JUDGMENT

Jagdish Sahai, J. - This is a reference u/s 66(1) of the Indian Income Tax Act (hereinafter referred to as the Act). The statement of the case submitted by the Income Tax Appellate Tribunal (hereinafter called the Tribunal) gives the following facts. The assesses M/s Kashiram Bhajanlal (hereinafter called the assessee) carries on business of cloth and arhat at Farrikhabad and also manufactures utensils. For the assessment years 194546, 1946-47 and 1947-48 the assessee was assessed on income shown as below:

2. Demand notices were sent for the tax due from the assessee but the demand not having been satisfied the following orders of penalty were passed u/s 46(1) of the Act on 1-10-1951.

3. The assessee did not pay the tax nor did he pay the amounts of penalty as ordered by the Income Tax Officer. Instead he filed three appeals against the quantum assessment and three others against the order of imposition of penalty. Ail these appeals were filed on 2-11-1951. The Appellate Assistant Commissioner allowed the appeals against the quantum assessment on 22-11-1951 and out of those directed against the orders of imposition of penalty he dismissed two on 15-12-1951 and the third on 31-12-1951 on the ground that the assessee not having paid up the tax on or before the 2nd of Nov., 1951, when the appeals were filed the same were incompetent under the first proviso to Section 30(1) of the Act. The assessee then filed three appeals before the Tribunal against the orders of the Appellate Assistant Commissioner dismissing the appeals against the order of imposition of penalty. The Tribunal by its judgment dated 12th of Aug. 1952, dismissed those appeals affirming the view of the Appellate Assistant Commissioner. The assessee then made applications to the Tribunal for referring a question of law to this Court and the Tribunal has referred the following question to us:

"Whether on the facts and in the circumstances of this case the Tribunal was justified in holding that the appeals preferred by the assessee before the Appellate Assistant Commissioner against the imposition of penalty u/s 46(1) of the Income Tax Act were incompetent on the ground that the taxes for the non-payment of which the penalty was imposed had not been paid on or before the date on which the appeals were filed?"

4. We have heard learned counsel for the assesses as also for the Department. The relevant portions of Section 30 and which are material for the decision of the case before us read as follows:

"Any assessee objecting to any penalty imposed by an Income Tax Officer under Sub-section (6) of Section 44-E or Sub-section (4) of Section 44-F or Sub-section (1) of Section 46. .... may appeal to the Appellate Assistant Commissioner against the assessment or against such refusal or order:

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

5. It has already been noticed in an earlier part of this judgment that on 2-11-1951 when the appeals against the orders imposing penalty were filed the tax assessed on the assessee had not been paid, and the question that requires consideration is whether the Appellate Assistant Commissioner and the Tribunal were right in interpreting the proviso to Section 30(1) of the Act so as to mean that the appeals could not be entertained. On behalf of the Department it has been contended that the language of Section 30 is clear and the words "no appeal shall lie" occurring in the proviso to Section 30(1) create a complete bar to the entertainment of the appeals, while on behalf of the assessee it has been contended that those words only bar the hearing of an appeal in the event of the amount of tax remaining unpaid even up to the date of hearing. It is notew