1972 (7) TMI 24 - HC - Income Tax

Civil Suit - Interest On Refund - UOI did not press this issue. Otherwise also a suit cannot be dismissed merely on the ground that the plaintiffs have not given their addresses within the jurisdiction of the court as required by rule 3 of Chapter 3 of the Delhi High Court Rules. This omission can always be corrected - The learned counsel for the Union argued that CIT has not been made a party to the suit and, therefore, the suit is defective. I do not agree with this contention. It is not necessary to make the CIT a party to the suit. The suit is properly constituted as the Union of India has been made a party to the suit - For the reasons given above I hold that interest cannot be awarded to the plaintiffs by this court - In the result, the plaintiffs suit is dismissed

Issues Involved:
1. Address requirement under rule 3, Chapter III, of the Delhi High Court Rules.
2. Cause of action disclosure in the plaint.
3. Misjoinder of parties.
4. Jurisdiction of the court.
5. Entitlement to interest on refunded sums.
6. Applicability of the Income-tax Act, 1961, or the Indian Income-tax Act, 1922.
7. Entitlement to reasonable compensation and/or interest.
8. Relief.

Issue-wise Detailed Analysis:

1. Address Requirement:
The court noted that the omission of providing addresses within the jurisdiction of the court as required by rule 3, Chapter III, of the Delhi High Court Rules is not a ground for dismissal. This omission can always be corrected.

2. Cause of Action Disclosure:
The court found that the plaint did disclose a cause of action. The plaintiffs seemed aggrieved by the original order of tax imposition, which was subsequently modified on reference, entitling them to interest on the unlawfully realized amount. However, the court noted that the tax was lawfully imposed and not wrongfully realized, and thus, the plaintiffs' claim for interest lacked a proper basis.

3. Misjoinder of Parties:
The court held that the suit was not defective due to the non-joinder of the Commissioner of Income-tax. The Union of India being made a party was sufficient for the suit to be properly constituted.

4. Jurisdiction of the Court:
The court concluded that it lacked jurisdiction to try the suit. The plaintiffs argued that the civil court had the power to correct the Commissioner of Income-tax and determine the rate of interest. However, the court found that the jurisdiction to grant interest and determine the rate of interest was vested in the Commissioner, and no suit was maintainable in this respect. The court referred to Section 67 of the old Act and Section 293 of the present Act, which barred suits in civil courts to set aside or modify any assessment order made under the Act.

5. Entitlement to Interest:
The court held that the plaintiffs were not entitled to recover any amount by way of reasonable compensation and/or interest. The relevant statutory provisions regarding the grant of interest on refunds were contained in both the old and present Acts, and there was no room for equitable considerations.

6. Applicability of the Income-tax Act, 1961, or the Indian Income-tax Act, 1922:
The court determined that the claim of the plaintiffs was governed by the provisions of the Indian Income-tax Act of 1922. The court preferred to follow the precedent set in Raja Jagdambika Pratap Narain Singh v. Income-tax Officer, Faizabad, and held that the reference pending when the new Act came into force should be disposed of under the old Act.

7. Entitlement to Reasonable Compensation and/or Interest:
The court found that the plaintiffs were not entitled to any compensation or interest for the period in question. The tax was lawfully imposed, and any claim for interest could only be made from the date of the order of the Tribunal until the date of refund, not from the date of payment.

8. Relief:
The court dismissed the plaintiffs' suit with costs, concluding that the civil court had no jurisdiction to grant the interest claimed by the plaintiffs, as this power was vested in the Commissioner of Income-tax. The court emphasized that the appropriate remedy for the plaintiffs would have been to seek a writ under Article 226 of the Constitution to compel the income-tax authorities to perform their statutory duties.

Conclusion:
The plaintiffs' suit was dismissed with costs, as the court found that it lacked jurisdiction to grant the relief sought and that the plaintiffs were not entitled to interest on the refunded sums under the relevant statutory provisions.

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