Maintainability of appeal under income-tax law depends on actual payment of tax; defective notice service does not remove the statutory bar.

An appeal against an order imposing penalty under section 46(1) of the Indian Income-tax Act, 1922 was not maintainable because the first proviso to section 30(1) required the tax to be actually paid before the appeal could be entertained or disposed of. The assessee had not paid the tax by the time the Appellate Assistant Commissioner decided the matter, so the statutory bar applied. Defective service of the demand notice did not excuse non-payment or affect the maintainability condition. The appeal was therefore incompetent, and the reference was answered against the assessee.

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Issues: Whether an appeal against an order imposing penalty under section 46(1) of the Indian Income-tax Act, 1922 was incompetent under the first proviso to section 30(1) when the tax had not been paid by the time the appeal was disposed of.

Analysis: The proviso to section 30(1) bars an appeal against an order under section 46(1) unless the tax has been paid. The assessee had not paid the tax even by the date on which the Appellate Assistant Commissioner decided the appeal. Defective service of the demand notice did not alter the statutory condition attached to maintainability. The proviso was therefore attracted because the appeal was directed against an order under section 46(1) and the tax remained unpaid when the appeal was heard and disposed of.

Conclusion: The appeal was rightly held to be incompetent, and the answer to the reference was in the affirmative against the assessee.

Ratio Decidendi: An appeal under section 30(1) against an order under section 46(1) is not maintainable until the tax has actually been paid, and mere defective service of notice does not dispense with that statutory requirement.

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