MAREDDI KRISHNA REDDY Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS is an appeal against the judgment of our learned brother Satyanarayana Raju, J. The facts may be briefly stated. The appellant was a partner of the registered firm of Messrs. Talluri Suryanarayana and others. The firm carried on the business of milling paddy from 17th January, 1945, to 28th December, 1947, after which it discontinued the business. On 7th August, 1950, the firm filed a return disclosing an income of Rs. 2, 389 for the assessment year 1947-48. That was signed by the partner Talluri Suryanarayana. During the scrutiny of the accounts, the assessee admitted that some cash credits found in the accounts represented the firm's own income and the Income-tax Officer also found that for some other credit items the assessee had no explanation. The assessment was completed on a total income of Rs. 50, 776. Thereafter, a notice was issued under section 28(1)(c) of the Indian Income-tax Act for the admitted concealment of income by the firm. On 31st August, 1953, a penalty of Rs. 9, 300 was levied on the firm and the said order and the notice of demand were duly served on the partner T. Suryanarayana, who represented the firm. As the firm discontinued the business, the amount of penalty was sought to be realised proportionately from all the partners. The objections raised by some of the partners including the appellant were rejected. All the partners, except the appellant, paid their proportionate share of the penalty. The Income-tax Officer is now proceeding to recover the share of the penalty from the appellant. The main contention of the learned counsel is that the Income-tax Officer has no jurisdiction to impose a penalty on the partners of a dissolved firm and to collect the same from any one of them

(2.) SECTION 44 of the Income-tax Act governs the situation. It reads

(3.) DEALING with the argument based upon section 25A of the Act, the learned Judge observed" The section does not, in my opinion, lay down the machinery for the imposition of penalty on a Hindu undivided family which had become disrupted ...... it is clear that there is a gap in the provisions of the Act but it is not the function of the Court to fill up the gap