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Application under Section 45 of the Specific Relief Act and Constitution of India for writs in the nature of mandamus, prohibition, and certiorari to cancel notice of demand under Section 29 of the Indian Income-tax Act. Analysis: The petitioners, operating a business in co-partnership as Ladhuram Taparia, filed a petition seeking relief from the notice of demand issued by the respondent under the Indian Income-tax Act. The respondent assessed the firm for the year 1945-46 as an unregistered firm, adding income from other firms to the total income. The petitioners appealed against the assessment and the refusal to renew registration under Section 26A. The petitioners requested an extension of time for payment, which was denied by the respondent, leading to the petition to the court for relief. The crux of the matter lies in the interpretation of Section 45 of the Indian Income-tax Act, which mandates payment specified in a notice of demand within the stipulated time. The petitioners argued that filing an appeal under Section 30 reopens the assessment, granting the appellate authority the power to make a new assessment. They cited English Income-tax Act provisions and relevant case law to support their contention that the Income-tax Officer's discretion under Section 45 should be exercised reasonably and judiciously, potentially becoming a duty under certain circumstances. The court considered the substantial disparity between the assessed amount and the return filed by the petitioners, raising questions of fact and law regarding the constitution of the firms involved. The protective assessments made by the Income-tax Officer aimed to safeguard revenue interests. The court acknowledged the potential adverse impact of the heavy tax demand on the petitioners' business and the lack of definitiveness in the appeal's outcome. Consequently, the court found a duty on the respondent to refrain from enforcing tax payment and grant an extension until the appeal's disposal. The Advocate-General contended that the discretionary power vested in public officers cannot be converted into a duty, emphasizing the need for interference only in cases of malafide exercise of discretion. However, the court found that in this instance, the discretion had become coupled with a duty due to the circumstances. Additionally, the court rejected the respondent's argument that there was no distinct demand to treat the petitioners as defaulters, highlighting the respondent's failure to respond to the petitioners' request for an extension of time, thereby denying justice to the petitioners. In conclusion, the court allowed the petition in part, directing the respondent to refrain from enforcing the notice of demand until the appeal's resolution. The petitioners were awarded costs for the proceedings. Judgment: The petition was allowed, and the Rule was made absolute to the extent of directing the respondent to forbear from enforcing the notice of demand until the appeal's disposal. The petitioners were granted costs for the proceedings.
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