to which, as we have pointed out already, we say nothing. In our opinion, the appeal must fail, and is dismissed ; but in the circumstances of the case, we do not make any order about costs.

Appeal dismissed.

(1) A.I R 1996 Bom. 364