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TMI Blog1967 (7) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... n chronological order. The assessee was a registered Hindu undivided family firm. Its assessment for the year ending 1954-55 under section 23(3) of the Act was completed on September 30, 1954. On September 29, 1958, the Income-tax Officer initiated action under section 34 of the Act on having come to know of substantial income of the Hindu undivided family from undisclosed sources which had not been assessed. On March 31, 1956, the Hindu undivided family disrupted. A registered partition deed, dated December 1, 1956, was executed between the members of the Hindu undivided family witnessing the partition. During the course of assessment for the year 1957-58, the assessee claimed disruption of the Hindu undivided family and filed an application, dated March 13, 1957, praying for an order being passed under section 25A of the Act accepting the partition of the Hindu undivided family with effect from March 31, 1956. The application was accompanied by a copy of the registered partition deed, dated December 1, 1956, the original partition deed on a stamp paper of Rs. 2,000 and a copy of the Punjab Government Gazette, dated April 20, 1956, in which a public notice had been issued regardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... du undivided family could not be upheld in this case, where an order under section 25A(1) of the Act had been passed accepting the disruption of the family with effect from March 31, 1956. Department's appeal against the order of the Appellate Assistant Commissioner was accepted by the Tribunal's order, dated June 1, 1963 (annexure "D" to the statement of the case), with the following observations: " We are of opinion that the Appellate Assistant Commissioner erred in his decision. He has placed reliance on a certain decision, but he has failed to see that in this case the facts are different. Here the order under section 25A had not been passed before the levy of the penalty. In this case, the penalty was levied on 13th February, 1959, whereas the order under section 25A was passed only subsequently, viz., 29th January, 1960. The true position in the present case is that, as a matter of fact, there was no order under section 25A(1) when the penalty was levied. The true implication of section 25A(3) does not appear to have been understood by the Appellate Assistant Commissioner. The sub-section quoted already refers to the actual passing of the order under section 25A(1) and it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of making an assessment under section 23, it is claimed by or on behalf of any member of a Hindu family hitherto assessed as undivided that a partition has taken place among the members of such family, the Income-tax Officer shall make such inquiry thereinto as he may think fit, and, if he is satisfied that the joint family property has been partitioned among the various members or groups of members in definite portions he shall record an order to that effect: Provided that no such order shall be recorded until notices of the inquiry have been served on all the members of the family. (2) Where such an order has been passed, or where any person has succeeded to a business, profession or vocation formerly carried on by a Hindu undivided family whose joint family property has been partitioned on or after the last day on which it carried on such business, profession or vocation, the Income-tax Officer shall make an assessment of the total income received by or on behalf of the joint family as such, as if no partition had taken place, and each member or group of members shall, in addition to any income-tax for which he or it may be separately liable and notwithstanding anything co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings taken under section 28 of the Act for imposing penalty on a Hindu undivided family after it has disrupted and after the Income-tax Officer had made an order under section 25A. In that case, however, the order of imposition of penalty under section 28 was passed on April 24, 1950, after the Income-tax Officer had passed an order under section 25A(1) on March 18, 1949, holding that the Hindu undivided family had become separate with effect from February 13, 1946. Sub-section (3) of section 25A of the Act could not and did not, therefore, come into the field in a Patna case. It has not been disputed before us by Shri J. N. Kaushal, the learned senior counsel for the assessee, that if no order under section 25A(1) had at all been passed in this case, the order of imposition of penalty could not have been questioned by the assessee on the ground on which it is now attacked. Nor does the judgment of a Division Bench of the Andhra Pradesh High Court (Subba Rao C. J., as he then was, and Mohammad Ahmad Ansari J.) in Mahankali Subba Rao v. Commissioner of Income-tax take the matter any farther, because in that case the penalty under section 28 had been imposed on January 29, 1947, afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer imposing the penalty was perfectly valid and within his jurisdiction, because the Income-tax Officer was bound to ignore the disruption of the Hindu undivided family on the date he passed the order under section 28(1)(c), as no order under section 25A(1) had admittedly been passed till then. There is force in this argument of Mr. Awasthy to the extent to which it goes. Mr. Kaushal has fairly conceded that, if no order under section 25A(1) had been made in this case till the penalty proceedings become final with the order of the Tribunal, the assessee would not be able to press its claim. What is pointed out by Mr. Kaushal is that during the pendency of the appeal before the Appellate Assistant Commissioner, an appropriate order under section 25A(1) having been passed and the income-tax authorities having accepted the disruption of the Hindu undivided family with effect from March 31, 1956, by order, dated January 29, 1960, the order under section 25A(1) was deemed to take effect from and relate back to March 31, 1956, and in any case to March 31, 1957, the date on which the claim of dissolution of the Hindu undivided family was made on behalf of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing words: " Learned counsel contended that, since the order that was passed by the Income-tax Officer was only on December 31, 1948, the Hindu undivided family should be deemed to have continued in existence till that date. We are unable to accept this interpretation of section 25A(3). Each of the clauses under section 25A begins with the expression 'where'. To construe 'where' as 'until' does not seem to fit in with the scheme underlying section 25A of the Act. Besides, such a contention put forward in Commissioner of Income-tax v. K. M. N. N. Swaminathan Chettiar was specifically repelled by a Division Bench of this court. " I am in respectful agreement with the above-quoted law laid down by the Madras High Court in the case of S. A. Raju Chettiar. There is no doubt that " where " has sometimes been interpreted to imply not only "cases in which", but also "if and so long as", but the expression has to be given the meaning which would best fit in the context. If the legislature had intended that an order of imposition of penalty under section 28 of the Act would be deemed to be legal because of the operation of section 25A(3) of the Act even after an appropriate order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adesh High Court in Muppana Somaraju and Veeraraju's case. Sub-section (3) of section 25A has its full effect in a case where no order under sub-section (1) of that section is passed at all, till the proceedings in question become final in all respects. Reference has then been made by Mr. Awasthy to the scheme of section 25A as discussed in the judgment of their Lordships of the Supreme Court in Additional Income-tax Officer, Cuddapah v. A. Thimmayya. Nothing has, however, been said in that judgment which goes contrary to the law laid down by the Madras High Court in S. A. Raju Chettiar v. Collector of Madras. It was lastly contended, on behalf of the revenue, that the order under section 25A(1) can become effective only in respect of the year of assessment subsequent to the one in which the claim for disruption is made. The argument appears to be misconceived. The order under section 25A(1) becomes effective from the date which is specified in the order itself as the date with effect from which the disruption of the Hindu undivided family is accepted by the Income-tax Officer. In spite of the vehement arguments advanced at the Bar by Mr. Awasthy, we have not been persuaded to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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