Hindu undivided family penalty validity turns on absence of a partition recording order under tax law.

Where a Hindu undivided family had already partitioned, section 25A(3) of the Indian Income-tax Act, 1922 treated the family as continuing for tax purposes until an order recording partition was made under section 25A(1). Because the penalty proceedings and penalty order under section 28(1)(c) were made when no such recording order existed, the family remained assessable in law at that time. A later recognition of partition by the Income-tax Officer did not retrospectively invalidate an order that was valid when passed. The penalty order was therefore upheld against the assessee.

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Issues: Whether penalty under section 28(1)(c) of the Indian Income-tax Act, 1922 could validly be imposed on a Hindu undivided family after its partition, when no order recording the partition under section 25A(1) had been passed at the time the penalty order was made.

Analysis: Section 25A(3) provided that, where no order recording partition had been passed under section 25A(1), the family was deemed for the purposes of the Act to continue as a Hindu undivided family. The penalty proceedings had been initiated and the penalty order had been passed while no order under section 25A(1) existed. The subsequent recognition of partition by the Income-tax Officer did not retrospectively invalidate an order that was valid when made. The family therefore remained assessable in law for the purpose of penalty proceedings at the relevant time.

Conclusion: The penalty order was valid, and the question was answered in the negative against the assessee.

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