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TMI Blog1987 (12) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax and excess profits tax claimed to be statutorily due and payable to him under section 66(7) of the Indian Income-tax Act, 1922 (hereinafter referred to as the 1922 Act ), on the refunds of the taxes. The suit claim comprised of a sum of ₹ 1,17,358.87 sought by way of interest on the refund of income-tax and ₹ 12,282.11 claimed as representing interest on the refund of excess profits tax. The assessments were made under the Indian Income-tax Act (1922 Act) and the Excess Profits Tax Act, 1940, respectively. The necessary and material facts may briefly be stated: Raja Ram Kumar Bhargava was assessed in the capacity of karta of a Hindu undivided family for income-tax and excess profits tax for the assessment year 1947-48. It would appear pursuant to the order of assessment dated September 23, 1951, made by the Income-tax Officer, as modified by the appellate orders dated May 15, 1952, and March 27, 1957, of the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal, respectively, that a sum of ₹ 2,57,383.87 was recovered from him on March 27, 1957, under threat of coercive process. It was the plaintiff-assessee's case that he met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt the Income-tax Officer made the order dated March 28, 1951-and that, therefore, the claim for interest squarely fell within section 66(7) of the 1922 Act read with, and saved by, section 297(2)(i) of the 1961 Act. The defendant resisted the suit contending, first, that the suit was not maintainable, secondly, that it was statute-barred, and thirdly, that at all events, the view taken by the authorities that the matter was governed by section 297(2)(i) of the 1961 Act was correct. The High Court framed the necessary and relevant issues stemming from the pleadings. Having regard to the questions agitated in this appeal, the following two issues-issues Nos. 4 and 6-require to be noticed (at p. 317 of 92 ITR) : 4. Whether this court has jurisdiction to try this suit ? 6. Whether the claim of the plaintiffs in the suit is governed by the provisions of the Income-tax Act, 1961, or the provisions of the Indian Income-tax Act, 1922 ? The learned single judge of the High Court who tried the suit recorded findings against the plaintiff-assessee on issue No. 4 and in his favour on issue No. 6. On issue No. 6, the learned judge held (p. 321 of 92 ITR): In my judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the Income-tax Officer made the initial order of assessment, but only when the assessment assumes finality in appeal. Implicit in the idea of a completed assessment, says learned counsel, is the element of its finality and the requirements and concomitants of the idea of a completed assessment would accordingly be satisfied only when all proceedings including those in appeal come to an end and the assessment thus assumes finality under the Act. Shri Nariman relied upon some authorities including the one in CIT v. Khemchand Ramdas [1938] 6 ITR 414 (PC) to explain what the concept of a completed assessment or a final assessment connotes in law. Learned counsel referred to the scheme of the 1961 Act in this behalf and to the provisions of the Removal of Difficulties Order, 1962, to suggest that the expression assessment completed before the commencement of this Act in section 297(2)(i) should not be so construed as to render the provisions in the 1922 Act relating to the payment of interest on refunds nugatory and deprive an assessee of a right vesting in him under the 1922 Act. Learned counsel urged that if the expression assessment completed in section 297(2)(i) is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this claim rested on an altogether different and surer legal footing. Learned counsel said that section 21 of the Excess Profits Tax Act, 1940, incorporated and assimilated into itself as a part of its own legislative scheme, inter alia, section 66 of the 1922 Act and the provisions so built into section 21 by the legislative expedient of incorporation and not merely of reference-continue to be operative notwithstanding the repeal of the 1922 Act and that, therefore, the claim for interest based on section 21 of the Excess Profits Tax Act, 1940, pre-eminently survives. Learned counsel submitted that the claim for interest has been negatived by the High Court without examining the scheme of the Excess Profits Tax Act, 1940, and merely as a corollary of the untenability of the claim of interest on refund of income-tax. The distinctive nature of this part of the suit claim pertaining to the interest on excess profits tax has not been specifically dealt with by the High Court. Section 66(7) of the 1922 Act which, by virtue of section 21 of the Excess Profits Tax Act, 1940, is attracted to cases of refunds of excess profits taxes, stipulates that notwithstanding that a reference has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 78. It was suggested for the Revenue that a civil suit is clearly barred and that the remedy of an assessee who has been denied interest by the Commissioner under section 66(7) of the 1922 Act would be a recourse to proceedings under article 226 of the Constitution, where if the assessee succeeds, the remedy is limited to the issue of a direction to the repository of the statutory power to consider and dispose of the matter afresh in accordance with law and that, even then, the court, could not by itself, grant the relief in terms of its own quantification of the interest. These contentions, of course, are eminently arguable. The Division Bench of the High Court did not keep the qualitative distinction between the two refunds distinguished ; but treated the second claim stemming from the excess profits taxes not with reference to the particularities characterising it but purely on its assumed similarity with that of the first. This is an old litigation which has vexed the parties for over two decades. It appears to us somewhat unjust to expose the parties to a fresh round of litigation. Even if the contention of the respondent as to the non-maintainability of a civil suit is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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