Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 [Corresponding to section 28(1) of the Indian Income-tax Act, 1922] - Penalty - For concealment of income - Assessment year 1943-44 - For concealment of income, penalty proceedings under section 28 of 1922 Act, were initiated against assessee - HUF - Before penalty was imposed, a partition was affected in said HUF - Thereafter, recovery proceedings were taken against petitioners, member of divided family, to recover as arrear of land revenue amount of penalty - Whether since family ceased to exist as 'person' for purpose of Act long before penalty was imposed, no portion of penalty could be recovered from any of petitioners as arrear of land revenue - Held, yes FACTS The assessee was a Hindu undivided family. 'B' was its Karta and petitioners were its members. The penalty proceedings for concealment of income were initiated against the assessee by serving a notice upon 'B' as karta under section 28 of the 1922 Act on 4-9-1944 and the penalty was imposed on 18-3-1948. In the meanwhile, a partition was affected in HUF with effect from 25-1-1946 'B' had paid a portion of the penalty. After death of 'B', proceedings were taken against the petitioners to recover as an arrear of land revenue the balance amount of penalty. On writ: HELD The joint family, of which the petitioners and 'B' had been coparceners, ceased to exist on 25-1-1946, even for purposes of the Act. The order of the ITO under section 25A of the 1922 Act, concluded that question on 31-12-1948. It was a Hindu undivided family of which 'B' was the karta, that was the assessee in 1943-44. No doubt the notice prescribed under section 28 of the 1922 Act was issued to the assessee. It was addressed to 'B'. The notice itself was issued on 4-9-1944 before the disruption of the Hindu undivided family, and when 'B' was still the karta; 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 Act long before the penalty was imposed on 18-3-1948. Under section 28(1) of the 1922 Act, any person, in whose case it is held that the requirements of that section have been satisfied,…

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