Penalty on a disrupted Hindu undivided family cannot survive after partition; section 25A does not extend to penalty recovery.

Penalty under section 28(1)(c) could not be sustained against a Hindu undivided family that had already ceased to exist on partition, because penalty proceedings must be directed against a ing "person" and the family had lost its assessable identity before the proceeding concluded. Section 25A, which deals with assessment and tax liability after partition, did not extend by implication to penalty proceedings or to recovery of penalty under section 28. The Act distinguished tax from penalty, and any gap in recovery machinery for penalty could not be supplied by judicial interpretation. The penalty imposed on the disrupted Hindu undivided family was therefore set aside.

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Issues: (i) Whether a penalty under section 28(1)(c) could validly be imposed on a Hindu undivided family after it had ceased to exist on account of partition; (ii) Whether the machinery of section 25A could be applied to proceedings for imposing and recovering penalty under section 28 against a disrupted Hindu undivided family.

Issue (i): Whether a penalty under section 28(1)(c) could validly be imposed on a Hindu undivided family after it had ceased to exist on account of partition.

Analysis: Section 28 authorises penalty proceedings against a "person", and the definition of "person" includes a Hindu undivided family. The scheme of the Act treats a Hindu undivided family as a separate legal entity. But the power to impose penalty is conditioned by the requirement that the assessee must be heard or given a reasonable opportunity of being heard. Here, by the time the penalty proceeding culminated, the family had already been found to have disrupted and had ceased to exist as an assessable unit. A proceeding initiated and concluded against a non-existent Hindu undivided family could not be sustained.

Conclusion: The penalty order was invalid and could not be maintained.

Issue (ii): Whether the machinery of section 25A could be applied to proceedings for imposing and recovering penalty under section 28 against a disrupted Hindu undivided family.

Analysis: Section 25A is directed to the assessment of a Hindu undivided family after partition and makes the members liable for their share of the tax assessed as if no partition had taken place. The provision does not extend, either in terms or by necessary implication, to penalty proceedings under section 28. The Act draws a clear distinction between tax and penalty, and the recovery provisions for penalty are separate. The omission to provide a machinery for recovery of such penalty is a gap in the legislation, which cannot be filled by judicial interpretation or analogy.

Conclusion: Section 25A could not be invoked for penalty proceedings or recovery of the penalty imposed under section 28.

Final Conclusion: Both questions were answered against the Revenue and the penalty imposed on the disrupted Hindu undivided family was set aside.

Ratio Decidendi: A penalty proceeding under section 28 cannot be sustained against a Hindu undivided family that has ceased to exist, and section 25A, being confined to assessment and tax liability, cannot be used to supply a recovery machinery for penalty.

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