Subba Rao, C.J.The income tax Appellate Tribunal, Madras Bench, referred to the High Court of Madras u/s 66(1) of the Indian income tax Act the following two questions of law:

(1) Whether the appeal did not lie to the Appellate Assistant Commissioner, against the order of the income tax Officer u/s 46(1) because of the first proviso to section 30(1) of the Act; and

(2) Whether the failure of the income tax Officer to object to the competency of the appeal gave the Appellate Assistant Commissioner jurisdiction to hear and decide the appeal.

2. The undisputed facts that gave rise to the reference may be briefly stated. For the assessment year 1948-49, the assessee was assessed to income tax on a sum of Rs. 2,19,541-2-0 and was directed to pay the same on or before 5th March, 1949. On 8th March, 1949, he sent a cheque for Rs. 25,000 and prayed for the payment of the balance in instalments of Rs. 25,000 per mensem. On nth March, 1949, the income tax Officer refused to grant time as the assessee made default in the payment of tax. On 19th March, 1949, the income tax Officer levied a penalty of Rs. 2,000 and called upon the assessee to pay up the tax and penalty by 25th March, 1949. After giving some extensions of time for the payment of the balance the income tax Officer on 28th March, 1949, levied a further penalty of Rs. 25,000. On 25th April, 1949, the assessee sent to the income tax Officer a cheque for Rs. 25,000 towards penalty and a further cheque for Rs. 30,000 in part payment of the tax due. The Commissioner of income tax, Madras, by his order, dated 2nd May, 1949, permitted the assessee to pay the balance of tax in monthly instalments of Rs. 40,000. On 21st April, 1949, the assessee filed two appeals to the Appellate Assistant Commissioner, A Range, Madras, against the said penalties of Rs. 2,000 and Rs. 25,000 imposed on him u/s 46(1) of the income tax Act. The Appellate Assistant Commissioner, by his order, dated 19th October, 1949, disposed of the appeals. He confirmed the imposition of penalty of Rs. 2,000 but cancelled the penalty of Rs. 25,000. It may be mentioned that, by that date, the assessee had paid all the amounts due from him in accordance with the terms of the order of instalment made by the Commissioner of income tax. The assessee preferred an appeal to the Tribunal against the order of the Appellate Assistant Commissioner confirming the penalty of Rs. 2,000. The department preferred an appeal against the order, cancelling the penalty of Rs. 25,000. The Tribunal dismissed the appeal filed by the assessee but allowed the appeal preferred by the department on the ground that, on the date when the assessee filed the appeal, the tax was due and, as the tax was not paid before the filing of the appeal, the appeal was incompetent. The assessee applied to the income tax Appellate Tribunal u/s 66(1) of the Act for referring the aforesaid two questions and they have accordingly done so.

3. Learned counsel for the assessee contended that the condition of pre-payment of tax laid down in the proviso to section 30(1) applies only to the final disposal of the appeal and not to its presentation. To put it differently, he would contend that if the condition is complied with on the date when the appeal is disposed of, the appeal is competent notwithstanding the fact that on the date of the presentation of the appeal, the condition was not satisfied. To appreciate this argument, the relevant provisions of the Indian income tax Act may be read:

"Section 46(1): 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."

"Section 30(1): Any assessee...objecting to any order under sub-section (1) of section 46 ...may appeal to the Appellate Assistant Commissioner against...such order.

Provided that no appeal shall lie against an order under subsection (1) of section 46 unless the tax has been paid.

Section 30(2): The appeal shall ordinarily be presented within 30 days...of receipt of the notice of demand relating to the assessment or penalty objected to...but the Appellate Assistant Commissioner may admit an appeal after the expiration of the period if he is satisfied that the appellant had sufficient cause for not presenting it within that period."

4. A combined reading of the provisions of section 30(1) and (2) leaves no doubt in our mind that the payment of the tax is a condition precedent for the maintainability of the appeal. The proviso to section 30, by indicating that no appeal shall lie unless the tax has been paid, clearly makes such payment of tax a condition. Sub-section (2) only limits the period of time within which such appeal shall be filed. To read the two sub-sections as dealing with a right of appeal at two different points of time is not only illogical but will lead to anomalies. An aggrieved party may file an incompetent appeal to satisfy the period of limitation with an off-chance of paying the arrears at any time before the appeal is disposed of. The maintainability of the appeal would then depend upon the fortuitous circumstance of the posting of the appeal for hearing before or after the payment of the tax. We would, therefore, hold that an appeal presented within the meaning of subsection (2) of section 30 should comply with the condition laid down in the proviso to sub-section (1).

5. Reliance is placed upon the judgment of the Orissa High Court in Ramanarayan Das Madanlal Vs. Commissioner of Income Tax, . There, the petitioner was assessed to income tax on 30th May, 1944. As he failed to pay the same, he was ordered to pay certain penalty u/s 46 of the Act. He filed an appeal on 5th July, 1944. According to the order of the income tax Officer, the petitioner should pay the balance of tax by 13th July, 1944. The appeal came up for disposal before the Appellate Assistant Commissioner on 10th September, 1944. Meanwhile, the Inspecting Assistant Commissioner extended the time for payment of tax till the 25th of September, 1944, i.e., on the date when the appeal was disposed of the assessee had some more time to pay the tax. The Assistant Appellate Commissioner rejected the appeal on the ground that an appeal did not lie inasmuch as the tax had not been paid. When an appeal was filed against that order, the income tax Appellate Tribunal dismissed it on the ground that the order was not one u/s 31 of the Act and therefore no appeal lay to them. The learned Judges on those facts directed the Tribunal to refer the following two questions to the High Court:

"(1) Whether an order passed by an Appellate Assistant Commissioner dismissing an assessees appeal on the ground of its incompetence according to the proviso to sub-section (1) of section 30 of the Act is one u/s 31 and as such appealable u/s 33(1) of the Act; and

(2) Whether such an order passed before the expiry of the time either as originally fixed or later extended by competent authority for payment of the tax is good in law "

6. After the two points were referred, the learned Judges held, on the first point, that the dismissal of the appeal by the Appellate Assistant Commissioner was one u/s 31 of the Act and, therefore, an appeal lay to the Tribunal. In regard to the second point, expressing the view that it would strictly fall within the scope of an appeal before the Appellate Tribunal, they did not give any finding on the same. This case cannot, therefore, be relied upon in support of the proposition advanced by the learned counsel for the assessee. We shall, later on, consider some of the relevant observations found in the judgment in their proper context.

7. This view will not dispose of the reference. The more substantial question is whether the Assistant Appellate Commissioner had jurisdiction to dispose of the appeal in the circumstances of this case. If the Assistant Appellate Commissioner had jurisdiction, the mere fact that there was some irregularity in the exercise of jurisdiction would not affect the validity of that order. At the time the appeal came to be disposed of, i.e., on 19th October, 1949, there was the order of the Commissioner dated 2nd May, 1949; whereunder the assessee was directed to pay the tax in instalments. The Commissioner had ample jurisdiction to make such an order u/s 33A whereunder the Commissioner may of his own motion call for the record of any proceeding under the Act in which an order has been passed by any authority subordinate to him and make such enquiry or cause such enquiry to be made and subject to the provisions of the Act may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit. It follows that, on 2nd May, 1949, the unconditional demand for the payment of the entire tax by the income tax Officer was modified by the competent revisional authority, the Commissioner. The result was as if the original demand itself contained a direction for the payment of the amount in the prescribed instalments. The question, under those circumstances, is whether the tax has been paid within the meaning of the proviso to section 30 (1) at the time the appeal was filed. The answer turns upon the meaning of the word "tax". Does that word mean the entire tax assessed or does it mean the tax due for payment If it was the former, undoubtedly the assessee did not pay it. If it was the latter, the entire tax was not due on the date the appeal was filed, for, in accordance with the modified order, the further instalments did not fall due by that date.

8. The observations made by the learned Judges in Ramanarayan Das Madanlal Vs. Commissioner of Income Tax, may usefully be referred to at this stage. At page 662, the learned Judges observed:

"This argument, however, has to be judged in the light of the facts, out of which the question emerges, whether a competent authority having extended the time for payment of the income tax, it can be held, before that time expires, that the assessee has committed a default in payment of the tax. In whatever language the proviso under consider action might have been couched it is nothing but a provision providing for forfeiture of right of appeal, accruing from a default. It follows, necessarily, that if there is no default, there ought to be no forfeiture. Therefore, the contention of the petitioner that till after the expiry of the time for payment under orders of an authority competent in that behalf it could not be held that the assessee lost his right of appeal, seems to bear a great force and requires consideration...."

9. These observations indicate that till the time given by the competent authority for payment expires, the tax would not be due. In Elbridge Watson Vs. R.K. Das, , Das Gupta, J., made certain observations, which are apposite to the question now raised. The section construed in that case reads as follows :

"Section 46. (5A) The income tax Officer may at any time, or from time to time, by notice in writing (a copy of which shall be forwarded to the assessee at his last address known to the income tax Officer) require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee to pay to the income tax Officer, either forthwith upon the money becoming due or being held or at or within the time specified in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due by the taxpayer in respect of arrears of income tax and penalty or the whole of the money when it is equal to or less than that amount.

The income tax Officer may at any time or from time to time amend or revoke any such notice or extend the time for making any payment in pursuance of the notice."

10. The question propounded for decision in that case was stated by the learned Judge thus:

"The point which specifically arises for my consideration is what would be the amount due as mentioned in section 46 (5A) of the income tax Act Is it, in the present case, the whole of the amount which is payable to the income tax authorities by the petitioner, viz., Rs. 3,37,345-5-0 or is it Rs. 5,000 per month as and when the instalments become due "

11. Answering that question at page 543, the learned Judge says :

"It seems to me that after the Certificate Officer has allowed instalments at Rs. 5,000 per month the assessee has the right to pay only Rs. 5,000 per month and the income tax authorities would be under an obligation to take, so long that order stands, only at such instalments. If that is so, then the income tax Officer cannot direct the debtors of the assessee to pay anything more than at the rate of Rs. 5,000 per month, and it was incumbent on the income tax Officer at least to amend his notice accordingly. The position, it seems to me, would be entirely anomalous if, on the one hand, the Collector, who is authorised to do so, allows the assessee to pay in certain instalments, but the income tax Officer issues notices for payment of the entire sum all at once.... The expression amount due in this case to my mind must mean the amount of instalments as and when they become due."

12. Though in the proviso to section 30, the word "due" is absent, the words "tax has been paid" mean only that the tax due has been paid. The Legislature could not have intended to compel a party to pay a tax not due as a condition precedent for conferring a right of appeal on him. "Tax", therefore, in the section means tax due for payment, i.e., a tax in respect of which the income tax Officer has a right to demand and the assessee has an obligation to pay. In this view, even at the time the appeal was presented no tax was due from the assessee as, by reason of the instalment order, he had further time to pay the balance and that by the time it fell due, it is conceded that it was paid.

13. Even if the tax was due at the time the appeal was presented, we would go further and hold that the subsequent events and the conditions obtaining at the time the appeal was disposed of by the Assistant Commissioner could certainly be relied upon by the assessee in the circumstances of the case. If an appeal was filed, though after the prescribed period of time, the Assistant Commissioner would have jurisdiction to hear the appeal after the tax due was paid. The only possible objection that could have been raised was that the appeal was barred under the provisions of sub-section (2) of section 30, but, under that sub-section the appellate authority would have jurisdiction to excuse the delay. The income tax authorities could have waived their objection. If the present objection had been raised before the appellate authority, he could have treated the appeal as filed after the condition was complied with- for, as aforesaid, by the time the appeal came to be disposed of, the instalments due up to that date were completely paid-and, if necessary, would have excused the delay in filing the appeal. In the view we expressed, viz., that the word "tax" in the proviso means the tax due, no question of jurisdiction arises, for the entire tax due was paid. If at all, there was irregularity in the exercise of jurisdiction, which, if pointed out in time, could have been rectified. The income tax authorities, not having raised that objection and allowed the appeal to be disposed of on merits, it is not open to them to contend for the first time before the Tribunal that the appeal should have been dismissed on the ground that it was filed after the prescribed time. In this view also, the appeal before the Assistant Commissioner was maintainable. In the result, we answer the first question in the negative and the second question in the affirmative. The respondent will pay the costs of the assessee which is fixed at Rs. 250.