Escaped assessment of a partitioned Hindu undivided family remains valid, but tax must be apportioned among members with separate demand notices.

Escaped-assessment proceedings against a Hindu undivided family that had partitioned and ceased to exist remained valid, because the income was still assessable as the family's income for the relevant year and individual member notices were not required to initiate proceedings. Under section 25A, however, the Income-tax Officer had to assess the total income first, then apportion the tax among the members according to their allotted share of the joint family property, and issue separate notices of demand accordingly. Recovery was not dependent on a prior default by one member, as section 25A(2) did not impose a default-based sequence.

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Issues: (i) Whether proceedings for escaped assessment could validly be initiated under section 34 read with section 22 against a Hindu undivided family which had ceased to exist after partition and an order under section 25A(1). (ii) Whether, after assessment of the total income of the divided family, the Income-tax Officer was bound to apportion the tax among the members and issue separate notices of demand before recovery.

Issue (i): Whether proceedings for escaped assessment could validly be initiated under section 34 read with section 22 against a Hindu undivided family which had ceased to exist after partition and an order under section 25A(1).

Analysis: The assessment proceedings for escaped income were to be treated as proceedings to assess the income of the Hindu undivided family as it stood in the relevant assessment year. It was not necessary, when such proceedings were initiated, to issue notice to every individual member of the family. The existence of a partition and an order under section 25A(1) did not make the initiation of proceedings invalid.

Conclusion: The proceedings were validly initiated; the contention to the contrary failed.

Issue (ii): Whether, after assessment of the total income of the divided family, the Income-tax Officer was bound to apportion the tax among the members and issue separate notices of demand before recovery.

Analysis: On the true construction of section 25A(1) and section 25A(2), the Income-tax Officer had first to assess the total income as if no partition had taken place, and thereafter to apportion the tax payable among the members according to the portion of the joint family property allotted to each. That duty was imperative. The notice of demand had therefore to be issued against each member in accordance with the section. However, recovery from the others was not conditioned upon prior default by one member, because section 25A(2) did not contain words comparable to those in section 26.

Conclusion: Apportionment and separate demand notices were required, but recovery was not limited to a default-based sequence.

Final Conclusion: The appeal failed in substance, and the Revenue's position on the validity of the escaped-assessment proceedings was upheld, though the assessment procedure required apportionment under section 25A(2).

Ratio Decidendi: In proceedings for escaped assessment against a Hindu undivided family, the tax is first to be assessed on the family as a unit, and thereafter the statutory duty to apportion liability among the members must be carried out without making recovery dependent on a prior default by one member.

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