TaxTMI 
TaxTMI 
1956 (4) TMI 56
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.... income-tax for three years. For the year 1947-48, he was assessed on 14th March, 1952, to a tax of Rs. 1,41,039-11-0 payable on or before the 28th of March, 1952. On 22nd January, 1953, the Income-tax Officer forwarded to the Collector a certificate specifying the amount of arrears due from the assessee. For the assessment year 1951-52, he was assessed on 29th February, 1952, to a tax of Rs. 40,230-7-0 payable on or before 25th March, 1952. The relevant certificate was issued on 22nd June, 1953. For the assessment year 1945-46, he was assessed on 7th December, 1950, to a tax of Rs. 20,113-13-0 payable on or before 31st January, 1951. The relevant certificate was issued on 9th May, 1951. The appellant preferred appeals in regard to the first two assessments but no appeal was filed in respect of the third. The total tax payable by him amounted to Rs. 1,70,083-15-0. Out of that amount, a sum of Rs. 1,900 was realised. In regard to the 1945-46 assessment, another sum of Rs. 8,000 was levied as penalty under section 46(2) on two occasions. Several adjournments were granted to the appellant for the payment of the tax but he did not pay even the admitted amount and, therefore, the certif....
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....elies upon the provisions of section 45 of the Income-tax Act and contends that, under that section, a duty is cast upon the Income-tax Officer to treat an assessee not as a defaulter under certain circumstances and that, in the present case, he did not discharge his duty, though there were compelling reasons for doing so. Alternatively, he would say that the Income-tax Officer in not staying his hands before his rights have been finally decided by the Appellate Tribunal had acted capriciously and, therefore, has not exercised the discretion vested in him in law. The argument of the counsel for the Commissioner of Income-tax may be put thus. If an assessee does not pay the tax within the time prescribed, he shall be deemed to be in default under section 45 of the Act. The discretion vested in the Income-tax Officer is within narrow confines to be exercised only against the State and he cannot be compelled to exercise it in favour of the assessee as, by a statutory fiction, he is declared to be a defaulter. That apart, the words "may in his discretion" give to the Income-tax Officer an absolute and uncontrolled discretion to treat the assessee as not being in default and that it can....
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.... be able to collect the amount till the result of the appeal is known. If he refuses to exercise his discretion, the assessee will be subjected to coercive process and the State will be in a position to recover the tax immediately. The power, therefore, if exercised, helps one and prejudices the other. In this view I must hold that the discretionary power conferred upon the Income-tax Officer is not limited as contended by the counsel for the Commissioner of Income-tax but is a power exercisable both against and in favour of the assessee or the State as the case may be. The scope of a discretionary power conferred on a public authority is the subject matter of treatises and decisions. In Maxwell on the Interpretation of Statutes, 10th edition, the following passage appears at page 239: "Statutes which authorise persons to do acts for the benefit of others, or, as it is sometimes said for the public good or the advancement of justice, have often given rise to controversy when conferring the authority in terms simply enabling and not mandatory. In enacting that they 'may&#....
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....oncerned 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. If the authority concerned exercises his discretion honestly and in the spirit of the statute, no mandamus will be issued directing him to exercise his discretion in a particular way. See Lord Krishna Sugar Mills Ltd. v. Income-tax Officer, Ambala, Julius v. Bishop of Oxford, Allcroft v. Lord Bishop of London. The application of the aforesaid principles to cases under section 45 ....
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....bsp; "They confer a faculty or power and they do not of themselves do more than confer a faculty or power. But there may be something in the nature of the thing empowered to be done, something in the object or which it is to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed, to exercise that power when called upon to do so." Relying upon this authority and the others, which followed it, Bose, J., observed: "In this case also a discretion was conferred on the Revenue authority but it was pointed out that if in a proper case he did not exercise that power he could be compelled to do so by an order under section 45 of the Specific Relief Act." When it was contended before him that the Court has no power to interfere with the exercise of discretion by public officers in pursuance of a discretionary power vested in them, the ....
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....he said amount in instalments up to 31st March, 1953. On those facts, Kapur and Soni, JJ., held that there was no case for issuing a writ. At page 417, Kapur, J., observes: "Under section 45 whatever discretion there is is of the Income- tax Officer and he having exercised it in a particular manner which in my opinion is neither mala fide, nor capricious, nor done for collateral purposes, nor has he taken matters into consideration which are extraneous to the issue, it is not open to this Court to interfere in its supervisory jurisdiction." Soni, J., expressed the same idea in the following terms: "If these Tribunals or the functionaries appointed under the special Acts do not perform their duties they may be compelled by an appropriate writ to do so. Where, however, they are acting within the limits of the powers assigned to them by the Legislature and have exercised their discretion, this Court will not sit in judgment over them and will not ordinarily interfere unless the discretion has been exercised so capriciously or in such an outrage....
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.... section 45, the words 'in the discretion of the Income-tax Officer' would become redundant. It will be an absolute right in all cases, where an appeal has been filed, of the assessee not to pay the amount of the tax till the appeal has been disposed of." After citing the decision in Ladhuram Taparia v. B.K. Bagchi [1951] 20 I.T.R. 51 the learned Judge observes: "No doubt the observations made in that case give support to the contention of the applicant but the circumstances of that case were different from the present case and if that case lays down that in all cases where an appeal has been filed, there is a duty cast upon the Income-tax Officer not to regard the assessee as a defaulter, I have no hesitation in differing from that opinion." With great respect to the learned Judge, Bose, J., in the Calcutta case did not say that the mere filing of an appeal would cast a duty on the Income-tax Officer to stay enforcement of demand. Bose, J., only held that, under certain compelling circumstances, a duty is cast upon an Income-tax Officer to exercise his discretion in st....
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....ncome-tax Officer should or should not give stay. It is in his discretion to give stay but, if he exercises his discretion honestly and fairly without caprice or arbitrariness, a Court would not and should not interfere with his discretion. Learned counsel for the Commissioner of Income-tax then contended that a writ would not lie to give interim relief pending an appeal and, in support of this contention, reliance is placed upon a judgment of the Supreme Court in State of Orissa v. Madan Gopal A.I.R. 1952 S.C. 12; [1952] S.C.R. 28. There, the Government of Orissa, having passed an order cancelling the temporary permits and having directed the respondents to remove their assets appertaining to the mines within a fortnight, the respondents filed an application for a writ of mandamus. The High Court declined to investigate and pronounce on the rights of the parties and left the rights of the parties to be decided in a suit. But, as the respondents could not file a suit till after the expiry of sixty days required for the purpose under section 80 of the Civil Procedure Code the High Court passed an order that till three months from the date of the order or one week after the instit....
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....w, coming to the merits, we are not satisfied that this is a fit case for issuing a writ. From the aforesaid facts, it is obvious that large amounts were due from the assessee and he paid only a comparatively small amount of Rs. 1,900. Though there is no specific order directing him to pay in instalments, he had years for paying the tax. The learned counsel, except stating that he had preferred an appeal, has not satisfied us that his appeal raises substantial questions of law. The earliest assessment is of the year 1945-46 and nothing has been paid though six years have elapsed since the assessment was made. In the case of the other two assessments, four years have elapsed since the date of assessments and no substantial amounts have been paid. Nor did the assessee offer security for the amount due from him. In the circumstances, we cannot say that the Income-tax Officer did not discharge his duty or exercise his discretion arbitrarily in not treating him as a person who had not made a default. The appeal is, therefore, dismissed with costs. Advocate's fee Rs. 200. VISWANATHA SASTRI, J.--The facts of the case have been stated in the judgment of my Lord and it is unnecess....
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....be circumstances which couple with the power a duty to exercise it. Though the word "may" in its ordinary or primary sense is susceptible of a permissive meaning, decisions of the highest courts have recognised that a duty might exist, outside and apart from the particular provisions of a statute whereby those on whom a power is conferred by the statute are under an obligation to exercise it. The word "may", though primarily permissive, has been, in certain circumstances, treated as obligatory and the question is whether the first proviso to section 45 could be so interpreted. The cases on the topic are so many and the language used by the learned judges is so varied that it would be a profitless task to refer to or reconcile all that has been said. Suffice it to refer to a few leading cases. In 1877 the judicial Committee, construing section 21 of Act XIV of 1859, observed: "There is no doubt that in some cases the word 'must,' or the word 'shall', may be substituted for the word 'may', but that can be done only for the purpose of giving effect to the intention of the Legislature; but in the absence of proof of such intention, the word 'may' m....
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....; "I think that great misconception is caused by saying that in some cases 'may' means 'must'. It never can mean 'must', so long as the English language retains its meaning; but it gives a power, and then it may be a question in what cases, where a judge has a power given to him by the word 'may', it becomes his duty to exercise it." In a similar train of thought, Talbot, J., in Sheffield Corporation v. Luxford said: "'May' does not mean 'must'; 'may' always means 'may.' 'May' is a permissive or enabling expression; but there are cases in which, for various reasons, as soon as the person who is within the statute is entrusted with the power it becomes his duty to exercise it." The same principle has been applied by the Judicial Committee in Alcock, Ashdown & Company Ltd. v. Chief Revenue Authority, Bombay, where, interpreting the word "may" in section 51 of the Indian Income- tax Act, 1918, empowering the Commissioner to state a case to the High Court, Lord Phillimore observed: &n....
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....statutes enacted for the public good and the advancement of justice, expressions which appear to belong to the language of mere permission like 'may' have a compulsory force." It should not be understood from the above statements either that enabling words are always compulsory where the public are concerned or are never compulsory except where the public are concerned. Lord Blackburn in Julius v. Bishop of Oxford clarified the position in these words: "The enabling words are construed as compulsory whenever the object of the power is to effectuate a legal right. It is more easy to show that there is a right where private interests are concerned than where the alleged right is in the public only, and in fact, in every case cited, and in every case that I know of (where the words conferring a power are enabling only and yet it has been held that the power must be exercised), it has been on the application of those whose private rights required the exercise of the power." Where a Court is invested with a discretionary power, as for instance, to award costs, grant time, co....
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.... be considered by the Income-tax Officer on its merits in a judicial spirit. The right of the State to realise the tax assessed should also be kept in view for the mere filing of an appeal does not entitle the assessee to a stay of collection of the tax. It is true that Income-tax Officers are but men, and being human, may not exercise their discretion against the State which employs them. The Legislature has, however, chosen to entrust the discretion to them. Being to some extent in the position of judges in their own cause and invested with a wide discretion under section 45 of the Act, the responsibility for taking an impartial and objective view is all the greater. If the circumstances exist under which it was contemplated that the power of granting a stay should be exercised, the Income- tax Officer cannot decline to exercise that power on the ground that it was left to his discretion. In such a case, the Legislature is presumed to have intended not to grant an absolute, uncontrolled or arbitrary discretion to the Officer but to impose upon him the duty of considering the facts and circumstances of the particular case and then coming to an honest judgment as to whether the cas....
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.... 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 the 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: Allcroft v. Lord Bishop of London. Nor will a writ issue for the purpose of reviewing his decision honestly given on the merits of the application, even though such decision is erroneous, if the proceedings have been conducted with fairness and impartiality and the assessee has been given an opportunity of being heard. To hold otherwise would be to give an appeal under colour of a mandamus when n....
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....ord Cairns in Julius v. Bishop of Oxford [1880] 5 App. Cas. 214, 222, 241 and 245 sought to equate the position of the Bishop to that of an Income-tax Officer, exercising his power under section 45 of the Income-tax Act, I am unable, with great respect, to agree with the reasoning. All the learned Lords in Julius v. Bishop of Oxford [1880] 5 App. Cas. 214, 222, 241 and 245 were at pains to point out that the complainant in that case had no particular or personal right in relation to church discipline and the Bishop owed no particular duty to him and refused a mandamus on those grounds. That is not the position of the assessee vis a vis the Income-tax Officer. The assessee has a personal and individual right for the protection or vindication of which the Income-tax Officer owes a duty to him to exercise his power. With the actual decision of the learned Judges of the Punjab High Court, I am in respectful agreement. The decision of a single Judge of the Allahabad High Court in Goverdhan v. Commissioner of Income-tax*** follows the Punjab decision. Though the argument was advanced in Ladhuram Taparia v. B.K. Bagchi that an appeal under section 30 of the Income- tax Act reopens the ass....