Cannot pick up calls on wait, Cannot make a second call holding the first call

I have a really weird problem with my iPhone 5S. (iOS 7.1)
1. When I am on a call, I am not able to pick up a second call that is on wait. I can see the second call, I can hear the beep sounds but as soon as I pick up, the call freezes in 00.00 time, and My first caller is still active, not on hold.
2. When I am on a call, I am not able to make a second call placing the first call on hold. The second call disconnects immediately with 3 beeps.
3. I am able to see the incoming calls on wait, when I am already on a call. I am able to hear the beeps coming in. SO it means the call waiting is on (Tried turning it on/off/on too.) But when I pick up the call, the above problem comes in.
What have I tried to solve this: (None of them helped)
1. I tried a hard reset of my iPhone (Holding Power and Home button)
2. I tried toggling the Call waiting button
3. I tried resetting network settings.
4. I called my Operator for assistance. I am using Airtel, India. They told me to dial this code - *43# . I tried it and it gave me this screen. But the problem is not solved yet.
Is there anybody here who is facing the same issue with your iPhone? I never had this problem with my iPhone 4.

Make sure you do not have "Do Not Disturb" turned on. This feature will block the first call, but is someone calls right back it will be put through.
On the iPhone, go to Settings/Do Not Disturb
Make sure you do not have Do Not Disturb turned on manual or scheduled.

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