Find a Lawyer

Writ Petition No. 1087 of 1957, decided on 7th July, 1959.

S. 45‑Recovery of tax -Arrears of tax‑Appeal from assessment‑Discretion of Income‑tax Officer not to treat assessee as in default‑Time assessee had already for payment‑Whether relevant ground for decision‑Incorrectness in grounds‑Whether basis for issuing writ of mandamus‑Con stitution of Pakistan 1956), Art. 170.

Partial or total incorrectness of the grounds on which a discretionary statutory power is not exercised by an authority would not serve as a basis for issuing a mandamus ; for that would mean reviewing the grounds and would amount to the exercise of appellate or revisory jurisdiction over the authority.

The time that an assessee has had for payment of tax cannot be treated as an altogether irrelevant ground for refusal to exercise the discretion of the Income‑tax Officer under section 45 of the Income‑tax Act to treat an assessee as not in default.

Sreeramamurthi v. Income‑tax Officer, Vizianagaram (1956) 30 I T R 252 and Vellore Govindarajulu Mudaliar v. Income‑tax Officer, Adoni (1959) 36 I T R 133 ref.

G. Venkatarama Sastri for Petitioner.

C. Kondaiah for Respondent.

This petition under Article 226 seeks a mandamus against the income‑tax officer, Vijayawada, in order ‑to prevent the writ petitioner being declared a defaulter and the tax of Rs. 4,523‑9‑0 from being collected. The facts preceding the writ petition are that the petitioner was served with a notice under section 22 (2) of the Income‑tax Act for submitting his return for 1946‑47, which was done, showing his income to be Rs. 832‑12‑7. On November 11, 1954, a notice was again issued under section 34 of the Act, alleging that the year ending March 31, 1947, had escaped assessment and the petitioner applied to the Income‑tax Officer to transfer his file to Guntur, as he was residing there, but the request was refused. Accounts were asked to be produced on March 24, 1955, on which date all the accounts along with the audit reports were produced and an adjournment was prayed. On its being refused, the petitioner prepared his returns at 5‑30 p.m., but .the concerned officer refused to receive them and on the same day assessed the petitioner to a tax of Rs: 4,523‑9‑0. An appeal against the order has been filed and has not yet been decided. During the pendency of the appeal the petitioner began on September 21, 1955, the proceeding under section 27 of the Income‑tax Act for re‑opening the assessment before the Income‑tax Officer, Vijayawada, and that has been concluded against him on July 11, 1957. An appeal against. this order also has been filed before the Appellate Assistant Commissioner on August 8, 1957, and has not yet been decided.

There is another set of facts which immediately led to the presentation of the writ petition. On April 9, 1955, the peti tioner had applied to the Income‑tax Officer not to treat him as a defaulter, as he had filed the appeal against the main assessment order. The application was made under section 45 of the Income‑tax Act and the petitioner while seeking the adjournment gave an undertaking not to alienate his properties. At that time the application under section 27 of the Income‑tax Act had also been filed before the Income‑tax Officer. On May 23, 1956, the Officer ordered adjournment till the disposal by him of the proceeding under section 27 and after the disposal the assessee had been called upon to pay the tax before September 28, 1957. Thereupon, the writ petitioner having filed the other appeal against the order by the Income‑tax Officer under section 27 again requested him not to declare him a defaulter. This was made under section 45 of the Act. The petitioner further informed the Income‑tax Officer that he was ready to offer security for the tax amount. On August 23, 1957, the Officer regretted his inability to entertain any request on behalf of the petitioner and asked for the payment of the tax. The relevant extract from the aforesaid order reads as follows;

"Considerable time, in fact more than a year, had in effect been given to you for payment of the tax. This period is more than a year, counting from the date of your petitions to the Inspecting Assistant Commissioner. The original due date for payment of tax, as per the assessment order, was April 10, 1955, and from then, more than 2 years had elapsed. In the circum stances, I find no justification in your asking for more time or for stay of tax till the disposal of the appeal before the Appellate Assistant Commissioner".

The principle on which a writ of mandamus would be issued is well settled by two pronouncements of this Court, and the difficulty, if any, is of applying the settled principles to the facts of any given case. In Sreeramamurthi v. Income‑tax Officer Vizianagaram ((1956) 30 I T R 252) it has been held that a discretionary statutory power conferred upon an authority for the public good is coupled with a duty to perform it under relevant circumstances and the exercise of the power being discretionary, does not exonerate the Officer from discharging the duty. Dealing with the conditions when the aforesaid writ would be issued Subba Rao, C.J., (as he then was) observes at page 257;

"The fact that the exercise of the power is left to the discretion of the authorised person does not exonerate him from discharging his duty. If the discretionary power so conferred is exercised arbitrarily, capriciously or unreasonably or by taking into consideration extraneous and irrelevant considerations, in the eye of law, the authority concerned must be deemed not to have exercised the discretion at all, that is, he has not discharged his duty. If the Court on the facts placed before it comes to a definite conclusion that a particular authority has not exercised his duty for one or other of the aforesaid reasons, it will compel the authority to discharge his duty, or, to put it differently, to exercise his discretion honestly and objectively.

There is also an essential distinction between a refusal to exercise the discretion and the manner of its exercise. If the authority fails to discharge his duty by refusing to exercise his discretion when facts calling for its exercise exist, or, if he exercises discretion under the circumstances mentioned above, which is not an exercise of discretion in law, the Court will compel him to do so."

Viswanatha Sastri, J., also states the same rule in the follow ing words;

"It is true that a Mandamus will not be issued by the Court where there is no obligation or duty imposed by statute on a public officer and the performance or non‑performance of an act is left to his absolute discretion . . . the Income‑tax Officer has no free option or absolute and uncontrolled discretion in this matter but is bound to receive, consider and give his decision on an application by an assessee invoking his jurisdic tion under section 45. These being duties or obligations cast upon him by law, could be enforced by mandamus. But the writ in such a case will only be a command to the officer to hear and decide the assessee's application. Where, however, the Income‑tax Officer receives and considers the application of the assessee but in the exercise of his discretion rejects his request for a stay of collection of the tax, it is a delicate question as to how far the Courts are entitled to interfere. If the officer has given no reasons at all for rejecting the application of the assessee for a stay, he may be required to take up the consideration of his application and dispose of it giving the assessee an opportunity to be heard and giving reasons for his decision. It is obvious that no writ will issue dictating to the officer in what manner he is to decide an application under section 45 or exercise his discretion, so long as he exercises his power honestly and in the spirit of the statute . . . Where, however, the Income‑tax Officer has not given a reasonable opportunity to the assessee to be heard in support of his application, he has not exercised his discretion in a judicial manner and he can be compelled by mandamus to do so. Where the Income‑tax Officer in refusing the assessee's application has allowed himself to be influenced by irrelevant and extraneous matters or considerations, in point of fact he would have exercised no jurisdiction or he would have exceeded his jurisdiction . . . . If the exercise of discretion by the Income‑tax Officer is so arbitrary and capricious that no reasonable man would have acted likewise, in other words, if there has been no exercise of discertion at all, in such a case too this Court might interfere."

The same rule has been reiterated by my learned brother, Basi Reddy, J., in Vellore Govindarajulu Mudaliar v. Income‑tax Officer, Adoni ((1959) 36 I T R 133). Therefore the limit within which a writ of mandamus should be issued against an officer vested with discretionary statutory power is well settled. Indeed the arguments on behalf of the writ petitioner are that order amounts to no exercise of discretion. Obviously the order is not one where no reason has been assigned, nor any complaint is made of the decision having been taken without affording adequate opportunity to the assessee of presenting his case. The point for the decision therefore is how far the refusal to stay on the ground of the assessee's having considerable time for paying the amount, can be treated as not being made in proper exercise of discretion. In the reason, it is argued, the officer overlooks his own stay order till the conclusion of the proceeding under section 27 which took place in July, 1957, and thereafter the assessees had a few months' time to make arrangements for paying the tax. It was further urged that the assessee had offered to furnish security to the satisfaction of the returning officer, which he did not consider when he refused the stay. Partial or total incorrectness of the grounds on which a discre tionary statutory power is not exercised, I am afraid, would not serve as a basis for issuing a mandamus ; for that would come to reviewing the grounds and would amount to the exercise of the appellate or revisory jurisdiction over the authority. The assessee has had time to make the payment and that may furnish a reason for denying him further stay under section 45 of the Income‑tax Act. The time he has had, therefore, cannot be treated as altogether an irrelevant ground for refusal ; nor in these circumstances can the order be held to have been made capri ciously ; nor would it cause irreparable loss ; for the Income -tax Act does provide for refund should the assessment be found illegal and unjustifiable. In these circumstances, I would not issue a writ or direction under Article 226, for it would amount to dictating on what is to be weighed. Accordingly this petition is dismissed with costs. Advocate's fee Rs. 100.

Petition dismissed.

Find a Lawyer Near You

Dealing with a matter like this? Connect with a verified advocate in your city — free on SJP Lawyers Directory.