Law: Income Tax Act, 1922

Section: 45

Law: Income Tax Act, 1961

Section: 220

Section 220 of the Income-tax Act, 1961 (Corresponding to section 45 of the Indian Income-tax Act, 1922) - Collection and recovery of tax - When tax payable and when assessee deemed in default - Assessment years 1945-46 to 1947-48 - Whether section 45 vests a wide discretion in ITO to treat or not to treat an assessee as being in default pending an appeal by assessee under section 30 of 1922 Act - Held, yes - Whether, therefore, section 45 of 1922 Act requires ITO to exercise his discretion judiciously, and so long as officer does not act arbitrarily, capriciously or vindictively, an order passed in sound exercise of his discretion is not open to challenge - Held, yes FACTS While completing the assessment of the petitioner-assessee for the assessment years 1945-46 to 1947-48, the ITO included certain credit items appearing in books of the assessee. The assessee did not give a satisfactory explanation for those credits and, therefore, the ITO treated the same as income. The ITO also imposed penalty upon the assessee. Pending appeals before the Commissioner against levy of penalty, the petitioner filed an application before the ITO requesting him to stay the collection of the penalties pending the disposal of the appeals filed by him. But the ITO, taking into consideration the fact that the petitioner had made persistent defaults in payments and that, although the due date for payment of the penalties was 31-3-1954, the petitioner had not paid anything at all towards those arrears although two years had elapsed, declined to exercise the discretion vested in him under section 45 of 1922 Act in favour of the petitioner. On writ: HELD Section 45 of the 1922 Act vests a wide discretion in the ITO to treat or not to treat an assessee as being in default pending an appeal by the assessee under section 30 of the 1922 Act. Section 45 of 1922 Act does not require that the ITO should give a hearing to the assessee before he exercises his discretion under the section. All that the section contemplates is that the ITO should apply his mind to the facts and circumstances of the case and exercise his discretion judiciously ; and so long as the Officer does not act arbitrarily,…

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