1987 (2) TMI 55 - HC - Income Tax

Summary

Issues Involved:
The issues involved in this case are the assessment of tax under the Income-tax Act, 1961 for the assessment year 1984-85, the demand for income-tax and surcharge, interest under section 139(8) and section 217(1)(b), the appeal filed by the petitioner against the assessment order, and the challenge to the decision regarding the stay of tax collection pending the appeal.

Assessment and Tax Demand:
The petitioner, a junior lawyer, was assessed to tax for the year 1984-85, with an income of Rs. 12,500 from the profession and Rs. 1,000 from agricultural income. The Income-tax Officer determined his total income at Rs. 1,39,770, leading to a demand of Rs. 1,14,360, including income-tax, surcharge, and interest under sections 139(8) and 217(1)(b).

Appeal and Stay of Tax Collection:
The petitioner appealed against the assessment order and requested a stay of tax collection pending the appeal. The Income-tax Officer permitted the petitioner to pay the demand in five monthly installments but did not grant a complete stay of collection. The petitioner challenged this decision, arguing that the Officer did not exercise discretion judiciously under section 220(6) of the Act.

Discretionary Power of Income-tax Officer:
The court emphasized that the discretionary power under section 220(6) should be exercised judiciously and reasonably, considering relevant grounds and not arbitrarily. The Officer should act as a quasi-judicial authority, mitigating hardship to the assessee while balancing the interests of the Revenue. The court cited previous judgments highlighting the duty of the Officer to consider facts, economic circumstances, and the prospects of appeal success in granting a stay of tax collection.

Judgment and Directions:
The court found that the Income-tax Officer did not exercise discretion fairly in the case, solely focusing on revenue collection without considering relevant factors. The court quashed the order and directed the Officer to pass fresh orders in accordance with law. Additionally, the second respondent was instructed to expedite the appeal hearing and disposal within six weeks from the judgment date.