Law: Income Tax Act, 1922

Section: 34,23,22(4A),23(3),22(4),45,23A,29,3,33, 31,5(8),45A,46,46C,67

Law: Civil Procedure Code (V of 1908)

Section: 115,OrderXLI,rule22,426(2)(a)

Central Board of Revenue Circular No. 23 of 1957 -- Recovery of tax -- Exercise of discretion -- Application for stay of recovery -- Whether should be decided after considering the grounds taken in the application and allowing an opportunity of hearing to the assessee even if no such claim is made -- Held yes -- Exercise of discretion -- Whether should be proper and judicious -- Held yes -- Departure from instructions issued by the Central Board of Revenue -- Whether amounts to an arbitrary exercise of discretion -- Held yes -- Recovery of tax and penalties pending appeal -- Application under section 45 by assessee -- Despite fact that no specific provision made in section 45 about opportunity of hearing, Income-tax Officer not clothed with power to reject application without hearing assessee -- Exercise of discretion under section 45 must be judicious and while passing order adverse to assessee, Income-tax Officer to give reasons in support of his decision -- Adverse order under section 45 passed against assessee without hearing him, held, to be without lawful authority and set aside-- Income-tax Officer directed to dispose of application under section 45 in accordance with law -- JUDGMENT MUHAMMAD AFZAL ZULLAH, J.---Writ Petitions Nos. 710 and 721 of 1973, involve same questions relating to law of income-tax, therefore, they are being disposed of together. 2. In the first writ petition it was alleged that the assessment for charge year 1967-68 was concluded on the declared income of Rs. 8,000 under Section 23 of the Income-tax Act. On receipt of notice under Section 34, however, the petitioner filed a return under protest but did not make any change in the original return. After issuing of notice under Section 22(4-A), which allegedly was complied with, the Income-tax officer issued another notice to the petitioner under Section 23(3) seeking explanation on various points. Thereafter the petitioner in pursuance of notice under Sections 23(2) and 22(4) appeared before the Income-tax Officer who completed the assessment on a total income of Rs. 1,02,800 vide order (Copy Annexure A'). The petitioner filed an appeal before the Income-tax Appellate Tribunal on…

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