JANKIDAS MOHANLAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this case the assessee was an HUF. For the asst. year 1947 -48 it was found by the ITO that the assessee had concealed a sum of Rs. 4,39,849. This additional amount was added to the taxable income of the assessee and the assessment order was made by the ITO on the 30th April, 1949. On the same day the ITO drew up a proceeding for imposition of penalty on the HUF under S. 28(1) (c) of the IT Act. In response to the show cause notice the assessee explained that he had voluntarily brought to the notice of the taxing authorities the amount which was brought from the home chest and there was hence no concealment of any income. The ITO rejected this explanation and imposed a penalty of Rs. 1,00,000 against the assessee by him order dated the 23rd January, 1958. It appears that the assessee had filed an application on the 21st October, 1957, under s. 25A of the IT Act, claiming disruption of the HUF w.e.f. the 18th February, 1957. In the appeal brought before the AAC against the order of penalty the assessee had urged that the ITO was under an obligation to dispose of the application under S. 25A before he could levy any penalty under S. 28(1)(c). The AAC accepted this argument and remanded the case to the ITO for making an inquiry into the claim of the assessee with regard to the disruption of the HUF and gave his finding thereon. In pursuonce of the direction the ITO disposed of the application under S. 25A on the 31st July, 1958, accepting that there was partition of the HUF w.e.f. the 18th February, 1957. After the matter came back to the AAC after remand, it was urged on behalf of the assessee that the order of imposition of penalty was illegal because the HUF had ceased to exist on the date of the order. This argument was rejected by the AAC who confirmed the order of penalty imposed upon the assessee. The same view was taken by the Tribunal which held that the order of penalty was validly imposed on the assessee by the ITO.

(2.) UNDER S. 66(1) of the IT Act, the Tribunal has stated a case on the following questions of law for the determination of the High Court :

(3.) IN view of our answer to the second question, it is not necessary to answer the first question of law referred by the Tribunal to the High Court because it is academic. We do not propose to make any order as to the costs of this reference.