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Section 245C of the Income-tax Act, 1961 - Settlement of cases - Application for - Assessment years 1986-87 to 1988-89 - Whether jurisdiction of Settlement Commission to proceed with a settlement application commences only after an order is passed by Settlement Commission to proceed with application under section 245C - Held, yes - Whether merely because a settlement application has been preferred to Settlement Commission, assessment proceedings have to be stayed during period when Settlement Commission is deciding whether to proceed or not to proceed with application - Held, no FACTS The assets, i.e., jewellery and other valuable articles, of the assessee were seized. Later, the assets were released to the assessee upon furnishing the bank guarantees. As the assessee failed to deposit the cash amount, the Asstt. Commissioner sought to encash the bank guarantees. On writ petition the Court ordered by order dated 11-11-1991 that the bank guarantees shall be encashed only to the extent of 50 per cent for being retained by the department in lieu of assets and for the balance amount of 50 per cent. the assessee shall furnish a fresh bank guarantee by 20-11-1991 which shall be kept alive from time to time. The Assessing Officer was also directed to hear the assessee and decide the application under section 220(6) afresh. On an application for a review of the order dated 11-11-1991, the petitioner contended that the application under section 245C filed by the applicant before the Settlement Commission on20-10-1991, was filed before the order dated 11-11-1991, and that once an application before the Settlement Commission was moved, then the Settlement Commission alone had the exclusive jurisdiction to exercise the powers and perform the functions of an income-tax authority under the Act in relation to the assessment year in question and, thus, the order dated 11-11-1991 was in conflict with the statutory provisions of Chapter XIX-A. HELD Under section 245D(1), the Settlement Commission on receipt of an application has to proceed with the application or reject the application. Under section 245F(2), it has been provided that where an application made under section 245C…

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