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Judgment
M.S. Menon, J.—The petitioner is a member of Messrs. Maveli Lazar Ouseph & Sons, Irinjalakuda, an association of persons which was directed to pay by way of income tax a sum of Rs. 17,769-4-0 on or before 30-6-1955 in respect of the assessment year 1953-54 (accounting period: 1124 M.E.). The assessment was by the 1st respondent, the First Additional income tax Officer, First Circle, Trichur, and the assessment order is Ext. P. dated 23-5-1955. The petitioner appealed against the assessment for and on behalf of the said association of persons to the Appellate Assistant Commissioner of income tax, Trivandrum. Ext. P. 1 is the memorandum of appeal and Ext. P. 2, the order of the Appellate Assistant Commissioner dated 23-10-1956. The concluding portion of the order reads as follows:
In the absence of definite findings on the various contentions raised by the appellants, I have no alternative but to set aside the assessment and direct the income tax Officer to re-do the assessment after making necessary investigation on the points mentioned above.
Ext. P. 3 dated 22-10-1955, Ext. P. 4 dated 7-1-1956, Ext. P. 5 dated 13-2-1956 and Ext.P. 6 dated 14-9-1956 are four orders passed by the first respondent u/s 46 (1) of the Indian income tax Act, 1922, which provides that:
When an assessee is in default in making a payment of income tax, the income tax Officer may in his discretion direct that, in addition to the amount of the arrears, a sum not exceeding that amount shall be recovered from the assessee by way of penalty.
The petitioner challenged the correctness of these orders before the Commissioner of income tax, Bangalore (2nd respondent), u/s 33 A of the Indian income tax Act, 1922. The petitions filed by him are Exts. P. 7, P. 8, P. 9 and P. 10 and the order of the Commissioner on those petitions is Ext. P. 11 dated 8-1-1957.
Ext. P. 11 reads as follows:
These four Revision Petitions are against the penalties of Rs. 788, 750, 1,500 and 100, levied respectively on dates 22-10-1955, 7-1-1956, 11-2-1956 and 14-9-1956 by first Additional income tax Officer, Trichur for default in payment of the taxes due for assessment year 1953-54.
As per assessment order dated 23-5-1955, the tax demand of Rs. 17,769-4-0 for the year was payable on or before 30-6-''55. The assessee paid only Rs. 1,000/- on 30-6-1955 and he requested for permission to pay the balance in easy installments. The income tax Officer intimated his inability to grant the request and asked the assessee to pay the balance before 30-7-1955. But no payment was made accordingly. Hence income tax Officer imposed a penalty of Rs. 788/- on 22-10-1955. Later, concessions for clearing off the arrears in installments were granted by the Inspecting Assistant Commissioner of income tax, Ernakulam. But the installments were not kept up. Hence penalties Rs. 750/-, 1,500/- and 100 had to be imposed by the income tax Officer on dates 7-1-1956, 11-2-1956 and 14-9-1956 for assessee''s default in respect of the part or whole of the demands outstanding on those dates. There were clear defaults on all the occasions on which the penalties were levied.
However, it is seen that a major portion of the assessment was in dispute and on assessee''s appeal, the Appellate Assistant Commissioner of income tax has set aside the assessment and remanded the case for fresh disposal after considering the explanations filed by the assessee regarding the cash credits and after making necessary investigations. Considering the extenuating circumstances of the case, I shall give the assessee some relief. The penalties of Rs. 750/- and Rs. 1,500/- levied on 7-1-1956 and 11-2-1956 are reduced to Rs. 400/- and 750/- respectively. The other two penalties are confirmed.
Revision Petitions 257/56-57 and 280/56-57 are rejected and Revision Petitions 278/56/57 and 279/56-57 are allowed.
omitting the proviso and the explanation thereto)
Section 45 of the Indian income tax Act, 1922, is in the following terms:
Any amount specified as payable in a notice of demand under sub-section (3) of section 23 A or u/s 29 or an order u/s 31 or section 33, shall be paid within the time, at the place and to the person mentioned in the notice or order, or if a time is not so mentioned, then on or before the first day of the second month following the date of the service of the notice or order, and any assessee failing so to pay shall be deemed to be in default, provided that, when an assessee has presented an appeal u/s 30, the income tax Officer may in his discretion treat the assessee as not being in default as long as such appeal is undisposed of.
Learned counsel for the petitioner drew my attention to The Lord Krishna Sugar Mills Ltd., Saharanpur Vs. Income Tax Officer, Ambala and Another, and (1956) 29 ITR 591. All these and other relevant decisions have been dealt with by the Andhra High Court in VETCHA SREERAMAMURTHY Vs. THE Income Tax OFFICER VIZIANAGARAM, AND ANOTHER., and I consider it unnecessary to go beyond that decision except to point out that LADHURAM TAPARIA Vs. B. K. BAGCHI., has apparently been reversed on appeal. (See the First Supplement to Sampath Iyengar''s Indian income tax Act, Fourth Edition, p. 227). The decision of the Andhra High Court can be summed up, in the words of the Head Note, as follows:
The discretionary power conferred by section 45 of the income tax Act on the income tax Officer is coupled with a duty to exercise his discretion when the facts calling for its exercise exist. The fact that the exercise of the power is left to the discretion of the Officer does not exonerate him from discharging his duty.
If the income tax Officer refuses to exercise any discretion at all, or his discretion is exercised arbitrarily, capriciously or unreasonably or by taking into consideration extraneous and irrelevant considerations, the Court can compel the officer to discharge his duty, that is, to exercise his discretion honestly and objectively.
The sequence of events subsequent to the order of assessment, Ext. P. (23-5-1955) and prior to Ext.P6 (14-9-1956), the last of the four orders u/s 46 (1) can be sketched as follows:
27�6�1955
The petitioner paid Rs. 1000/-and prayed: �I may be allowed to pay the balance amount in easy installments�.
30�6�1955
The 1st respondent wrote to the petitioner that his request to pay the balance in installments cannot be allowed and that the balance should be paid on or before 30�7�1955.
22�10�1955
P. 3 (Penalty : Rs. 788
4�11�1955
On a request from the petitioner to stay collection of the tax the Inspecting Assistant Commissioner ordered : �The balance of tax should be paid as follows:
(1) Rs. 1,500/- at once
2) Rs. 2,500/-by 26�11�55
(3) Rs. 2,500/- by 25�12�55
(4) Rs. 3,500/- on 15�1�1956
(5) Rs. 3,500/- on 15�2�1956 and the balance on 15�3�1956. Interest will be collected in respect of deferred payments�.
18�11�1955
The petitioner paid Rs. 1,500/-
7�1�1956
P4 (Penalty: Rs. 750)
9�1�1956
The 1st respondent wrote to the Inspecting Assistant Commissioner as follows:
�The assessee has not paid the installments of Rs. 2500 each on 26�11�1955 and 25�12��55 granted to him as per the I.A.C.''s letter referred to above. I have imposed a penalty of Rs. 750 on him on 7�1�1955 for the default to pay the installments in time. I may also be informed whether the entire demand can be considered to be in arrears or only the installment due on 26�11�1955 and 25�12�1955�.
20�1�1956
The petitioner paid Rs. 1500.
24�1�1956
The Inspecting Assistant Commissioner wrote to the petitioner:
�Since you have not paid the 2nd and 3rd installments according to my order dated 4�11�1955, the concession stands automatically cancelled and the entire arrears became payable in full when the default occurred�.
13�2�1956
P5 (Penalty: 1,500)
21�2�1956
The petitioner wrote to the Inspecting Assistant Commissioner: �For failure to comply with the terms of your order, the concession granted has been cancelled and the income tax Officer has imposed a penalty of Rs. 3038/-as per his three orders dated 22�10�1955, 7�1�1956 and 13�2�1956�
and requested him �to stay the collection of the balance tax till the disposal of the pending appeal�.
1�3�1956
The Inspecting Assistant Commissioner replied:
�Without prejudice to penalties imposed u/s 46
(1) you are permitted to pay Rs. 3500/-in two equal installments on 10�3�1956 and 25�3�1956. The balance of tax is stayed till 15�7�1956�.
12�3�1956
The petitioner paid Rs. 1750
23�3�1956
The petitioner paid Rs. 1750
18�7�1956
The Inspecting Assistant Commissioner wrote to the petitioner:
�The appeal was filed in July 1955 and it is not possible to grant time till disposal of appeal. The balance of tax should be paid in installments of Rs. 2000 beginning from 30�8�1956. This is without prejudice to the demands due for subsequent years which should be paid on the due dates.
14�9�1956
P6 (Penalty :100).
The above narration of events makes it quite clear that there was no failure to exercise the discretion u/s 45 or any mal-exercise thereof which will attract the jurisdiction of this Court.
Counsel for the petitioner submitted that the orders of the 1st respondent u/s 46 (1) after he became aware of the filing of the appeal cannot be sustained. The filing of an appeal as already indicated does not operate as a stay of collection and I am not prepared to say that section 45 demands anything more than the exercise of a discretion on the part of the income tax Officer as to whether he should treat an assessee as a defaulter or not when his jurisdiction under that section is invoked in a given case.
The only other argument urged on behalf of the petitioner was that Ext. P. 11 was subsequent to the cancellation of the assessment by Ext. P. 2 and that the Commissioner was hence wrong in not holding that Exts. P. 3, P. 4, P. 5 and P. 6 were unsustainable and that the revision petition be allowed.
I cannot agree. The Commissioner should evaluate-as he has done-the correctness or otherwise of Exts.P. 3, P. 4, P. 5 and P. 6 as on the date of those orders and not in the light of subsequent events.
Section 2 (6D) of the Indian income tax Act, 1922, defines, "Inspecting Assistant Commissioner" as follows :
Inspecting Assistant Commissioner means a person appointed to be an Inspecting Assistant Commissioner of income tax u/s 5.
Counsel for the petitioner and the Department are unable to point out any provision of Law under which the Inspecting Assistant Commissioner can issue orders like those he has given on 4-11-1955 and 1-3-1956. As no controversy has been raised before me regarding his powers or action I have not dealt with that question in this judgment.
The petition fails and is hereby dismissed. No costs.