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4. Insofar as the assessment year 1975-76 is concerned, the petitioner filed its return of income on 15-9-1975, showing a total income of Rs. 11,79,522 after claiming set off of carried forward loss of Rs. 4,35,412. There is no dispute that the first hearing of the case was posted by the assessing officer on 3-6-1977. As already noticed, the petitioner had approached the Settlement Commission for .the assessment years from 1963-64 to 1974-75 on 7-4-1977, and on 25-7-1977. The petitioner approached the Settlement Commission for the assessment year 1975-76 on 21-9-1977 and the petition was admitted on 7-1-1976. The petitioner offered a total income of Rs. 14,92,604 for the assessment year 1975-76 before the Settlement Commission. The Settlement Commission on 30-12-1992, sent the case back to the assessing officer relating to the assessment year 1975-76 along with the cases for other assessment years 1975-76 to 1982-83 by invoking the provisions of section 245HA(1) of the act for the completion of the assessment proceeding in accordance with Act as if no application under section 245C was filed.

9. The main case of the petitioner is that under rule 40 of the Rules, where assessment is completed after more than one year from the date of submission of return and the delay in assessment is not attributable to the assessee, the assessing officer is empowered to reduce or waive interest payable under section 215 or 217 of the Act. It is stated that on the facts of the case, the case was posted for first hearing on 3-6-1977, whereas the return was filed on 15-9-1975, and soon thereafter, an application was filed before the Settlement Commission and after the Settlement Commission admitted the application, the petitioner had no occasion to take part in the assessment proceedings and only when the matter was sent back to the assessing officer by the Settlement Commission under section 245HA of the Act the assessing officer would have jurisdiction to take part in the assessment proceedings. It is therefore submitted that the petitioner could appear before the assessing officer only after the case was sent back from the Settlement Commission and the period from the date when the application was filed before the Settlement Commission till the date on which the matter was sent back from the Settlement Commission should be taken into account for arriving at the period of delay. It is therefore, submitted that the delay in the assessment was not attributable to the petitioner and hence, the entire interest levied has to be waived. Though in the petition, a reference has been made to rule 40(v) and 40M of the Rules, learned senior counsel appearing for the petitioner mainly focussed his attention on rule 40(i) of the Rules. The petitioner has also taken up a plea that the petitioner co-operated with the Settlement Commission and notwithstanding the co-operation extended by the petitioner, the Settlement Commission was of the view that the assessment proceedings should be reverted back to the assessing officer and the only option that was available to the Settlement Commission was to invoke the powers under section 245HA of the Act. According to the petitioner, the department was also aware that the petitioner has fully co-operated with the Settlement Commission and the finding regarding non-co-operation was rendered for the limited purpose of sending the case back to the assessing officer under section 245HA of the Act.

13. The main question that arises is whether for the period from the date of filing of the petitioner under section 245C of the Act before the Settlement Commission, i.e., 7-1-1976, till the dated 30-12-1992, when the Settlement Commission remitted the matter back to the assessing officer under section 245HA of the Act has to be included or excluded while levying interest under section 215 of the Act or the interest levied is liable to be waived under rule 40 of the Rules. The petitioner as well as the department has taken divergent views on this aspect. The case of the petitioner is that though the petitioner extended full co-operation before the Settlement Commission, the Settlement Commission remitted the matter to the assessing officer for the assessment years 1975-76 to 1982-83, while for the assessment year 1963-64 to 1974-75 it settled the matter. According to the petitioner, the Settlement Commission remitted the matter under section 245HA of the Act so that the assessing officer could do assessment on the basis of its earlier order for the assessment years 1963-64 to 1974-75. The case of the department, on the other hand, is that the petitioner has not extended its co-operation for the assessment years 1975-76 to 1982-83 and that is the reason for the Settlement Commission to remit the matter to the assessing officer.

18. The Commissioner has also not exercised his revisional power in a proper manner. The Commissioner proceeded on the basis that the delay in the completion of assessment between 21-9-1977, when the application under section 245C of the Act was filed till 30-12-1992, when the Settlement Commission passed orders under section 245HA of the Act, the petitioner did not co-operate with the Settlement Commission. The Commissioner recorded the finding that there was non-co-operation on the part of the petitioner before the Settlement Commission on the basis of the order passed by the Settlement Commission under section 245HA of the Act. The Commissioner while so holding has not examined the records before the Settlement Commission as to what happened between 21-9-1977 and 30-12-1992. The Commissioner also has not examined the question whether there was no co-operation by the petitioner before the Settlement Commission and the period of non-co-operation by the petitioner and whether it was for the entire period from the date of filing the application till the order was passed by the Settlement Commission or for a part of the period. In other words, the Commissioner has not determined when the non-co-operation by the petitioner commenced how long it extended and the period of non- co-operation.