1958 (1) TMI 39

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....as made payable on or before 20th April, 1956. Against that order of assessment the petitioner filed an appeal on 5th April, 1956, to the Appellate Assistant Commissioner. After having filed the said appeal, the petitioner requested the Income-tax Officer to grant him time to pay the amount till the disposal of the appeal. That prayer was refused by the Income-tax Officer on 28th March, 1956. The petitioner applied on 5th April, 1956, to the Inspecting Assistant Commissioner to grant him time to pay till the disposal of the appeal. The Inspecting Assistant Commissioner gave time till 1st June, 1956. On 25th May, 1956, the petitioner again applied to the Commissioner of Income-tax to grant him time to pay the amount of tax assessed till the ....

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....nder the said section ; and even if it be held that he did exercise his discretion, the same was exercised arbitrarily. On these grounds the learned advocate contended before us that no penalty could be imposed under section 46 of the Income-tax Act and the order imposing such penalty should be quashed. Before I deal with these contentions of the learned advocate for the petitioner, it would be necessary to set out the relevant portions of sections 45 and 46 of the Income-tax Act, Section 45 inter alia provides as follows: "Any amount specified as payable in a notice of demand under sub-section (3) of section 23A or under section 29 or an order under section 31 or section 33, shall be paid within the time, at the place and to the pe....

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....n one way or the other. Any imposition of penalty under section 46 without such exercise of discretion must be held to be invalid. Applying this test to the present case, it appears to us that the Income-tax Officer did not exercise his discretion, which he was in duty bound to do, under section 45 of the Income-tax Act before he proceeded to make an order of imposition of penalty under section 46 of the Act. It appears that an application to the Income-tax Officer was made on 19th March, 1956, by the assessee for grant of time to pay the amount demanded of him till the disposal of the appeal which he proposed to file against the said order of assessment. At that time, no doubt, no appeal was in fact filed against the order of assessment an....

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....r the said section. He had to determine whether or not he would treat the assessee as in default. This, in our opinion, he has failed to do. There is nothing before us to show that he had considered this question before he made his order under section 46 of the Income-tax Act. There is nothing to show that he exercised his discretion which he was required to do under section 45 of the Income-tax Act. That being so, on this ground we are constrained to hold that the imposition of penalty on the assessee by the Income-tax Officer under section 46 of the Incomer tax Act was invalid and should be set aside. It is not necessary having regard to the aforesaid conclusion to decide the other ground raised by the learned advocate for the petitioner,....