Judgment

VENKATACHALIAH, J. - This appeal, by special leave, by the legal representatives of Raja Ram Kumar Bhargava, the unsuccessful plaintiff, is directed against the Judgment and decree, dated 14-2-1980 of the High Court of Delhi in First Appeal (O. S.) No. 17 of 1972* on its file, affirming the judgment and decree of dismissal dated, 28-7-1972 in Suit No. 372 of 1969 entered by the learned single Judge of the High Court.

* (1983) 141 ITR 836 (Delhi).

Plaintiff sued for recovery of interest on certain refunds of Income-tax and Excess Profit Tax claimed to be statutorily due and payable to him under Section 66 (7) of the 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 Rs. 1,17,358.87 sought by way of interest on the refund of income-tax; and Rs. 12,282. 11 claimed as representing interest on the refund of Excess Profit Tax. The assessments were made under the Income-tax Act (1922 Act) and the Excess Profit Tax Act 1940 respectively.

2. The necessary and material facts may briefly be stated :

Raja Ram Kumar Bhargava was assessed in the capacity of Kartha of a Hindu Undivided Family for Income and Excess Profit Taxes for the assessment year 1947-48. It would appear, pursuant to the order of assessment dated, 23-9-1951 made by the Income-tax Officer, as modified by the appellate orders dated 15-5-1952 and 27-3-1957 of the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal, respectively, a sum of Rs. 2,57,383.87 was recovered from him on 27-3-1957 under threat of coercive process. It was plaintiff-assessees case that he met this obligation by raising funds from the Central Bank of India Ltd. on the mortgage of his properties incurring heavy liability towards interest on the mortgage loans.

3. However, the quantum of both the taxes came to be substantially reduced pursuant to the consequential orders, dated, 16-9-1966 made under Section 66(5) of the 1922 Act and under Section 66(5) read with Section 21 Excess Profit Tax Act 1940 respectively giving effect to the orders of the High Court in certain references under Section 66(l) of Act. a sum of Rs. 2,01,146.62 and a sum of Rs. 19,126.16 became refundable by way of income-tax and Excess Profit Tax, respectively, on such re-computation of the income. The said sum of Rs. 2,01,146.62 was refunded on 17-12-1966; and the sum of Rs. 19,126.16 towards Excess Profit Tax refunded on 9-12-1967. The question that yet remained was whether plaintiff-assessee was entitled to the payment of interest on the said refunds under Section 66(7) of the 1922 Act.

4. In the meanwhile, on 1-4-1962, the Income-tax Act (1961 Act) had come into force. Section 297(l) of the 1961 Act repealed the 1922 Act. Under the 1922 Act and the Excess Profit Tax Act 1940, appellant was entitled to claim interest on the refund of taxes under circumstances contemplated by Section 66(7) of the 1922 Act. But Section 297(2)(i) provided that:

"(i) where, in respect of any assessment completed before the commencement of this Act, a refund falls due after such commencement or default is made after such commencement in the payment of any sum due under such completed assessment, the provision of this Act relating to interest payable by the Central Government on refunds and interest payable by the assessee for default shall apply;"

Accordingly, the claim of the plaintiff-assessee for payment of interests on the refunds came to be considered authorities under the provisions of 1961 Act and no claim for interest was held to survive.

5. Plaintiff-assessee thereafter, instituted the present suit against the Union of India for recovery of the interest under Section 66 (7) of the 1922 Act alleging that the assessment in the present case must be held to have been "completed before the commencement of the 1961 Act - according to the assessee the assessment was completed the moment the income-tax officer made the order dated, 28-3-1951 - and that, ther