Tax arrears remain payable despite no default classification, allowing valid refund adjustment against unpaid demand.

Tax liability arises on service of the notice of demand and continues until payment, while default under section 45 is a separate concept from the underlying obligation to pay. The default and recovery provisions under section 46 govern enforcement consequences but do not extinguish the debt. On that construction, "amount remaining payable" under section 49E includes unpaid tax lawfully demanded, even where the assessee is protected from being treated as a defaulter under the proviso to section 45. The refund adjustment against the outstanding arrears was therefore valid, and a writ for refund of the set-off amount was not available.

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Issues: Whether tax arrears remained "payable" for the purpose of set-off under section 49E of the Income-tax Act, 1922, even though the assessee could not be treated as in default under the proviso to section 45.

Analysis: The liability to pay tax was held to arise on service of the notice of demand and continued until the amount was paid. The statutory concept of default under section 45 was treated as distinct from the underlying liability to pay. The provisions for default and recovery under section 46 were considered to govern enforcement consequences, but they did not exhaust or destroy the liability itself. On that basis, the expression "remaining payable" in section 49E was construed to include tax lawfully demanded and unpaid, even where the assessee was protected from being treated as a defaulter under the proviso to section 45.

Conclusion: The adjustment of the refund towards the outstanding arrears was valid, and the assessee was not entitled to a writ directing refund of the amount set off.

Final Conclusion: Liability to pay tax and default in payment are separate concepts, and a refund may be adjusted against unpaid tax arrears under section 49E even when the assessee is not in default under section 45.

Ratio Decidendi: For the purpose of refund adjustment, "amount remaining payable" includes unpaid tax liability notwithstanding that the assessee is not liable to be treated as a defaulter under the default provisions of the Act.

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