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Rani Lila Bhargava and Others Vs. Union of India - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtDelhi High Court
Decided On
Case NumberCivil Regular First Appeal (O.S.) No. 17 of 1972
Judge
Reported in[1983]141ITR836(Delhi)
ActsIncome Tax Act, 1961 - Sections 244(1) and 297(2); Income Tax Act, 1922 - Sections 66(5) and 66(7); Income-tax (Removal of Difficulties) Order, 1962
AppellantRani Lila Bhargava and Others
RespondentUnion of India
Cases ReferredSmt. Somawanti v. State of Punjab
Excerpt:
.....income tax act, 1922 and income-tax (removal of difficulties) order, 1962 - in case assessed filed claim for refund prior to commencement of 1961 act his claim to be decided under 1922 act - condition precedent for invoking for order of 1962 is that claim for refund should have been filed before commencement of 1961 act - it was only by decision of high court that assessed became entitled to refund - appellant filed his claim for refund after commencement of 1961 act - section 297 requires claim to be filed before coming into force of 1961 act and was inapplicable - no assistance can be sought from income-tax (removal of difficulties) order. - - cit [1975]99itr579(sc) ), that this case clearly came within the scope of s. in the first place, it is not even disputed by the counsel for..........case from madras relating to the assessment year 1952-53, the assessed became entitled to a refund in view of the supreme court judgment, where he had taken up the matter. the department refunded the tax but refused any interest on this amount. the assessed, thereforee, filed a writ petition which was dismissed by the division bench of the madras high court with the observation that the principle of the their order in pandyan insurance co. ltd. : [1969]73itr12(mad) , governed the case. the assessed, thereupon, filed an appeal to the supreme court, which dismissed the appeal and held (reported as o.rm.m.sp.sv.p. panchanatham chettiar v. cit : [1975]99itr579(sc) ), that this case clearly came within the scope of s. 297(2)(i) of the i.t. act. 1961, and not under s. 66(7) of the.....
Judgment:

Sachar, J.

1. This is the plaintiffs' appeal against the judgment of the learned single judge dated July 28, 1972, by which the suit was dismissed (since reported in : [1973]92ITR312(Delhi) ).

2. This is the plaintiffs' filed a suit for the recovery of Rs. 1,29,640.98 against the respondent Union of India. The claim related to the interest on refund for the income-tax and E.P. Tax paid by the applicant for the assessment of 1946-47 (A.Y.). The tax liability was created on the appellant and he ultimately paid the tax on March 27, 1957. The appellant had, however, taken up the matter in appeal to the Income-Tax Tribunal and then to the High Court. The reference was answered in favor of the assessed/appellant on April 7, 1966, with a direct by the High Court to refund the excess tax. A consequential order by the Tribunal was passed on September 16, 1966, with a direction by the High Court to refund the excess tax. A consequential order by the Tribunal was passed on September 16, 1966, and the Department refunded the excess amount of tax which had been realised from the appellant.

3. The appellant, however, claimed that he was entitled to interest on the amount refunded to him under s. 66(7) of the Indian I.T. Act, 1922, which provides that if an amount of assessment is reduced on a reference, the amount overpaid should be refunded with such interest as the Commissioner may allow. The Commissioner of Income-tax, however, took the view and informed the appellant on September 2, 1967, that the appellant's case was governed by s. 244(1) read with s. 297(2)(i) of the I.T. Act. 1961, and as the refund, due as a result of the Tribunal's order under s. 66(5) of the Act, had been granted within a period of six months from the date of the said order, no interest was allowable. This made the appellant to file the suit out of which this appeal has arisen. Two main issues namely, No. 4 and 6, were canvassed before the learned judge, namely, whether the case of the appellant was governed by the Indian I.T. Act of 1922 or the I.T. Act, 1961 and whether the civil courts have jurisdiction to try the suit. The learned judge held in favor of the appellant that his case was governed by the old Act of 1922. For this purpose he relied on Raja Jagdambika Pratap Narain Singh v. ITO : [1970]76ITR619(All) in which it had been held that, in a similar situation in the reference, the provisions of the Act of 1922 will apply. The learned judge noticed that this view was contrary to the view taken by the Madras High Court in Pandyan Insurance Co. Ltd. v. CIT : [1969]73ITR12(Mad) and Jogendra Nath Naskar v. CIT . He however, preferred to follow the view in Raja Jagdambika Pratap Narain Singh v. ITO : [1970]76ITR619(All) . He, however, dismissed the suit on his further finding that the civil courts have no jurisdiction to try the suit.

4. We feel that it is unnecessary to decide the issue of jurisdiction, because, in our view, the finding of the learned judge that the appellant, s case was governed by the old Act of 1922, cannot be sustained and the suit will in any case have to be dismissed even on merits. It is common case that if it is held that the appellant's case is governed by the 1961 Act, then he has no claim for the interest for the payment of amount of the refund, because, the same was paid to him within the period prescribed in s. 244 of the I.T. Act., 1961. The sole claim by the appellant is based on the assumption, which is erroneous that it is the old Act, 1922, which is applicable. In Pandyan Insurance Co. Ltd. v. CIT : [1969]73ITR12(Mad) , the assessment related to the tax (for the year) 1954-55. Liability was credited by the ITO, but the Supreme Court allowed the Appeal with the result that the assessed became entitled to a refund and the consequential order was passed by the Tribunal in 1964. The assessed had paid the tax on January 31, 1955, and claimed interest for the period up to the date of refund under s. 66(7) of the Act. This was rejected by the Commissioner on the finding that the case was governed by s. 297(2)(i) case from Madras relating to the assessment year 1952-53, the assessed became entitled to a refund in view of the Supreme Court judgment, where he had taken up the matter. The Department refunded the tax but refused any interest on this amount. The assessed, thereforee, filed a writ petition which was dismissed by the Division Bench of the Madras High Court with the observation that the principle of the their order in Pandyan Insurance Co. Ltd. : [1969]73ITR12(Mad) , governed the case. The assessed, thereupon, filed an appeal to the Supreme Court, which dismissed the appeal and held (reported as O.RM.M.SP.SV.P. Panchanatham Chettiar v. CIT : [1975]99ITR579(SC) ), that this case clearly came within the scope of s. 297(2)(i) of the I.T. Act. 1961, and not under s. 66(7) of the Indian I.T. Act, 1922. It is obvious, thereforee, that the view of the Madras High Court in : [1969]73ITR12(Mad) has now the approval of the Supreme Court. The learned judge has preferred to follow Raja Jagdambika Pratap Narain : [1970]76ITR619(All) , as against Pandyan Insurance Co. Ltd. : [1969]73ITR12(Mad) . In the circumstances it is apparent that the view of the learned single judge runs contrary to the view of the Supreme Court and can no longer he considered. As a matter of fact, in the Commentary on Income Tax by Kanga and Palkhivala, 7th Edn., Vol. I, at p. 1294, under the heading 'Refund and interest', after noticing the decision in Panchanatham Chettiar : [1975]99ITR579(SC) , it is mentioned that Raja Jagdambika Pratap Narain : [1970]76ITR619(All) and Raja Ram Kumar Bhargava v. Union of India [1973] 92 ITR 321 (Delhi) (this very case under appeal before us) must be deemed to be overruled on this point.

5. Mr. Gobind Das, the learned counsel for the appellant, however, places reliance on Kalawati Devi Harlalka v. CIT : [1967]66ITR680(SC) , where the Supreme Court has expressed the view that the 'proceedings for the assessment of person in clause (a) of section 297(2) of the 1961 Income-tax Act has a very comprehensive meaning' and covers proceeding under s. 33B of the Act of 1922. He also refers to the Income Tax (Removal of Difficulties) Order, 1962, and in particular para. 2, which says that for the purposes of cls. (a) and (b) of sub-s.(2) of s. 297 of the I.T. Act, 1961, proceedings relating to the registration of a firm or a claim for refund of tax shall be regarded as a part of proceedings for the assessment of the person concerned for the relevant assessment years. The argument of the person concerned for the relevant assessment year. The argument is that in view of the Removal of Difficulties Order and the decision in Kalawati Devi Harlalka v. CIT, the claim for refund of tax being regarded as part of proceedings for assessment for the purpose in clause (a) of sub-s. (2) of s. 297 of the Act, proceedings will have to be continued as if the 1961 Act had not been passed, and thus the claim for payment of interest on refund has to be governed by the 1922 Act. We cannot agree and must repel this contention. In the first place, it is not even disputed by the counsel for the appellant that the decision in Panchanatham Chettiar : [1975]99ITR579(SC) clearly applies to the facts of the present case. He is also not in a position to contend that if the law laid down in : [1975]99ITR579(SC) clearly applied to the facts of the present case. He is also not in a position to contend that if the law laid down in : [1975]99ITR579(SC) has not noticed the earlier decision in Kalawati Devi Harlalka : [1967]66ITR680(SC) and has also not made a reference to the Income-tax (Removal of Difficulties) Order, 1962, it has no binding force. We find this argument unacceptable. The Supreme Court having clearly decided that in a case like the present the Act of 1961 applies, we cannot be asked not to follow that decision on the plea that this particular argument which is now being raised by the counsel for the appellant does not appear to have been raised before the Supreme Court, because, it is well settled in Smt. Somawanti v. State of Punjab : [1963]2SCR774 :

'The binding effect of a decision does not depend upon whether a particular argument was considered therein or not, provided that the point with reference to which an argument was subsequently advanced was actually decided'.

6. We have, thereforee, to hold that the case of the appellant's is governed by the 1961 Act and they are not, thereforee, entitled to payment of any interest on the amount of refund paid to them.

7. We may, however, say that in our opinion, even the Income-tax (Removal of Difficulties) Order, 1962, does not assist the appellant. The reason is that all that the order says is that proceedings relating to a claim for the refund of a tax shall be regarded as a part of the proceedings for the assessment of that person. The only effect of this deeming clause is that for the purpose of s. 297(2) of the I.T. Act, 1961, proceedings for the assessment of that person will include a claim for refund. The result would be that if a claim for refund had been filed, just as (where return of income has been filed) before the commencement of 1961 Act, proceedings for the claim for refund also (should) be taken as if the 1961 Act had not been passed. That is to say, if an assessed had filed a claim for a refund prior to the commencement of the 1961 Act, his claim will be decided under the 1922 Act. It is only to the extent that the Removal of Difficulties Order makes a claim for refund to be regarded as a part of the proceedings for assessment that an assessed can take advantage of it. But the condition precedent for invoking the Order of 1962 necessarily is that the claim for refund should have been filed before the commencement of the 1961 Act. In the instant case it was only by the decision of the High Court of April 7, 1966, that the assessed became entitled to the refund. The appellant naturally filed his claim for refund after the commencement of the 1961 Act and cl.(a) of sub-s.(2) of s. 297 of the Act requires claim to be filed before the coming into force of the 1961 Act and was clearly inapplicable. Mr. Gobind Das, thereforee, cannot seek any assistance from the Income-tax (Removal of Difficulties) order, 1962.

8. We may note that though the learned judge had held that the appellant was entitled to interest, he had only allowed interest from the date of the (order of the) Tribunal, i.e., September 16, 1966, and not from the date of the payment of tax, i.e., March 27, 1967. Mr. Gobind Das, the learned counsel for the appellant, sought to challenge this finding. But in view of the fact that we have held that the claim for payment of interest on refund was not permissible at all, we do not feel that it is necessary for us to decide this aspect of the matter. As a result of the above discussion, the appeal is dismissed, The suit will also be dismissed though for reasons different from that for which it was dismissed by the learned single judge. The result is that both the appeal and the suit are dismissed. The parties will bear their own cost in the appeal.


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