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TMI Blog1969 (9) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... 957, an application was moved before the Income-tax Officer claiming that a partition had taken place in the family on 22nd June. 1956. The Income-tax Officer was satisfied on this point. On 26th March, 1962, he recorded an order under section 25A(1) of the Act to the effect that partition had taken place with effect from 22nd June, 1956. In the meanwhile, penalty proceedings were initiated against the Hindu undivided family. On 15th March, 1957, the Income-tax Officer issued a notice to the assessee to show cause why penalty under section 28(1)(c) of the Act should not be imposed on the assessee. After hearing the assessee, a penalty of Rs. 26,000 was imposed by the Income-tax Officer on 20th March, 1958. In appeal the penalty was reduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder sub-section (1). Although sub-section (2) provides for assessment of income-tax, it does not expressly refer to any proceeding for imposing penalty. Sub-section (3) is important. Sub-section (3) of section 25A states : " Where such an order has not been passed in respect of a Hindu family hitherto assessed as undivided, such family shall be deemed, for the purposes of this Act, to continue to be a Hindu undivided family. " The main question for consideration in the present reference is whether the order imposing penalty is protected by sub-section (3) of section 25A of the Act. In S. A. Raju Chettiar v. Collector of Madras, it was held by the Madras High Court that in order that proceedings under section 28 of the Act for imposin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of penalty, would not disentitle the family to claim that the imposition was illegal so long as the proceedings for imposition of penalty had not become final. In Kalwa Devadattam v. Union of India, their Lordships of the Supreme Court pointed out on page 172 that if no order is recorded under sub-section (1) of section 25A by virtue of sub-section (3), the family shall be deemed, for the purposes of the Act, to continue to remain a Hindu undivided family. In C. A. Abraham v. Income-tax Officer, Kottayam, it was explained by the Supreme Court that the legislature by enacting section 44 of the Act has provided that assessment proceedings may be commenced and continued against a firm whose business is discontinued, as if discontinuance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout from 1945 to 1947. Penalty proceedings were initiated in the year 1951. The Tribunal has found that there was concealment of income. Prima facie, there should be no serious difficulty about imposing penalty for the concealment. The assessee relies on the fact that the family was partitioned on 22nd June, 1956, and penalty was not imposed until 22nd March, 1958. We must, however, bear in mind that the partition was not recognised by the Income-tax Officer till he recorded an order under section 25A(1) of the Act on 26th March, 1962. The position in 1958 was that no order had by that time been passed by the Income-tax Officer under section 25A(1) of the Act. In the year 1958 the Income-tax Officer was fully entitled to the benefit of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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