1955 (12) TMI 43

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..... ngs for levy of penalty for concealment of income were thus initiated under section 28 of the Income-tax Act. Those proceedings terminated only on 18th March, 1948, when a penalty of ₹ 83,000: was imposed on the assessee, which it should be remembered was the Hindu undivided family. Meanwhile steps had been taken under section 25A of the Act to get the partition dated 25th January, 1946, recorded by the departmental authorities. The application was preferred on 18th September, 1946. That application was allowed by the Income-tax Officer on 31st December, 1948. In that partition the business in cloth, in connection with which penalty was subsequently levied, was allotted to Balagurumurthi. Balagurumurthi appears to have paid a po .....

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..... ee in 1943-44. No doubt the notice prescribed under section 28 of the Act was issued to the assessee. It was addressed to Balagurumurthi. The notice itself was issued on 4th September, 1944, before the disruption of the Hindu undivided family, and when Balagurumurthi was still the kartha ; he was entitled to and did in fact represent the assessee family at that stage. But the family had ceased to exist as a person for purposes of the Income-tax Act long before the penalty was imposed on 18th March, 1948. Under section 28(1) of the Act, any person, in whose case it is held that the requirements of that section have been satisfied, is liable to be penalised. A Hindu undivided family is within the scope of the expression person : see se .....

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..... my opinion the proceeding initiated by the Income-tax Officer under section 28(1)(c) of the Act is legally invalid since the Hindu undivided family was nonexistent on that date. It follows that the order of the Income-tax Officer imposing the penalty on the 24th of April, 1950, is also legally invalid. Thus both the Requirements have to be satisfied on the date proceedings are initiated under section 28 of the Act ; the person, and if that person is a Hindu undivided family that family, must be in existence ; that family must be also in existence on the date the order imposing the penalty on that family as a person is passed. We respectfully agree with the principle laid down by the learned Judges in Sanichar Sah Bhim Sah's case( su .....

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