9911796707
TMI Blog1954 (11) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... income in the shape of cash credits and the assessee had further maintained three sets of accounts for the purpose of concealing its income. In a statement made under section 37 of the Income-tax Act, Bhim Sah, a member of the undivided family conceded that three sets of accounts were maintained in order to conceal the income. Bhim Sah further admitted that the "Paicha khata in the books originally produced really represented sales that were sought to be concealed". Finally the Income-tax Officer determined the total income of the assessee for the assessment year 1945-46 to be ₹ 70,440. This amount was reduced on appeal to the Appellate Assistant Commissioner by ₹ 10,488. Meanwhile the Income-tax Officer started a proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorising the Income-tax Officer to impose penalty on a Hindu undivided family which had ceased to exist. The Income-tax Officer appealed to the Appellate Tribunal against the order of the Appellate Assistant Commissioner. The appeal was dismissed by the Tribunal and the order passed by the Appellate Assistant Commissioner was confirmed. At the instance of the Income-tax Department the Tribunal has stated a case on the following questions of law: "(1) Whether in the facts and circumstances of the case the Income-tax Officer could impose a penalty on 24th April, 1950, under section 28(1)(c) of the Act in respect of concealment of income by the Hindu undivided family of Sanichar Sah Bhim Sah whose members had become separated with ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Hindu undivided family in view of the definition given in section 2(2) of the Act. It is therefore clear that section 28 authorises the Income-tax authorities to impose penalty on a Hindu undivided family. But the power of the Income-tax authorities to impose the penalty is subject to the peremptory condition that notice must be given to the Hindu undivided family to show cause. In other words, the penalty cannot be imposed by the Income-tax authorities unless the Hindu undivided family is heard or is given a reasonable opportunity of being heard before the final order is passed. It is also important to remember in this connection that a Hindu undivided family is a separate legal unit under the scheme of the Indian Income-tax Act. As I h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 950, is also legally invalid. The second question is whether the machinery prescribed by section 25A of the Act could be applied to the proceedings taken under section 28 of the Act for imposing penalty on the Hindu undivided family of Sanichar Sah Bhim Sah whose members had become separated with effect from the 14th of February, 1946. The argument put forward by Mr. Bahadur on behalf of the Income-tax Department was that the machinery prescribed by section 25A could be applied for recovery of the penalty imposed on the Hindu undivided family even after they had become separated. In my opinion the argument is unsound. Section 25A(i) states: "Where, at the time of making an assessment under section 23, it is claimed by or on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of the assessment year. The section does not, in my opinion, lay down the machinery for the imposition of penally on a Hindu undivided family which had become disrupted. This is clear from the opening words of section 25A (1)-"Where at the time of making an assessment under section 23." This view is also borne out by the language of section 25A (2) which states that "the member or group of members" shall be liable for a share of the tax on the income assessed. Section 25A (2) does not say that the member or group of members shall be liable to pay a share of the penalty imposed upon a Hindu undivided family. It cannot be argued and it was not argued on behalf of the Income-tax Department that the expression "t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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