RAJA RAM KUMAR BHARGAVA (DEAD) BY LRS. versus UNION OF INDIA

Citation: [1988] 2 S.C.R. 352 · Decided: 11-12-1987 · Supreme Court of India · Bench: S. NATARAJAN · Disposal: Case Partly allowed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

1.-
, 
A 
RAJA RAM KUMAR BHARGAVA (DEAD) BY LRS. 
v. 
UNION OF INDIA 
> 
A 
DECEMBER 11, 1987 
B 
[S. NATARAJAN AND M.N. VENKATACHALIAH, JJ.] 
Income Tax Act, 1922, Sections 66(5), 66(7) 
Income Tax Act, 1961, Sections 297(2)(a), 297(2)(i) 
Excess Profit Tax Act, 1940, Section 21. 
c 
Removal of Difficulties Order, 1962. 
Assessee-Assessment made and recovery effected under the 1922 · 
Act-Tax reduced on reference to High Court subsequent to commence-
,_ 
j 
ment of 1961 Act-Claim to interest on refund of income and excess 
D profit taxes-'Completed assessment'-Meaning of-Section 297(2)(i) 
and not 297(2)(a) held applicable-Claim to interest on refund of 
income tax wholly insupportable-Claim to interest on excess profit tax 
·~· 
upheld-Suit for-Whether maintainable. 
Civil Procedure Code, 1908: Section 9-Civil Court-Exclusion 1
of jurisdiction-When implied. 
E 
Raja Ram Kumar Bhargava-Appellant was assessed in the 
capacity of Kartha of a Hindu Undivided Family for Income and Excess 
Profit Taxes for the assessment year 1947-48. Pursuant to assessment · 
. order dated September 23, 1951 as modified by the orders of the Appel-
late Assistant Commissioner and the Income-Tax Appellate Tribunal 
F 
dated May 15, I952 and March 3, 1957 respectively, a snm of 
Rs.2,57 ,383-87 was recovered from the assessee on March 27, 1957 
under threat of coercive process. Payment was made by the assessee by 
borrowing money from a Bank on heavy interest by mortgage ·<>f his 
properties. The assessee's Reference under Section 66 of the 1922 Act 
and Section 21 of Excess Profit Tax Act 1940 was decided in his favour, 
and the quantum of both the taxes came to be substantially reduced. A 
' ' 
G 
sum of Rs.2,01,146. 62 as income tax, and Rs.19,126.16 as Excess Pro· 
~
fit Tax became refundable. 
In the meanwhile, the 1922 Act was repealed by Section 297(1) of 
the 1961 Act, and the assessee's claim of interest from the date of 
payment of tax in 1957 till the date of reference, was rejected by the 
H Department in view of Section 297(2)(i) of the I.T. Act, 1961. 
352 
~ 
RAJA RAM KUMAR v. U.0.1. 
353 
The assessee filed a suit in the High Court for recovery of interest 
A 
• 
on the refunds of Income Tax and Excess Profit Tax claiming that the 
assessment for the year 1947-48 was completed the moment the assess-
ment order dated March 28, 1951, was passed, and that the claim for 
interest squarely fell within Section 66(7) of the 1922 Act, read with, 
and saved by Section 297(2)(a) of the 196 l Act. 
c 
B 
~-
The Revenue resisted the suit contending. that the suit was not 
maintainable; that it was statute barred, and being governed by Section 
297(2)(i) and not Section 297(2)(a) of the 1961 Act no interest was 
payable. 
A Single Judge dismissed the suit, holding that the remedy of a c 
f-
civil suit was misconceived, for the Civil Court has no jurisdiction to 
grant interest in place of the discretion vested in the Commissioner 
.. 
under Section 66(7) of the 1922 Act, and that on a reading of the 
provisions of section 297 with the Removal of Difficulties Order 1962 it 
had to be held that the claim of the plaintiffs was governed by the 
provisions of the 1922 Act. 
D 
In Appeal, the Division Bench reversed the findings of the Single 
Judge and held that the provisions of the 1922 Act did not govern the 
claim, but sustained the decree of dismissal. 
The legal representatives of the Assessee appealed by Special 
E 
Leave to this Court. 
t 
It was contended on behalf of the appellant-plaintiff that: (i) for 
purposes of Section 297(2)(i) the assessment most be held to have been 
completed not when the IfO made the initial order of assessment but 
only when the assessment assumes finality in appeal; (ii) the scheme of 
F 
the 1961 Act and the provisions of the Removal of Difficulties Order, 
1962 suggest that the expression "assessment completed before the 
commencement of this Act" in Section 297(2)(i) should not be construed 
as to render the provisions of the 1922 Act relating to the payment of 
interest on refunds nugatory and deprive an assessee of a right vesting 
~· 
in him nuder the 1922 Act, and (iii) the claim for interest based on 
G 
Section 21 of the Excess Profit Tax Act, 1940 pre-eminently survives, as 
Section 21 incorporates and assimilates into itself as a part of its own 
legislative-scheme, Section 66 of the 1922 Act and the provisions so built 
into Section 21 by the legislative expedient of incorporation and not 

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