1976 (5) TMI 1

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....y, consisted of Gauri Shankar, the father, and his three sons, viz., Chandrabhan, Bengali Lal and Brij Kishan. Gauri Shankar, the karta of the family, who was in charge of the affairs of the family during the relevant year which extended from April 13, 1945, to April 12, 1946, the assessment year being 1946-47, died on April 2, 1946. He was succeeded by his son, Chandrabhan, as karta of the family. The appellant had, in the first instance, filed a return showing an income of Rs. 9,701. On scrutiny of the relevant material, the Income-tax Officer found a number of discrepancies in the accounts of the appellant and also noted the existence of cash credits to the appellant's account in the books of another firm, viz., M/s. Tilyani Glass Works ....

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...., 1958, the appellant preferred and appeal to the Appellate Assistant Commissioner, who reduced the penalty to Rs. 15,000. Not satisfied with this reduction, the appellant went up in further appeal to the Income-tax Appellate Tribunal and raised before it a number of contentions. Amongst other things, it was urged before the Tribunal that since the Hindu undivided family had disrupted on June 22, 1956, as accepted by the Income-tax Officer in his aforesaid order dated March 26, 1962, passed under section 25A(1) of the Act, the imposition of the penalty by the Income-tax Officer on March 20, 1958, after the disruption of the family was bad in law and could not be sustained. While rejecting the other contentions raised on behalf of the appell....

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.... in law and could not be sustained. Counsel appearing on behalf of the revenue has, on the other hand, urged that imposition of the impugned penalty cannot be challenged as, in view of section 25A(3) of the Act, a Hindu undivided family must be deemed to have continued in existence till the date of the passing of the order under section 25A(1) of the Act. For a proper determination of the question, it is necessary to refer to section 25A of the Act which at the relevant time stood as under: "25A. (1) Where, at the time of making an assessment under section 23, it is claimed by or on behalf of any member of a Hindu family hitherto assessed as undivided that a partition has taken place among the members of such family, the Income-tax Of....

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.... received by or on behalf of the joint family as such. (3) Where such an order has not been passed in respect of a Hindu family hitherto assessed as undivided, such family shall be deemed, for the purposes of this Act, to continue to be a Hindu undivided family." It will be noticed that sub-section (3) of the above-quoted section embodies a legal fiction according to which a Hindu family which has been previously assessed as "undivided" is to be continued to be treated as "undivided" till the passing of the order under sub-section (1) of the, section. This view gains strength from two decisions of this court in Additional Income-tax Officer, Cuddappah v. A. Thimmayya and joint Family of Udayan Chinubhai, etc. v. Commissioner of Income....