SHYAM SUNDER KABRA Vs. NADKARNI S M

JUDGEMENT

(1.) THE petitioner is an individual and assessed to income tax. He was assessed by respondent No. 1 for the asst. yrs. 1946 47, 1947 48 and 1948 49 under S. 23(3) r/w S. 34(1)(a) of the Indian IT Act, 1922 (hereinafter referred to as "the Act of 1922"). In respect of these assessment years, certain additions were made by respondent No. 1. An addition of Rs. 1,00,000 was made in the asst. year 1947 48 as income of the petitioner from undisclosed sources. The petitioner carried appeals before the AAC and the cases were remanded to the ITO some time in the year 1949. While the appeals were pending before the AAC, certificate of recovery was issued on 3rd Sept., 1958, and accordingly recovery was made from certain debtors of the petitioner. After the receipt of the remand report, the AAC annulled the assessment order for the asst. year 1946 47 and set aside the assessment orders for the asst. yrs. 1947 48 and 1948 49 by a consolidated. order dt. 29th June, 1963. The ITO passed fresh assessment orders dt. 12th June, 1969, for the asst. yrs. 1947 48 and 1948 49 and the addition of Rs. 1,00,000 was deleted for the asst. year 1947 48, while the addition of Rs. 8,275 for the asst. year 1948 49 was retained. As a result of this order, an amount of Rs. 26,436, recovered by the IT authorities from the debtors of the petitioner, became due and refundable to the petitioner. Respondent No. 1 refunded the said amount of Rs. 26,436 to the petitioner some time in the year 1973 after adjustment of demand raised in the fresh assessment order, but the amount was refunded without interest.

(2.) THE petitioner submitted an application dt. 8th Jan., 1974, to respondent No. 2, the CIT, claiming interest on the refund under S. 244(1) of the IT Act, 1961 (hereinafter referred to as "the Act of 1961"). The petitioner relied upon Circular 30 D of 1962 issued by the Central Board of Revenue in support of the claim. Respondent No. 2 by order dt. 1st June, 1974, rejected the application without assigning any reasons. The petitioner thereupon filed Miscellaneous Petition No. 653 of 1974 in this Court under Art. 226 of the Constitution of India, and by judgment dt. 6th Aug., 1979, the order passed by respondent No. 2 was set aside and respondent No. 2 was directed to pass a fresh order giving reasons for the conclusion. Respondent No. 2 thereafter heard the petitioners and issued a fresh order dt. 3rd Oct., 1979, rejecting the application. It was held that the assessments were completed before the commencement of the Act of 1961, and in terms of s. 297(2)(a), (c) and (d)(i) of the Act of 1961 read with paragraph 4 of the Income tax (Removal of Difficulties) Order, 1962, all further proceedings are also required to be taken under the Act of 1922. Respondent No. 2 held that the orders passed by the ITO pursuant to the order of the AAC could not be said to be under the Act of 1961, but will have to be treated as one under the Act of 1922. The order of respondent No. 2 is under challenge.

(3.) MR . Joshi, learned counsel appearing on behalf of the Revenue, submitted that the provisions of s. 244(1) would come into play provided any order is passed in appeal or other proceedings under the provisions of the Act of 1961. The learned counsel urged that in the present case, the order was passed not under the provisions of the Act of 1961 but under the provisions of the Act of 1922. In support of the submission, reliance was placed on S. 297 which deals with "Repeals and savings". Sub s. (1) of S. 297 provides that the Act of 1922 stands repealed and Sub S. (2) deals with savings of the proceedings commenced under the Act of 1922. Sub s. (2)(a) of S. 297 reads as under :