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TMI Blog1972 (7) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... two deposits totalling Rs. 54,202 were found to have been utilised for payments of kists for certain abkari contracts for which the licence was in the name of Govindaswami Naidu. Govindaswami Naidu submitted an explanation in which he pleaded that he was a benamidar for one Bakthavathsalu who wanted to bid at the auction for the abkari contract at Pudukkottai and that as that person was not in a position to file a solvency certificate, he sought the help of Govindaswami Naidu to bid in the auction. Bakthavathsalu was examined by the Income-tax Officer. The Income-tax Officer also found that a sum of Rs. 946-12-3 being the interest due on the deposit had been withdrawn by the said Govindaswami Naidu. It was common ground that the receipt of this interest had also not been accounted in the assessee's books of account. Not accepting the explanation offered by the said Govindaswami Naidu, the Income-tax Officer added a sum of Rs. 54,000 as income from undisclosed source to the income returned for the assessment year 1949-50. On appeal by the assessee, the Appellate Assistant Commissioner held that though there was ample evidence for the finding of the Income-tax Officer that the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivided family as a juristic entity, it was held that in respect of concealment of income or deliberate furnishing of inaccurate particulars in the return submitted by the previous karta, proceedings under section 28(1)(c) could be taken against the Hindu undivided family even after the death of the previous karta who filed the inaccurate return. Ultimately, the levy of penalty of Rs. 16,000 made by the Income-tax Officer was confirmed by the Appellate Assistant Commissioner and the Tribunal. At the instance of the assessee, the following question has been referred under section 66(1) of the Act : " Whether, on the facts and in the circumstances of the case, the levy of penalty under section 28(1)(c) on the assessee as the succeeding karta of the Hindu undivided family was valid in law ? " The relevant portion of section 28 of the Indian Income-tax Act, 1922, reads as follows : " 28 (1). If the Income-tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal, in the course of any proceedings under the Act, is satisfied that any person... (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he or it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that in any case in this case the original Hindu undivided family consisted of only two coparceners, the father and son, and on the death of the father the Hindu undivided family came to an end and the son became the individual assessee. We are clearly of opinion that this contention is incorrect and not acceptable. Under the scheme of the Income-tax Act, a Hindu undivided family is a distinct taxable entity apart from the individual members who constitute that family. For the purposes of assessment under the Income-tax Act, it is a juristic entity. Any change in the kartaship would not affect the legal continuity of that juristic entity. If any authority is needed for this proposition, we may refer to the decision in Radha Rukmani Ammal v. Commissioner of Income-tax. It is also not correct to state that the property in the hands of a single coparcener was not the property of a Hindu undivided family and that a Hindu undivided family comes to an end as an entity when the coparceners are reduced to a single individual. This point was specifically considered by the Supreme Court in Narendranath v. Commissioner of Wealth-tax. The Supreme Court quoted with approval the following pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to manage the joint family properties and represents the family in all transactions. The propriety of his past actions cannot be called in question by the other coparceners on the ground that they are imprudent actions. In such circumstances they could only ask for a partition. Having regard to these settled legal principles, we do not find any insuperable difficulty in attributing the consciousness of the karta to the Hindu undivided family which he represents. In fact, if the consciousness of the karta cannot be attributed to a Hindu undivided family, neither a lawful act nor an unlawful act could be imputed to it. Even for an ordinary breach of contract the Hindu undivided family cannot be proceeded with. In this connection, it is useful to refer to the decision of the House of Lords in Lennards Carrying Co. v. Asiatic Petroleum Co. in which Viscount Haldane L.C., with reference to the liability of a company for default of its managing director, said : " My Lords, a corporation is an abstraction. It has no mind of its own any more than it has a body of its own ; its active and directing will must consequently be sought in the person of somebody who for some purposes may be ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Of Income-tax, relied on by the learned counsel for the assessee, were considered and held not to deal with the point now in question, it is not-necessary for us again to note those facts in this case. The learned counsel for the assessee then placed strong reliance on the decision of the Supreme Court in Kapurchand Shrimal v. Tax Recovery Officer, that the representative character of the karta cannot be stretched to his contumacious conduct and that conduct attributed to the Hindu undivided family. This decision was concerned with the question of default and liability for arrest and detention of the defaulter. It was held that in the case of a Hindu undivided family the manager is competent to represent the Hindu undivided family by virtue of his status but on that account he cannot be deemed to be the assessee when the assessment is made against the Hindu undivided family and certificate for recovery is issued against the family. It was further held that, in the context in which the expression " person " occurs in sections 276, 276A, 277 and 278, there can be no doubt that it seeks to penalise only those individuals who fail to carry out the duty cast by the specific provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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