(Delivered by The Chief Justice)
These petitions are to quash the orders of the Agricultural Incometax Officer, dated 11th January, 1972. The matter related to the assessment year 1971-1972. By petitions dated 27th December, 1971 and 1st January, 1972, the assesses, on the ground that they had filed appeals, invoked the proviso to S. 40 of the Madras Agricultural Incometax Act, 1955 and asked for stay of collection of that part of the tax covered by the appeals. The petitions were dismissed. The reason for dismissal is stated thus:
“The assessment was made under S. 17(4) with the best of my knowledge. It is also ascertained from the village officer that the assessee is financially sound and he is in a position to pay the agricultural incometax. Therefore, I consider that there is no necessity to use the discretion vested under the provision to S. 40 in favour of the assessee in as much as the petitioner is reported to be financially in sound position”. We are clearly of opinion that the orders of the Agricultural Incometax Officer cannot be sustained. S. 40 occurs in Chapter VI relating to recovery of tax and penalties. It gives discretion to the Agricultural Incometax Officer to make a demand of the tax in such number of instalments, within such time, at such place and in such manner as may be prescribed. If an assessee fails to pay tax as demanded, he would be considered to be in default. The section has a proviso which says:
“Provided that, when an assessee has presented an appeal, under S. 31, the Agricultural Incometax Officer may, in his discretion, treat the assessee as not being in default so long as such appeal is disposed of.”
The proviso vests a discretionary power in the Agricultural Incometax Officer to treat the assessee as not being in default, if he has filed an appeal. But the discretion vested in him cannot be arbitrarily exercised. Wherever a statute invests a discretionary power in a Public Officer, it is normally for exercise in favour of the person concerned, unless there is some sound and relevant reason for denying the benefit of the discretionary power. The intention of the proviso appears to be that, if an appeal is filed, that will be a ground for treating the assessee as not being in default to the extent of the tax covered by the appeal. Normally, therefore, once the Officer is satisfied that an appeal has been filed, he has to treat the assessee as not being in default. Notwithstanding the filing of an appeal, there may be a sound and relevant reason why the benefit of the discretion must be given to the assessee. In what cases the denial of the discretion will be justified, is not indicated by the proviso. But it will suffice for us to say that the fact that the assessees are sound and in a position to pay the tax is not in itself a ground for refusing to exercise the discretion under the proviso. The petitions are allowed. No costs.
The Agricultural Tncometax Officer will pass fresh orders in accordance with the observations in this judgment. He will do so within a week from to date.
V.C.S