Satish Chandra, J. - (1.) THE State of U. P. instituted a suit for the recovery of Rs. 3,02,982.62 as arrears of agricultural income-tax for the assessment year 1952-53 with pendente lite and future interest at twelve per cent. per annum. THE learned civil judge, Faizabad, decreed the suit for recovery of Rs. 1,89,364.62 with interest at 4 1/2 per cent. per annum. Aggrieved Raja Jagdambika Pratap Narain Singh, the defendant, has come up in appeal.
(2.) THE plaint case was that the defendant, Raja, had agricultural income liable to tax under the Agricultural Income-tax Act, 1948, for the assessment year 1952-53. THE Deputy Commissioner, Faizabad, on 27th November, 1952, passed an order assessing the defendant's income to a tax of Rs. 3,40,090. THE defendant preferred an appeal (No. 65 of 1953) before the Agricultural Income-tax Commissioner. THE appeal was decided on 25th November, 1953. THE quantum of tax was reduced to Rs. 1,89,364.62. THE assessee did not prefer a revision and the appellate order became final. During the pendency of the appeal the defendant had obtained an order of stay from the appellate court staying the realisation of three-fourth of the assessed tax. THE defendant filed a writ petition (No. 77 of 1953) in the High Court and on 21st January, 1953, obtained a stay order in regard to the recovery of the tax. THE writ petition was dismissed on 19th April, 1954, as not pressed. THE plaintiff. State, was, however, informed of the dismissal of the writ petition by the standing counsel on 18th March, 1958. It was alleged that the defendant had not paid the tax in spite of the demand and that in addition to the arrears of tax of Rs. 1,89,364-62 the plaintiff was further entitled to Rs. 1,13,618 as interest by way of damages at twelve per cent. per annum with effect from 25th November, 1953, till the date of the suit. THE cause of action was alleged to have arisen on 25th November, 1953 (the date when the appeal was decided) and on 19th April, 1954, when the writ petition was dismissed. In defence it was pleaded that the appellate order, while reducing the original amount of tax to Rs. 1,89,364.62, ordered its realisation in four equal instalments to be fixed in a fresh notice of demand. In spite of this well-known decision the plaintiff took no steps to realise the tax. On 24th March, 1958, the defendant received a notice from the plaintiff calling upon him to deposit the entire amount in a lump sum by 31st March, 1958. The defendant felt that the demand made in this notice was barred by time. The defendant thereupon filed a writ petition (No. 1072 of 1958) in the High Court on 1st April, 1958. On 26th September, 1961, the High Court allowed the writ petition and quashed the notice of demand dated 29th March, 1958. The plaintiff has not served on the defendant any other notice of demand on the basis of which the plaintiff can legally realise the disputed tax. In the absence of a valid notice of demand the defendant was under no liability to pay the disputed tax. It was also pleaded that the suit was barred by Order 7, Rule 11, and Section 11, Civil Procedure Code. The learned civil judge repelled the various pleas taken in defence. He held that the plaintiff was entitled to interest at the rate of 41/2 per cent. per annum only from 25th November, 1953, till the date of realisation. The suit was consequently decreed for the principal amount determined in the appellate order with interest at 41/2 per cent. per annum.
(3.) THE appeal was valued at Rs. 1,89,364.62 which was the principal amount of the arrears of tax. This valuation did not include the amount which was granted by way of interest at 41/2 per cent. During the course of the hearing the appellant made an application for the amendment of the valuation of the appeal. Finding that the prayer in the appeal was that the suit be dismissed and that there was a specific ground taken in the memorandum that the award of interest was illegal, we permitted the appellant to amend the valuation and pay the requisite court tee. THErealter, the plea that the award of interest was illegal became a live issue in this appeal. One of the pleas taken in the written statement was that the plaint was liable to be rejected under Order 7, Rule 11, Civil Procedure Code, On 22nd February, 1964, during the course of arguments before the trial court, the defendant made an application for amendment of the written statement (87-A). In this he gave the details of the facts upon which the plea was supposed to rest. This application was rejected by that trial court on the ground that it was highly belated. The appellant reiterated his application for amendment during the hearing of the appeal. After hearing the parties, we by an order dated December 6, 1971, allowed the appellant to amend the written statement in the manner set out in his application No. 87-A. We also allowed the plaintiff, State, to file a replication, if any.;