The Assessee filed an application before the Settlement Commission. Furthermore, according to the Assessee’s calculation, it paid the taxes and interest on the additional income disclosed in the application. However, the Revenue objected, stating there was a shortfall in the taxes and interest paid by the Assessee. The Settlement Commission held that the application had abated since the Assessee failed to pay the appropriate taxes on the additional income disclosed in the said applications.

The High Court noted that the Revenue had not provided any information to the Assessee regarding the shortfall in the tax and interest paid as per the income disclosed in the application. It was only subsequently that the Joint Commissioner gave information about the shortfall in the taxes paid. The Assessee had complied with the provisions of section 245D(2D) by paying the additional tax and interest on the income disclosed in its application as per its own calculation. Therefore, the abatement of the application by the Settlement Commission was quashed and set aside, and the matter is directed to be placed before the Interim Board for Settlement constituted under section 245AA for consideration.(AY. 2002-03, to 2004-05)