Penalty against a Hindu undivided family failed after partition because liability could not survive the family's cessation.

A penalty under the Income-tax Act, 1922 cannot be enforced against members of a Hindu undivided family if the family has already disrupted and ceased to exist when the penalty order is made. The analysis states that penalty liability must attach to a person who exists both when proceedings are initiated and when the order is passed. Section 25A(3) was not read as deeming the family to continue until the departmental partition order, and recovery as arrears could not proceed on an invalid penalty order.

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Issues: Whether a penalty imposed under section 28 of the Income-tax Act, 1922 could be enforced against members of a Hindu undivided family after the family had disrupted and ceased to exist for the purposes of the Act, and whether section 25A(3) deemed the family to continue until the departmental order recording partition was passed.

Analysis: The penalty proceedings were initiated when the Hindu undivided family was still in existence, but the order imposing penalty was passed after the family had already ceased to exist on partition. Section 28 made the penalty liable to be imposed on the person who satisfied the statutory requirements, and in the case of a Hindu undivided family that person had to exist both when proceedings were initiated and when the penalty order was made. Section 25A(3) was held not to mean that the family continued in existence until the departmental order recording partition; the word used in the section could not be read as meaning 'until'. Section 47 could operate only on a valid penalty order, and where the order itself was invalid against the petitioners, recovery as arrears could not follow.

Conclusion: The penalty order did not amount in law to an imposition of penalty on the petitioners, and recovery from them was impermissible.

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