Law:

Section:

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 1947-48 and 1951-52 - Whether if ITO honesty exercises his discretion under provisions of Section 45 to treat assessee as not in default, in spirit of statute, no mandamus will be issued directing him to exercise his discretion in a particular way - Held, yes - large amount were due from assessee and he paid only a comparatively small amount - Though there was no specific order directing him to pay in instalments, he had years for paying tax - However, Except stating that he had preferred an appeal, assessee had not satisfied that his appeal raised substantial questions of law - Whether since assessee had neither paid substantial amount of due, nor did offer security for amount due from him, it could not be said that ITO had not discharged his duty or exercised his discretion arbitrarily in not treating him as a person who had not made a default - Held, yes FACTS The assessee was carrying on business in groundnut, niger seeds, jute, etc. On his own account and for commission. He also had income from other property. He was assessed for relevant assessment years. Since the tax was not paid, the ITO forwarded to the collector certificates specifying the arrears due. The assessee filed appeals. Several adjournments were granted to the assessee for the payment of the tax but he did not pay even the admitted amount and, the certificates were issued. Proceedings were taken under the Revenue Recovery Act and the sale of the property was posted. The petitions filed for quashing the aforesaid proceedings and for stay were dismissed. On writ appeal : HELD Under section 45 of the 1922 Act, if the amount specified as payable in the notice of demand is not paid within the prescribed time, the assessee would be deemed to be in default. But, the same section provides that, pending an appeal filed by the assessee, the ITO may, in his discretion, treat the assessee as not being in default. Per Subba Rao, CJ.-Section 45 in terms declares the assessee, under circumstances…

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