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Issues:
1. Imposition of penalty on Hindu undivided family. 2. Validity of penalty imposition after family disruption. 3. Interpretation of section 25A(3) regarding continuity of Hindu undivided family. 4. Recovery of penalty under section 47 of the Income-tax Act. Analysis: The judgment in the case involved the imposition of a penalty on a Hindu undivided family, which had undergone partition. The petitioners, members of the family, argued that no penalty could be enforced against them post the family's disruption. The court highlighted that the family ceased to exist for Income-tax Act purposes after partition, even though the penalty order was passed later. It was emphasized that the penalty could not be imposed on a non-existent entity, as per section 28(1) of the Act, which requires a valid "person" to be penalized. The court cited a similar case where proceedings against a non-existent family were deemed legally invalid. Regarding the interpretation of section 25A(3), which deems a Hindu undivided family to continue for tax purposes until a specific order is passed, the court rejected the argument that the family should be considered existing until the order date. The court held that the provision does not support such an interpretation and referenced a previous case where a similar argument was dismissed by a Division Bench. In terms of penalty recovery under section 47 of the Act, the court noted that a valid penalty order is a prerequisite for recovery. Section 28 was identified as a comprehensive regulation for penalty imposition, distinct from tax assessment and levy procedures. The court declined to fill any perceived lacuna in the legislation, as highlighted in a previous case. Ultimately, the court ruled in favor of the petitioners, stating that no penalty was effectively imposed on them. The order from 1948 did not legally or factually penalize any of the petitioners, thereby precluding any recovery of the penalty from them. The court allowed the petition with costs, affirming the petitioners' contentions and rejecting the enforcement of the penalty against them.
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