VHA SREERAMAMURTHY Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS is an appeal against the order of Ramaswami, J., dismissing the petition filed by the appellant under Art. 226 of the Constitution of India for quashing (i) the order of the ITO, Vizianagaram, declaring the appellant a defaulter, and (ii) the sale notice dt. 24th March, 1954, issued in pursuance thereof by the 2nd respondent, the Special Deputy Tahsildar, Vijayawada, attaching and bringing to sale the properties mentioned in the said sale notice for realising the tax assessed on the appellant.

(2.) THE appellant carried on business in niger seeds, ground nut, ground nut kernel and jute on his own account and for commission at Vizianagaram. He had also income from other property. He was assessed to income tax for three years. For the year 1947 48, he was assessed on 14th March, 1952, to a tax of Rs. 1,41,039 11 0 payable on or before the 28th of March, 1952. On 22nd Jan., 1953, the ITO forwarded to the Collector a certificate specifying the amount of arrears due from the assessee. For the asst. year 1951 52, he was assessed on 29th Feb., 1952, to a tax of Rs. 40,230 7 0 payable on or before 25th March, 1952. The relevant certificate was issued on 22nd June, 1953. For the asst. year 1945 46, he was assessed on 7th Dec., 1950, to a tax of Rs. 20,113 13 0 payable on or before 31st Jan., 1951. The relevant certificate was issued on 9th May, 1951. The appellant preferred appeals in regard to the first two assessments but no appeal was filed in respect of the third. The total tax payable by him amounted to Rs. 1,70,083 15 0. Out of that amount, a sum of Rs. 1,900 was realised. In regard to the 1945 46 assessment, another sum of Rs. 8,000 was levied as penalty under S. 46(2) on two occasions. Several adjournments were granted to the appellant for the payment of the tax but he did not pay even the admitted amount and, therefore, the certificates were issued. Proceedings were taken under the Revenue Recovery Act and the sale of the properties was posted to 24th May, 1954, 25th May, 1954, and 26th May, 1954. The petitions filed for quashing the aforesaid proceedings and for stay were dismissed by Ramaswami, J. The assessee filed the above appeal on 26th May, 1954, and got an interim stay of the sale of the properties fixed for the 15th, 16th and 17th Sept., 1954.

(3.) LEARNED counsel for the appellant relies upon the provisions of S. 45 of the IT Act and contends that, under that section, a duty is cast upon the ITO to treat an assessee not as a defaulter under certain circumstances and that, in the present case, he did not discharge his duty, though there were compelling reasons for doing so. Alternatively, he would say that the ITO in not staying his hands before his rights have been finally decided by the Tribunal had acted capriciously and, therefore, has not exercised the discretion vested in him in law. The argument of the counsel for the CIT may be put thus. If an assessee does not pay the tax within the time prescribed, he shall be deemed to be in default under S. 45 of the Act. The discretion vested in the ITO is within narrow confines to be exercised only against the State and he cannot be compelled to exercise it in favour of the assessee as, by a statutory fiction, he is declared to be a defaulter. That apart, the words "may in his discretion" give to the ITO an absolute and uncontrolled discretion to treat the assessee as not being in default and that it cannot be questioned in a Court of law. The question falls to be decided on a construction of S. 45 of the IT Act. Sec. 45 runs thus :