V.G.OAK C.J - (1.) THE question raised in this petition under article 226 of the Constitution is whether the Commissioner of Income-tax, U.P., was competent to cancel a pervious order passed by him allowing interest on excess income-tax paid by an assessee. Raja Jagdambika Pratap Narain Singh is the assessee. THE assessment year was 1947-48. At the time of the assessment for that year the Income=tax Officer took the view that 74 currency notes of the denomination of Rs. 1000 each, represented the assessees income during the previous year. When the matter went before the Appellate Tribunal, the Tribunal agrees to reduce the amount of add-back from Rs. 74,000 to Rs. 34,000. At the instance of the assessee the following question of law was referred to this court : Whether there was material for assessing the sun of Rs. 34,000 represented by 34 notes of Rs. 1,000 each and cashed by the assessee under the High Denomination Notes (Demonetization) Ordinance, 1947, as income chargeable to income-tax ?
(2.) THIS question was answered by this court on August 21, 1962, in the negative, and against the department. In view of the High Courts decision, a sum of Rs. 26,021 was refunded to the assessee. On April 8, 1965, the Commissioner of Income-tax, U.P., passed an order sanctioning payment of Rs. 10,828.30 on account of interest payable under section 66(7) of the Indian Income-tax Act, 1922. After some years another Commissioner of Income-tax, U.P., took the view that the order dated April 8, 1965, passed by his predecessor-in-office was incorrect. A notice under section 154 of the Income-tax Act, 1961, was issued to the assessee. The assessee submitted that the previous order dated April 8, 1965, was sound. The objection of the assessee was overruled. On March 24, 1969, the Commissioner of Income-tax, U.P., passed an order cancelling the previous order, dated April 8, 1965. The Income-tax Officer took action on the same lines. He decided that the amount of Rs. 10,828.30 had been wrongly allowed in favour of the assessee. A separate order was passed directing the assessee to refund this amount of Rs. 10,828.30. These orders passed by the Commissioner of Income-tax, U.P., and the Income-tax Officer, Faizabad, have been challenged by Raja Jagdambika Pratap Narain Singh in this writ petition. Annexure B to the writ petition is a copy of the order passed by Sri Nadkarni, Commissioner of Income-tax, U.P., on April 8, 1965. It purports to have been passed under section 66 (7) of the Indian Income-tax Act, 1922. According to the petitioner, the present case is governed by the Indian Income-tax Act, 1922. According to the department, the present case of refund is governed by the Income-tax Act, 1961. It will be convenient to refer to the two Acts as the old Act and the new Act, respectively. An important question for consideration in this case is whether the present case is governed by the old Act or by the new Act. The petitioner points out that the matter relates to the assessment year 1947-48. The new Act came into force on April 1, 1962. The various orders passed by the Income-tax Officer, the Appellate Assistant Commissioner and the Appellate Tribunal in the assessment proceeding were passed long before April 1, 1962. On the other hand, it has been pointed out for the opposite parties that the order of the High Court disposing of the reference is dated August 21, 1962, after April 1, 1962.
(3.) SECTION 297 of the new Act deals with repeals and savings. Sub-section (2) of section 297 of the new Act states : Notwithstanding the repeal of the Indian Income-tax Act, 1922... (a) where a return of income has been filed before the commencement of this Act by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Act had not been passed;.... (c) any proceeding pending on the commencement of this Act before any income-tax authority, the Appellate Tribunal or any court, by way of appeal, reference or revision, shall be continued and disposed of as if this Act had not been passed;.... (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 provisions of this Act relating to interest payable by the Central Government on refunds and interest payable by the assessee for default shall apply.... In the present case the High Court disposed of the reference on August 21, 1962. It was Income-tax Reference No. 47 of 1960. Since the reference was pending before the High Court from before April 1, 1962, clause (c) of sub-section (2) of section 297 of the new Act is attracted. The reference should be deemed to have been disposed of under the old Act.;