Judicial exercise of discretion in stay requests under tax law requires real consideration of the assessee's circumstances and reasons.

The Income-tax Officer's refusal to treat the assessee as not in default pending appeal was quashed because the discretion under section 45 of the Indian Income-tax Act, 1922 was not exercised judicially. The order disclosed no real application of mind to the stay request or the circumstances placed before the authority, and the recorded reasons were vague. The court held that the power was coupled with a duty to consider the request properly and to decide whether it was just and proper to treat the assessee as a defaulter during the pendency of the appeal. The matter was remitted for fresh disposal in accordance with law.

---

---

Issues: Whether the Income-tax Officer exercised the discretion vested in him under section 45 of the Indian Income-tax Act, 1922 in refusing to treat the petitioner as not in default pending disposal of the appeal, and whether the order was liable to be quashed under article 226 of the Constitution of India.

Analysis: The officer's order did not disclose any real application of mind to the application for stay or to the circumstances relied upon by the petitioner. The reasons recorded were vague and did not show that the discretionary power under section 45 had been independently and properly exercised. The power was one coupled with a duty to consider the request judicially and not as a mere measure of tax collection. The principles governing analogous discretion under section 31(3) of the Wealth-tax Act, 1957 were treated as applicable, including the requirement that the authority must decide whether it is just and proper to treat the assessee as a defaulter while the appeal is pending.

Conclusion: The order refusing stay was held unsustainable for non-exercise of discretion and was quashed. The Income-tax Officer was directed to dispose of the application in accordance with law.

---