V.G.OAK C.J. - (1.) THIS is a reference under section 66(1) of the Indian Income-tax Act, 1922. Santosh Kumar is the assessee. He filed a return for the assessment year 1957-58. The Income-tax Officer made a provisional assessment under section 23B of the Act. The assessees liability was fixed at Rs. 12,477. On January 21, 1960, a demand notice accompanied by the assessment form was issued. The notice was served on the assessees minor brother, Suresh Kumar. The assessee had not given any specific authority to his minor brother to accept service of notice on behalf of the assessee. On January 29, 1960, an application was made to the Income-tax Officer raising objections against the assessment order under section 23B. On February 11, 1960, another application was moved on behalf of the assessee through his advocate asking for time for payment. That application was rejected by the Income-tax Officer. Penalty of Rs. 1,500 was imposed under section 46(1) of the Act on the ground that no tax had been paid by the assessee. On March 25, 1960, and on March 31, 1960, fresh orders were passed by the Income-tax Officer imposing further penalties of Rs. 3,000 each. Against these orders dated March 25, 1960, and March 31, 1960 two separate appeals were filed by the assessee before the Appellate Assistant Commissioner. They were dismissed on the ground that tax had not been paid and the appeals were incompetent. The assessee appealed to the Income-tax Appellate Tribunal, Patna Bench, Camp Allahabad. The Appellate Tribunal accepted the view taken by the Appellate Assistant Commissioner and dismissed the two appeals filed by the assessee. The assessee moved before the Tribunal two applications under sections 66(1) of the Act for reference to the court. The assessee proposed a number of question. The Tribunal agreed toot refer only one of these questions to the court. The question so referred is : Whether, on the facts and circumstances of the case and having regard to the first proviso to section 30(1), the order of the Tribunal confirming the order of the Appellate Assistant Commissioner that no appeal lay to him as the tax had not been paid was right in law ?
(2.) THE Appellate Assistant Commissioner held that the two appeals before him were incompetent by virtue of the first proviso to section 30 of the Act. Section 30 provides for appeal against assessment under the Act. Sub-section (1) of section 30 states : Any assessee objecting to the amount of income assessed... or denying his liability to be assessed under this Act... or objecting to any penalty imposed by an Income-tax Officer under sub-section (6) of section 44E... or sub-section (1) of section 46... may appeal to the Appellate Assistant Commissioner... Provided that no appeal shall lie against an order under sub-section (1) of section 46 unless the tax has been paid... The question is whether the appeals filed by the assessee before the Appellate Assistant Commissioner were liable to be dismissed under the first proviso to sub-section (1) of section 30 of the Act. Section 46 of the Act deals 3with the mode and time of recovery. Sub-section (1) of section 46 is : When an assessee is in default in making a payment of income-tax, the Income-tax Officer may in his discretion direct that in addition to the amount of the arrears a sum not exceeding that amount a shall be recovered from the assessee by way of penalty.
(3.) SUB-section (1A) of section 46 provides : For the purposes of sub-section (1), the Income-tax Officer may direct the recovery of any sum less that the amount of the arrears any may enhanced the sum so directed to be recovered from time to time in the case of a continuing default, so however that the total sum so directed to the recovered shall not exceed the amount of the arrears payable. In the instant case the Income-tax Officer acted under sub-section (1) and (1A) of section 46 of the Act. So, prima facie, the first proviso to sub-section (1) of section 30 of the Act was attracted. But Mr. R. K. Gulati appearing for the assessee urged before us that, in the circumstances of the present case, the proviso was not attracted. He urged that, in the present case, there was no notice served upon him under section 29 of the Act.;