1987 (10) TMI 20

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....ed in accordance with the notice of demand. The petitioners challenge section 40 as violative of article 14 of the Constitution as, according to them, the assessing authority is invested with unguided power to fix the time for payment of the tax assessed. Sub-section (1) of section 40 with its proviso is extracted below: " Any amount specified as payable in a notice of demand under section 30 or an order under sections 31, 32 or 33 shall be paid in such number of instalments, within such time, at such place and to such person, as may be specified in the notice or order, or if a time is not so specified, then on or before the first day of the second month following the date of the service of the notice or order and any assessee failing....

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....thority is invested with jurisdiction not to treat the assessee as in default. Subsection (1) of section 40 allows a discretion to the assessing authority to fix the time for payment of the tax assessed. As earlier stated, once the liability is fixed by the order of assessment, it is a matter of discretion for the assessing authority to fix a time within which the liability is to be discharged by payment of the tax assessed. It is not an uncanalised power of treating the assessee as in default to enable the assessing authority to initiate penal proceedings against the assessee. If in any particular case the discretion is not exercised in a judicial manner, it is open to the higher authorities under the Act or in appropriate cases for this c....

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....nd on the same day passed exhibit P-5 order imposing a penalty of Rs. 25,000 on the assessee for his failure to remit the tax within the time specified in exhibit P-2. As earlier stated, sub-section (1) of section 40 allows the assessing authority a discretion to fix the time for payment of the tax assessed. The section itself gives an indication as to the time to be allowed in the normal course. In the corresponding provisions in section 220 of the Income-tax Act, 1961, the assessee is required to pay the amount specified in a notice of demand within 35 days of the service of the notice. The proviso to sub-section (1) of section 220 of the Act empowers the Income-tax Officer to fix a shorter time if he has reason to believe that it will....