Chagla, C.J:—
The assessee in this case was assessed for the years 1944-1945 and 1945-1946. He failed to make the full payment in respect of his assessment for these years. Thereupon on June 23, 1948, the Income-tax Officer purported to pass an order to the following effect. “Tax not paid; Issue Penalty Notice.” Pursuant to this order a demand was made for payment under s. 29 and the notice of demand mentioned what was the amount of penalty that the assessee had to pay. The assessee appealed to the Appellate Assistant Commissioner from the order under s. 46(1) and the Appellate Assistant Commissioner ??? the penalty. Then there was an appeal to the Tribunal ??? Tribunal upheld the decision of the Appellate Assistant Commissioner. The contention urged before the Tribunal and also before us is that the penalty imposed was contrary to law inasmuch as no proper order was passed by the Income-tax Officer under s. 46(1). That sub-section provides that when an assessee is in default in making payment of income-tax, the Income-tax Officer may in his discretion direct that in addition to the amount in arrears a sum not exceeding that amount shall be recovered from the assessee. It is clear that the direction that the Income-tax Officer has to give under s. 46(1) must be a direction which must take the form of an order and that order must state the specific sum which of the assessee has got to pay by way of penalty. The limitation laid down upon the Income-tax Officer under that sub-section is that the amount which the assessee has to pay as penalty must not exceed the amount of arrears. Now, the contention of Mr. Joshi is that s. 46(1) merely provides for a departmental direction to be given by the Income-tax Officer. According to him that departmental direction is carried out when the notice of demand is given under s. 29 and it is sufficient if in the notice of demand the actual amount which has to be paid by the assessee is mentioned. Now, when we turn to s. 29, what it provides is that when any tax penalty or interest is due in consequence of any order passed under or in pursuance of the Income-tax Act, the Income-tax Officer shall serve upon the assessee or other person liable to pay such tax penalty or interest a notice of demand in the prescribed form specifying the sum so payable. Therefore, the notice of demand can only be served under this section provided tax, penalty or interest is due in consequence of an order passed under the Act. Therefore the condition precedent to the validity of the notice of demand under s. 29 must be an order passed under the Act, and the notice is merely consequential upon that order. Therefore, if there is no order under the Act, then no notice can be served under s. 29. Therefore, if Mr. Joshi's contention is sound that no order is required under s. 46(1) and in fact no order was passed under that sub-section, then the notice of demand under s. 29 is clearly bad and there was no liability of the assessee to comply with that notice. As I stated before the contention of Mr. Joshi that no order is required under s. 46(1) is clearly untenable, because when one ??? at the scheme of the Act a right of appeal is provided by ??? the Act against the penalty imposed, and it cannot ??? that the right of appeal given under s. 30 is against a direction made by the Income-tax Officer under s. 46(1) which does not even specify what is the amount of the penalty which the assessee has got to pay. Under s. 46(1) there must not only be a formal order which imposes a penalty but it must also specify the actual amount of the penalty which the assessee is liable to pay. After that order is passed then, consequential upon that order, a notice of demand may be served under s. 29 and the assessee has a right of appeal against such order under s. 30 of the Act. Inasmuch as the order passed by the Income-tax Officer in this case under s. 46(1) does not specify the amount of the penalty, the order is bad and the notice of demand is equally bad as it follows upon an invalid order of the I.T.O In the result the penalty imposed by the I.T.O is not valid in law and we shall therefore answer the question referred to us in the negative. The Commissioner to pay the costs of the reference.
Attorneys for applicants: Manilal, Kher, Ambalal and Co.
Attorney for respondents: N.K Petigara.
Answer accordingly.
A.J.P