Suppose if I buy option which becomes deep ITM and hence illiquid so there is no change in the price so does it settles at LTP or the PnL is calculated based on Spot and Strike price on expiry?
Upon expiry ITM Options will be settled at Intrinsic Value, any profit or loss you will be making will be credited to / debited from your account.
You can learn more about Options on Varsity:
For account related queries would suggest you create a ticket at support.zerodha.com. Team will have this checked and assist.