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Section 271(1)(c) , read with section 171, of the Income-tax Act, 1961 [Corresponding to section 28(1)(c), read with section 25-A, of the Indian Income-tax Act, 1922] - Penalty - For concealment of income - Whether where application for recording partition of HUF was made after penalty proceedings under section 28(1)(c) of 1922 Act were initiated against it and order recognising partition was passed under section 25A(1) of 1922 Act only when penalty was imposed, there was no bar to imposition of penalty - Held, yes FACTS One 'G' and his three sons including appellant constituted a joint Hindu family. 'G', the karta of the family, who was in charge of the affairs of the family died on 2-4-1946. He was succeeded by his son, the appellant, as karta of the family. The appellant had, in the first instance, filed a return showing an income. The ITO being satisfied that the appellant had deliberately concealed its income and furnished an inaccurate return, made addition to his income and also imposed penalty under section 28(1)(c) of the 1922 Act on 20-3-1958. Meanwhile, on 19-3-1957, an application under section 25A of the 1922 Act was made to the ITO for an order recording partition of joint family property in definite portions, which according to the application had taken place among the members of the Hindu undivided family on 22-6-1956. The ITO on being satisfied after making enquired that a complete partition of the joint family property had taken place, recorded an order under section 25A(1) of the 1922 Act on 26-3-1962, accepting the partition with effect from 22-6-1956, as claimed. The Tribunal held that the imposition of the penalty by the ITO after the disruption of the family was bad in law and could not be sustained. On reference, the High Court reversed the Tribunal's decision. On appeal to the Supreme Court : HELD Section 25A(3) of the 1922 Act embodies a legal fiction according to which a Hindu family which has been previously assessed as "undivided" is to be continued to be treated as "undivided" till the passing of the order under section 25A(1). In the instant case, there was not a whisper of the application under section 25A(1) of the 1922 Act by…

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