1957 (1) TMI 52

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..... rd Vacuum Oil Co. for sale of petrol, kerosene oil, etc. The family comprised of two brothers, Subba Rao and Nageswara Rao. It is now found that they became divided on 5th April, 1943. In respect of the year 1943-44, the assessee filed a return on 15th July, 1947, declaring a total income of ₹ 32,073. The Income tax Officer did not accept the figure but added a sum of ₹ 40,000, on the ground that the assessee had dealings in black market and suppressed his income there from. He also took proceedings under section 28 of the Income-tax Act and imposed a penalty of ₹ 21,960 by his order dated 29th January, 1947. The question is whether the members of a disrupted family are liable to pay penalty under section 28 of the Act. Se .....

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..... the tax assessed on the total income received by or on behalf of the joint family as such. This section was introduced to provide a machinery for assessing the disrupted members of a joint Hindu family to income-tax and for collecting the share of the tax payable by each member of that family. Under the proviso, the members of the erstwhile family are liable to pay the tax assessed jointly and severally. But there is no provision authorising the authorities concerned to impose a penalty on the members of a divided family. Section 28, which enables the Income-tax authorities to impose penalty under the circumstances mentioned therein, says that if the Income-tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal in .....

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..... ge pointed out: It is clear that there is a gap in the provisions of the Act; but it is not the function of the Court to fill up the gap. We respectfully agree with the aforesaid observations. Rajagopalan and Rajagopala Ayyangar, JJ., of the Madras High Court had to consider a similar question in Raju Chettiar v. Collector of Madras [1956] 29 ITR 241. The observations of the learned Judges in the context of the applicability of section 28(1) of the Act to the members of a disrupted family may usefully be extracted. At page 244, the learned Judges observed: A Hindu undivided family is within the scope of the expression 'person': see section 2(9) of the Act. It was that 'person', the Hindu undivided family, t .....

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