Law:

Section:

JUDGMENT Oak, CJ.-This is a reference under section 66(1) of the Indian Income-tax Act, 1922 (hereinafter referred to as the Act). The assessee was a Hindu undivided family. At one time the family consisted of Gauri Shanker and his three sons. The family was assessed to income-tax for the assessment year 1946-47. The corresponding accounting period was from 13th April, 1945, to 2nd April, 1946. On 19th March, 1957, 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 reduced to Rs. 15,000. The assessee went up in appeal before the Appellate Tribunal. A number of points were urged before the Tribunal. One of the points urged for the assessee was that, in view of the partition of the joint family with effect from 22nd June, 1956, the order dated 20th March, 1958, imposing penalty was illegal. This contention was accepted by the Appellate Tribunal. The order imposing penalty was cancelled. At the request of the Commissioner of Income-tax, U.P., the Appellate Tribunal has referred the following question of law to this court: "Whether, in the facts and circumstances of the case, the imposition of penalty under section 28(1)(c) on the Hindu undivided family after it had disrupted within the meaning of section 25A is bad in law". In-view of the form of the question referred to this court, we have merely to consider the effect of the partition, dated 22nd June, 1956. It was uiged for the assessee that no penalty could be imposed on the joint family after its partition. On the other hand, it was…

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