JUDGMENT
Susanta Chatterji, J.
1. The writ petitioner, Indian Aluminium Company Limited, has prayed for a writ of mandamus commanding the respondent to issue the refund vouchers for interest under Section 244 of the Income-tax Act to the petitioner for the assessment years 1957-58, 1958-59, 1959-60, 1960-61 and 1961-62 and to pay interest thereon at 18 per cent. per annum from the respective dates when the said amount became refundable. It is stated that, under Section 240 of the Income tax
Act, 1961, where, as a result of any order passed in appeal or other proceedings under the Act, the refund of any amount becomes due, the Assessing Officer shall refund the amount without the assessee having to make any claim in their behalf. Under Section 244(1) of the Act, where a refund is due in pursuance of an order referred to in Section 240 of the Act and the Assessing Officer does not grant the refund within a period of 3 (three) months from the end of the month in which such order is passed, the Central Government shall pay to the claimant simple interest at 12 per cent. per annum on the amount of refund due from the date immediately following the expiry of the period of (3) three months aforesaid to the date on which the refund is granted. The petitioner has made a chart in paragraph 16 of the writ petition for the refund for the assessment years and claimed the amount of interest at 12 per cent. totalling Rs. 26,76,146. Stating all these facts in detail, the petitioner has come to this court on the ground that, in view of the admitted facts, the Assessing Officer, in his 5 (five) orders, 4 of which dated March 20, 1981, and the last one dated March 23, 1981, should have issued the refund vouchers along with interest under Section 240 of the Act read with Section 244 thereof and the respondents have acted mala fide, arbitrarily and/ or capriciously by not issuing the refund vouchers.
2. Dr. Debi Pal, learned counsel appearing for the petitioner, has argued that it is no longer open to the respondents to assert that since the assessments for the various years were completed before the commencement of the Income-tax Act, 1961, interest under Section 244 of the Act cannot be claimed by the petitioner. This stand of the respondents is not at all sustainable on the express provisions of Section 297(2)(i) of the Income-tax Act, 1961. The said section provides, inter alia, that, notwithstanding the repeal of the Indian Income-tax Act, 1922, where, in respect of any assessment completed before the commencement of the Income-tax Act, 1961, any 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 the Income-tax Act, 1901, relating to interest payable by the Central Government on refunds and interest payable by the assessee for default shall apply. The attention of this court has been drawn to CIT v. Sassoon J. David and Co. Ltd. [1990] 181 ITR 363 (Bom). There is also a reference to an unreported judgment in Case No. FMAT 1819 of 1985. The judgment has been delivered by the Division Bench consisting of their Lordships the Hon’ble Mr. Justice G.N. Ray (as his Lordship then was) and the Hon’ble Mr. Justice S.K. Hazari on July 17, 1990. Dr. Pal has tried to distinguish the case reported
in New Woodlands v. CIT . He has drawn the attention of the court to the decision reported in Trustees of H.E.H. the Nizam’s Miscellaneous Trust v. CWT , where the Division Bench of the Andhra Pradesh High Court has distinguished the decision of the Kerala High Court by observing that the said case is one of making a fresh assessment and tax liability pursuant to the remand order. There the assessment orders were set aside and fresh assessment orders had to be made. It was not a case of allowing certain deductions. The attention of the court has also been drawn to the case reported in Purshottam Dayal Varshney v. CIT and another judgment reported in Grantha Mandir v. CIT [1988] 172 ITR 287 (Orissa).
3. Mr. A. C. Moitra, learned counsel appearing for the Revenue authorities, has submitted that, admittedly, the assessments have been completed under the Indian Income-tax Act, 1922. The claim of the assessee before the Income tax Appellate Tribunal and the High Court was under the Act of 1922 relating to claim under Section 15C and not under the provisions of Section 80J of the Income-tax Act, 1961. It is contended that no rate of interest is provided for in the old Act relating to the assessment years 1957-58 to 1961-62. The provisions of law regarding Section 297(2)(d)(i) are only procedural in nature and this should be considered by the Legislature in the proper perspective. Thus, charging of interest at the specified rate is of substantive nature and the only procedural portion as envisaged under Section 244 of the Income tax Act, 1961, cannot solve the present problem. It is strongly argued that it is well-settled that, in a fiscal enactment, the Legislature has a larger discretion in the matter of classification. So long as there is no departure from the rule and the persons included in a class are not singled out for special treatment. In fact, a reasonable classification has been made between the assessments prior to the introduction of the 1961 Act and those after the introduction of the 1961 Act. According to Mr. Moitra, the question of interest under Section 244 of the Act does not arise until a fresh computation of tax is made by a fresh assessment.
4. Considering the submissions of both sides and upon a perusal of the materials on record, this court finds that, admittedly, a case of refund has been made out in view of the relevant assessment years. Those assessment years were covered by the Indian Income-tax Act, 1922. A short point has arisen as to whether the refund has to be made even after the promulgation of the Act of 1961. Several cases have been referred to
by both sides. From the ratio of the decision cited from the Bar, it is clear that the claim of refund of the petitioner cannot be defeated after promulgation of the Act of 1961. Procedural matters are nothing but handmaids of justice. The substantive claim cannot be defeated by reason of technical defects and/or procedural irregularities. Such an argument for the Revenue authorities is not appreciated by this court. Since the refund has to be made by the Revenue authorities, the same has got to be issued in accordance with law and they will have to pay 12 per cent. interest in the manner as observed by the subsequent Act.
5. For the foregoing reasons, this court does not find any bar and/or impediment to allowing the writ petition and to issue a writ commanding the respondents to take effective steps to refund the dues with interest at 12 per cent. within six months from the date of communication of the order. No order as to costs.