YUSUF JAN SAHIB Vs. ADDITIONAL INCOME TAX OFFICER

JUDGEMENT

(1.) This is a petition under Art.226 of the Constitution to quash Ext. P2 dated March 2, 1959, by which the Income Tax Officer refused to treat the petitioner, an assessee under the Indian Income Tax Act, 1922, as not being in default as long as the appeal preferred by him against the assessment is undisposed of, by virtue of S.45 of the Act. The petitioner submitted a return of income for about ten thousand rupees, but the Income Tax Officer assessed him, according to his best judgment, on seventy-nine thousand odd rupees and imposed tax to the extent of over thirty-four thousand rupees. The petitioner deposited the admitted income tax of two thousand rupees, and preferred an appeal against the assessment. A sum of nearly six thousand rupees due to the petitioner by way of refund of income tax for previous years was adjusted by the Income Tax Officer, and the balance of tax payable by the petitioner was over twenty-four thousand rupees. The petitioner made an application under S.45 of the Act, for treating him as not in default pending the disposal of his appeal, on the ground, that he had discontinued the major items of his business that he was subjected to financial difficulties and that he has a fair chance of success in the appeal preferred by him, expressing his willingness, for a sum of over seven thousand rupees due to him under some forest contract from Government, to be set off against his liability. By Ext. P2 the Income Tax Officer has, in effect, rejected his application but in these terms:

(2.) The decided cases are clear, that the Income Tax Officer must exercise the discretion vested in him under S.45 of the Act, and that in a proper manner, failing which, the jurisdiction under Art.226 can be invoked. The latest case on the point was decided under S.31 (3) of the Wealth Tax Act, 1957, which is in pari materia with the relevant part of S.45 of the Act. D.N. Sinha. J., in his judgment in Aluminium Corporation of India Ltd. v. C. Balakrishnan, 37 ITR. 267, has enumerated several points which the authority under S.31(3) of the Wealth Tax Act may usefully consider in exercising his discretion which, in my opinion, also apply to the exercise of the discretion under S.45 of the Act. It is unnecessary to recapitulate these several points in this judgment. The learned Judge has also answered one of the contentions pressed before me by counsel for the respondent, in these terms:

(3.) Applying these principles to the present case, I am not satisfied, that the Income Tax Officer exercised any discretion whatever, in rejecting the application under S.45 of the Act. I therefore quash the order Ext. P2, and direct the Income Tax Officer to dispose of the application in accordance with law. It is seen from Ext. P1, the application of the petitioner, that his appeal had been heard on February 20, 1959, but it still remains undisposed of. I make no order as to costs.