Discretion to forbear enforcement pending appeal requires reasonable exercise and can suspend demand enforcement until disposal.

The Income-tax Officer's discretionary power to treat an assessee as not in default must be exercised reasonably and may include a duty to grant temporary relief; where protective assessments have been made, substantial questions of law and fact exist about firm constitution, immediate enforcement would risk ruin, and the respondent failed to justify refusal of an extension, the discretion should be exercised to forbear enforcement of the demand under Section 29 pending disposal of the Section 30 appeal. The petitioners were granted the limited relief of forbearance and costs.

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Issues: Whether the Income-tax Officer should be directed to forbear from enforcing the notice of demand dated 30th March, 1950 issued under Section 29 of the Income-tax Act pending disposal of the appeal filed under Section 30 of the Act.

Analysis: The petition challenges enforcement of a large notice of demand after the respondent refused renewal of registration under Section 26A and assessed the firm together with several other firms, leading to an aggregate demand substantially higher than the return. Section 45 of the Income-tax Act confers a discretion on the Income-tax Officer to treat an assessee as not being in default while an appeal under Section 30 remains undisposed; that discretion must be exercised reasonably and may in appropriate circumstances be coupled with a duty to grant temporary relief. The Court observed that protective assessments had been made safeguarding revenue, that substantial questions of law and fact existed regarding the constitution of the firms, and that immediate payment of the large sum could ruin the business. The petitioners had sought extension of time and the respondent did not reply; no grounds were shown for refusing extension and alternative remedies were thereby rendered ineffective. In these circumstances the discretionary power under Section 45 must be exercised to forbear enforcement pending the appeal.

Conclusion: The respondent is directed to forbear from taking any steps to enforce the notice of demand dated 30th March, 1950 under Section 29 of the Income-tax Act until the appeal under Section 30 is disposed of; petition allowed in part and petitioners granted costs (decision in favour of the assessee on the limited relief sought).

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