Divided coparcener status and advance-tax penalty depend on prior assessment and a finding of reasonable cause.

A divided coparcener whose liability was computed under section 25A of the Indian Income-tax Act, 1922, was not treated as a person already assessed for section 18A(3), because the special partition machinery only apportioned Hindu undivided family liability and did not amount to an assessment of the member's own total income. Penalty under section 28(1)(a) read with section 18A(9) depended on a default under section 18A(3) without reasonable cause, so a finding on reasonable cause was necessary before penalty could stand. For the assessment year 1953-54 in one case, the recorded "no action" order was treated as an order under section 23, preventing treatment of the assessee as previously unassessed for that year.

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Issues: (i) Whether a divided coparcener, whose liability was worked out under section 25A of the Indian Income-tax Act, 1922, could be treated as a person already assessed for the purpose of section 18A(3); (ii) whether penalty under section 28(1)(a) read with section 18A(9) could be sustained without a finding that the assessee failed to comply with section 18A(3) without reasonable cause, including for the assessment year in which a "no action" order had been recorded.

Issue (i): Whether a divided coparcener, whose liability was worked out under section 25A of the Indian Income-tax Act, 1922, could be treated as a person already assessed for the purpose of section 18A(3).

Analysis: Section 25A creates a special machinery for partitioned Hindu undivided families by fictionally treating the family as continuing for the limited purpose of quantifying the tax on the joint family income and then apportioning the liability among the members. That process is distinct from an assessment of the individual member's own total income under the general charging and assessment provisions. The expression "person who has hitherto been assessed" in section 18A(3) was held to refer to a person assessed on his own total income, not to a divided coparcener whose liability arises only through the family assessment mechanism.

Conclusion: The divided coparceners were not persons already assessed within the meaning of section 18A(3), and the plea based on section 25A failed.

Issue (ii): Whether penalty under section 28(1)(a) read with section 18A(9) could be sustained without a finding that the assessee failed to comply with section 18A(3) without reasonable cause, including for the assessment year in which a "no action" order had been recorded.

Analysis: Penalty under section 18A(9) read with section 28 depends on a default under section 18A(3) without reasonable cause. The record did not show that the Tribunal had considered the assessees' plea of reasonable cause before levying penalty for the years in question. As to the assessment year 1953-54 in one case, the order recording "no action" on a section 34 proceeding was treated as an order within section 23, so the assessee could not be proceeded against as a person not previously assessed for that year.

Conclusion: The penalty could not be upheld for the assessment year 1953-54 in one case, and for the remaining years the matter required reconsideration on the question of reasonable cause.

Final Conclusion: The references were answered generally in favour of the revenue on the section 25A point, but the penalty failed for the assessment year 1953-54 in one case and the Tribunal was required to examine whether reasonable cause existed before finalising the remaining penalty proceedings.

Ratio Decidendi: A divided coparcener assessed only through the special machinery for partitioned Hindu undivided families is not a person hitherto assessed on his own total income for the purpose of advance-tax obligations, and penalty for non-compliance with that obligation cannot be imposed unless absence of reasonable cause is affirmatively found.

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