1. V. G. OAK, C. J.-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 assessm ent under section 23-B of the Act. The assessee's liability was fixed at Rs. 12,477. On January 21, 1960, a demand notice accompanied by the assessment form was issued.
2. The notice was served on the assessee's 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 assessm ent order under section 23-B. 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 applica--tions under section 66(1) of the Act for reference to the Court. The assessee proposed a number of questions. The Tribunal agreed to 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?"
3. 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 assessm ent under the Act. Subsection (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 subsection
(6) of section 44-E . . . Or subsection (1) of section 46 . . . May appeal to the Appellate Assistant Commissioner . . .
4. Provided that no appeal shall lie against an order under subsection (1) of section 46 unless the tax has been paid. . ."
5. 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 subsection (1) of section 30 of the Act.
6. Section 46 of the Act deals with the mode and time of recovery. Subsection (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 shall be recovered from the assessee by way of penalty."
7. Subsection (1-A) of section 46 provides: "For the purposes of subsection (1), the Income-tax Officer may direct the recovery of any sum less than the amount of the arrears and may enhance 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 be recovered shall not exceed the amount of the arrears payable."
8. The Tribunal has found that service of notice on Suresh Kumar was not proper service on the assessee. But, on receiving notice threatening penalty proceedings, the assessee, through his duly authorised Advocate, applied to the Income-tax Officer for time to pay the tax.
9. It is true that the proceeding for service of notice upon the assessee in the instant case was defective. But the Tribunal has found that the assessee through his duly authorised Advocate applied to the Income-tax Officer for time to pay the tax. That conduct of the assessee implies that he was aware of his liability to pay the tax. Under these circumstances, it is impossible to accept the contention of the assessor that no tax was due from him.
10. Mr. Gulati urged that, in view of the defective service of notice, the Appellate Assistant Commissioner should have invited the assessee to pay the tax before disposing of the appeal. No such responsibility lay on the Appellate Assistant Commissioner. It was for the assessee to pay up the dues if he was anxious to avoid the prohibition of the proviso to subsection (1) of section 30 of the Act.
11. The two appeals in question were filed by the assessee under subsection (1) of section 30 of the Act. In order to attract the first proviso, two conditions are necessary : firstly, the appeal must be against an order under subsection (1) of section 46. Secondly, the appellant must have failed to pay the tax. In the instant case the assessee was challenging the two orders passed under subsection (1) of section 46 of the Act. The tax had not been paid even up to the time the appeals were disposed of by the Appellate Assistant Commissioner. Thus both the conditions mentioned in the proviso were fulfilled. The Appellate Assistant Commissioner was right in holding that the two appeals fell within the prohibition contained in the proviso to section 30(1) of the Act, and that the two appeals were incompetent.
12. Our answer to the question referred to the Court is in the affirmative, and against the assessee. The assessee shall pay the Commissioner of Income-tax, U. P., costs of the reference, which we assess