Estate duty instalment default continues despite separate recovery proceedings, so penalty remains valid under the taxing scheme.

Failure to pay estate duty in accordance with instalments granted under the taxing scheme constituted default for penalty purposes under the Estate Duty Act read with the Income-tax Act. The pendency of certificate proceedings under the Bengal Public Demands Recovery Act did not displace that statutory default, because recovery proceedings under a different enactment operated independently of the default under the estate duty regime. The penalty provisions therefore continued to apply notwithstanding the separate instalment arrangement in certificate proceedings, and the penalty orders were held valid.

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Issues: Whether an assessee who failed to comply with instalments granted for payment of estate duty could still be treated as being in default for the purpose of penalty under the Estate Duty Act and the incorporated provisions of the Indian Income-tax Act, notwithstanding the pendency of certificate proceedings under the Bengal Public Demands Recovery Act.

Analysis: The penalty provisions were examined in the light of the statutory scheme governing time for payment and the consequence of non-payment. The relevant default under the taxing enactment depended on failure to pay the amount due in accordance with the instalment order made under that scheme. The existence of instalment arrangements or recovery steps under the Bengal Public Demands Recovery Act did not displace the statutory default under the Estate Duty Act read with the Income-tax Act. The two sets of proceedings operated independently, and default under one statutory regime did not cease merely because instalments had been granted in certificate proceedings.

Conclusion: The assessee remained in default for the purpose of penalty, and the penalty orders were valid.

Ratio Decidendi: Failure to pay instalments granted under the taxing statute constitutes default for penalty purposes, and recovery proceedings under another enactment do not negate that default.

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