Penalty for concealment cannot survive against a disrupted Hindu undivided family where liability is personal to the defaulting person.

Penalty under section 28(1)(c) of the Income-tax Act, 1922 is explained as a personal penal liability that must attach to the person responsible for concealment. Where the income belonged to a Hindu undivided family and the family had already disrupted before the penalty order was made, the text states that penalty proceedings could not be sustained against the erstwhile family or its karta. The continuation principle applicable to certain reassessment matters was said not to extend to this type of penalty proceeding.

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Issues: Whether penalty under section 28(1)(c) of the Income-tax Act, 1922 could validly be imposed on the assessee after the Hindu undivided family had disrupted, and whether the penalty proceedings could be sustained when the income alleged to have been concealed belonged to the erstwhile family.

Analysis: The assessment records showed that the income in question belonged to the Hindu undivided family and that, if penalty proceedings were maintainable at all, they could lie only against that family. The family had been in existence when the proceedings were initiated, but it had ceased to exist before the penalty order was passed. Penalty under section 28 is a penal proceeding directed against the person responsible for the concealment, and the law does not contemplate imposing a vicarious penalty on a person other than the one liable for the default. The principle that the personality of a disrupted Hindu undivided family may continue for certain reassessment proceedings did not extend to penalty proceedings of this character.

Conclusion: The penalty was not valid in law and the answer was in favour of the assessee.

Ratio Decidendi: A penalty under section 28 of the Income-tax Act, 1922 cannot be imposed on a Hindu undivided family or its karta after the family has ceased to exist, because penal liability must attach to the person in existence who is responsible for the default.

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