Post-adjudication tax penalty is not a provable insolvency debt where liability arises only on imposition.

An income-tax penalty imposed after adjudication as insolvent was held not to be a provable debt under section 46(3) of the Presidency Towns Insolvency Act, 1909. The liability to pay a penalty arises only when the penalty is actually imposed, not merely because assessment or related proceedings are pending. As the penalty order was made after the adjudication order, the claim was a post-adjudication liability and could not be proved in insolvency. The official assignee's rejection of the claim was therefore consistent with the statutory scheme.

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Issues: Whether an income-tax penalty claim imposed after the date of adjudication as insolvent could be treated as a provable debt under section 46(3) of the Presidency Towns Insolvency Act, 1909.

Analysis: A debt is provable in insolvency only if the insolvent was subject to the liability when adjudged insolvent, or became subject to it before discharge by reason of an obligation incurred before adjudication. The liability to pay a penalty arises when the penalty is imposed, and not from the mere pendency of assessment or related proceedings. Since the penalty order in this case was made after the adjudication order, the claim related to a post-adjudication liability and could not be proved in insolvency. The rejection of the claim by the official assignee was therefore consistent with the statutory scheme.

Conclusion: The claim for penalty was not a provable debt under section 46(3) of the Presidency Towns Insolvency Act, 1909, and the rejection of the claim was upheld, against the appellants and in favour of the insolvents.

Ratio Decidendi: A liability imposed after adjudication in insolvency is not a provable debt unless it arises from an obligation incurred before the date of adjudication.

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