Pathak, J. - (1.) THE petitioner, Sir Shadi Lal Sugar and General Mills Ltd., manufactures and sells sugar, confectionery and other sugar products.
(2.) DURING the financial year 1960-61, the petitioner paid a total sum of Rs. 5,47,002 in four instalments as advance tax under Section 18A, Indian Income-tax Act, 1922. Subsequently, the Income-tax Officer," Special Investigation Circle A, Meerut, completed the assessment for the assessment year 1961-62 and made an assessment order dated March 30, 1966, under Section 23(3) of the Act. The total income was assessed at Rs. 15,37,580. By an order dated February 12, 1968, the figure was revised to Rs. 15,39,048. The petitioner appealed against the assessment. On February 27, 1969, the Appellate Assistant Commissioner of Income-tax, Range III, Meerut, reduced the figure of assessable income considerably and directed the Income-tax Officer to give effect to the reduction and modify the assessment accordingly. On July 15, 1969, the Income-tax Officer, Central Circle IV, Meerut, who was now seized of the case, made an order purporting to give effect to the appellate order. The assessable income was now shown at Rs. 8,88,154. A revised assessment form was drawn up, showing that a sum of Rs. 2,92,902 was refundable to the petitioner after taking into account the advance tax deposited by the petitioner during the financial year 1960-61, The petitioner applied to the Income-tax Officer on December 2, 1969, pointing out that consequent upon effect being given by the Income-tax Officer to the 6rder of the Appellate Assistant Commissioner it appeared that advance tax had been paid in excess by Rs. 1,52,819, and claimed that he was entitled to interest on this excess payment. The petitioner informed him that his application should be treated as one made under Section 154 of the Income-tax Act, 1961, for rectification of the order dated July 15, 1969. On April 27, 1970, the Income-tax Officer stated in reply: "(1) The application could not be considered as made under Section 154 of the Act of 1961, because the assessment for the year 1961-62 was completed under the Act of 1922. (2) There was no mistake apparent from the record. Whether interest under Section 18A(5) was payable could be determined at the time of regular assessment only and on that date no interest could be said to be payable." The petitioner now applies for relief under Article 226 of the Constitution. The relevant provisions of Section 18A(5) read- "The Central Government shall pay simple interest- (i) at 2 per cent. per annum on any amount payable in accordance with the provisions of this section before the 1st day of April, 1955, and paid accordingly; (ii) at 4 per cent. per annum on any amount payable in accordance with the provisions of this section after the 1st day of April, 1955, and paid accordingly; from the date of payment to the date of the provisional assessment made under Section 23B or if no such assessment has been made, to the date of the assessment (hereinafter called the 'regular assessment') made under Section 23 of the income, profits and gains of the previous year for an assessment for the year next following the year in which the amount was payable : Provided that on any portion of such amount which is refunded under the foregoing provisions of this section interest shall be payable only up to the date on which the refund was made : Provided further that for any period beginning with the 1st day of April, 1952, interest shall be payable only on the amount by which the aggregate sum of any instalments paid during any financial year in which they are payable under this section exceeds the amount of the tax determined on regular assessment calculated as hereunder- (i) in respect of such instalments paid in any financial year before the said date, from the said date to the date of the regular assessment; (ii) in respect of such instalments paid after the said date, from the beginning of the financial year next following to the date of the regular assessment."
(3.) TO truly comprehend the scope of this provision, its legislative history may be referred to. Section 18A(5) as it originally stood provided : "The Central Government shall pay on any amount paid under this section simple interest at 2 per cent. per annum from the date of payment to the date of the assessment (hereinafter called the regular assessment) made under Section 23. . . .." Under that provision an assessee was entitled to interest at 2 per cent. per annum on the entire amount of advance tax paid by him. After some minor changes, the second proviso set out above was added by the Indian Income-tax (Amendment) Act, 1953, with effect from April 1, 1952. The effect of inserting this proviso was that interest for the period beginning April I, 1952, would be payable only on the excess amount of the advance tax over the tax determined on regular assessment. So far as the period before April 1, 1952, was concerned, interest continued to be payable on the whole amount of the advance tax paid. Then, by the Finance Act, 1955, the substantive provision of Section 18A(5) was substituted by the language existing at present, so that the rate of interest at 2 per cent. was confined to payments made before April 1, 1955, and as regards payments made after that date it was raised to 4 per cent. per annum.;