S A RAJU CHETTIAR Vs. COLLECTOR OF MADRAS

JUDGEMENT

(1.) PETITIONERS were members of a Hindu undivided family, of which Balagurumurthi was the kartha till 25th January, 1946, when a partition was effected Assessment proceedings for 1943-44 were completed on 30th September, 1944. During the pendency of those proceedings, on 4th September, 1944, a notice was issued which was served upon Balagurumurthi, who represented the assessee family. Proceedings for levy of penalty for concealment of income were thus initiated under section 28 of the Income-tax Act. Those proceedings terminated only on 18th March, 1948, when a penalty of Rs. 83, 000 was imposed on the assessee, which it should be remembered was the Hindu undivided family Meanwhile, steps had been taken under section 25A of the Act to get the partition dated 25th January, 1946, recorded by the departmental authorities. The application was preferred on 18th September, 1946. That application was allowed by the Income-tax Officer on 31st December, 1948.

(2.) IN that partition the business in cloth, in connection with which penalty was subsequently levied, was allotted to Balagurumurthi Balagurumurthi appears to have paid a portion of the penalty. He died on 20th April, 1949. Even before Balagurumurthi died, in February, 1949, itself proceedings were taken to recover as an arrear of land revenue the balance of the penalty, as if it was due from the petitioners, who had meanwhile become divided in status. Those proceedings were dropped in September, 1950. They were, however, revived in February, 1953, and the Collector finally rejected the objections of the petitioners in December, 1953. The petitioners thereupon applied under article 226 of the Constitution for the issue of a writ of prohibition, to restrain the respondents from collecting the penalty from any of the petitionersThe contention of the learned counsel for the petitioners was that, neither in fact nor in law, was any penalty imposed on any of the petitioners. It was further urged that there could be no question of any liability under the order dated 18th March, 1948, being enforced against any of the petitioners, or against the properties of any of them. These contentions, in our opinion, are well founded and should prevail The joint family, of which the petitioners and Balagurumurthi had been coparceners, ceased to exist on 25th January, 1946, even for purposes of the INcome-tax Act.

(3.) THUS both the requirements have to be satisfied on the date proceedings are initiated under section 28 of the Act the person, and if that person is a Hindu undivided family that family, must be in existence that family must be also in existence on the date the order imposing the penalty on that family as a "person" is passed. We respectfully agree with the principle laid down by the learned Judges in Commissioner of Income-tax, Bihar and Orissa v. Sanichar Sah Bhim Sah Learned counsel for the respondent referred to section 25A(3), which runs :