Partition of Hindu undivided family does not defeat penalty for pre-partition income under income-tax law.

Penalty under section 271(1)(c) remained enforceable for income relatable to periods before partition of a Hindu undivided family. Section 171(8) does not prevent levy or collection of penalty merely because a total or partial partition is recognised later; the statutory consequence of partition does not nullify jurisdiction to pass penalty orders for assessment years preceding the partition. On that basis, the penalty was held lawfully leviable and the Tribunal's view was sustained.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 could be validly levied and collected in respect of income relatable to a period prior to the partition of a Hindu undivided family, notwithstanding that the partial partition had already taken place when the penalty orders were passed.

Analysis: On a plain reading of section 171(8) of the Income-tax Act, 1961, the statutory consequence of partition does not prevent levy or collection of penalty for periods up to the date of partition, whether the partition is total or partial. The penalty in the present case related to assessment years preceding the partition, and the later recognition of the partial partition did not nullify the jurisdiction to pass the penalty orders.

Conclusion: The penalty was lawfully leviable and the Tribunal was right in upholding it. The question is answered in the affirmative and against the assessee.

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