ase there was not a whisper of the application under section 25A 1 of the Act by the appellant on March 15 1957 when the penalty proceedings were initiated against it
Even on March 20 1958
when the penalty was imposed there was no order under section 25Al of the Act lt was only on March 26 1962 that the partition was recognised and order 506 under section 27A1 of the Act was passed
There was thus no bar to the imposition or the impugned penalty
509E F  CIVIL APPELLATE JURISDICTION Civil Appeal No 886 of 1971
From the judgment and order dated the 1891969 of the Allahabad High Court in I T R Misc
Case No 836 of 1963 G C Sharma V N Ganpule D K Jain Anup Sharma and P C Kapur for the appellant
B Sen and 5
P Nayar for the respondent The Judgment of the Court was delivered by JASWANT SINGH J
This is an appeal by certificate of fitness granted by the High Court of Judicature at Allahabad under section 66 A2 of the Indian Income tax Act 1922 hereinafter referred to as the Act  from its judgment dated September 18 1969 in ITR Misc
Case No 836 of 1963
The facts giving rise to this appeal are The appellant a Hindu undivided family 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 incharge 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 9701 j 
On scrutiny of the relevant material the Income Tax Officer found a number of discrepencies 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 Ms Tilyani Glass Works and a certain sum deposited in an account styled as Abdul Wahid Khan  Sons
He thereupon issued a notice dated March 15 1957 calling upon the appellant to explain the discrepencies in the accounts as also in the cash credits and to show cause why a penalty under section 281c of the Act be not imposed upon it
In response to the notice a representative of the appellant appeared before the Income Tax officer and voluntarily agreed to a sum of Rs 15000 being treated as its income
After hearing the Appellant s representative the Income Tax Officer felt satisfied that the appellant had deliberately concealed its income and furnished an inaccurate return
Accordingly by his order dated March 20 1958 he added a sum of Rs 68550 to the income of the appellant and imposed on it a penalty of Rs 26000 
Meanwhile on March 19 1957 an application under section 25 A of the Act was made to the Income Tax officer for an order recording partition of joint family property in definite portions which according to the application had taken place amongst the members of the Hindu undivided family on June 22 1956
The Income Tax Officer on being satisfied after making enquiries that a complete partition of the joint family property has taken place recorded an order under section 25A 1 of the Act on March 26 1962 accepting the partition with effect 507 from June 22 1956 as claimed
Against the penalty of Rs 26000 imposed the Income Tax Officer by his order dated March 20 1958 the appellant preferred an appeal to the Appellate Assistant Commissioner who reduced the Penalty to Rs 15000 
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 date March 26 1962 passed under section 25 Al cf 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 appellant the Tribunal upheld this contention by its order dated March 6 1963
Thereupon the Commissioner of Income tax UP made application before the Income tax Appellate Tribunal under section 661 of the Act requesting that the following question of law arising from its decision be referred to the High Court Whether in the facts and circumstances of the case the imposition of penalty under section 28  1  c on the Hindu Undivided family after it had disrupted within the meaning of section 25 A is bad in law
Acceding to the request of the Commissioner of Income Tax the Tribunal referred the above mentioned question to the High Court which answered the same in the negative The appellant thereupon applied to the High Court and obtained the aforesaid certificate of fitness for appeal to this Court
This is the matter is before us
E Relying on Commissioner of Income Tax vs Sanichar Sah Bhim Sah1 section A Raju Chattiar  Ors
vs Collector of Madras  Anr2 Mahankali Subha Rao Mahankali Nageswara Rao  Anr
vs Commissioner of Income Tax Hyderabad3 and Commissioner of Income tax Punjab vs Mothu Ram Prem Chand4 counsel for the appellant has reiterated before us that since the Hindu undivided family had dissolved on June 22 1956 as accepted by the Income Tax officer vide his order dated March 26 1962 passed under section 25 A of the Act and the Act did not provide any machinery for imposition of the penalty on the Hindu family after its disruption the imposition of penalty on March 20 1958 was had in law and could not be sustained
Counsel appearing on behalf of the Revenue has on the other hand urged that imposition of impugned penalty cannot be challenged as in view of section 25 A3 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 25 Al of the Act
For a proper determination of the question it is necessary to refer to section 25 a of the Act which at the relevant time stood as under 25 A 1 Where at the time of making an assessment ll under section 23 it is claimed by or on behalf of any member 1 1957 27 2 3 4 508 of a Hindu family hitherto assessed as undivided that a partition has taken place among the members of such family the Income tax Officer shall make such inquiry thereinto as he may think fit and if he is satisfied that the joint family property has been partitioned among the various members or groups of members in definite portions he shall record an order to that effect Provided that no such order shall be recorded until notices of the inquiry have been served on all the members of the family 2 Where Such an order has been passed or where any person has succeeded to a business profession or vocation formerly carried on by a Hindu undivided family whose joint family property has been partitioned on or after the last day on which it carried on such business
profession or vocation The Income tx Officer shall make an assessment of the total income received by or on behalf of the joint family as such as if no partitionLPN had taken place and each member or group of members shall in addition to any income tax for which he of may be separately liable and notwithstanding anything contained in sub section 1 of section 14 be liable for a share of the tax on the income so assessed according to the portion of the joint family property allotted to him or it and the Income tax officer shall make assessments accordingly with provisions of section 23
Provided that all the members and groups of members whose joint family property has been partitioned shall be liable jointly and severally for the tax assessed on the total income 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 lt 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 of the section
This view strength from two decisions of this Court in Additional Income tax Officer Quddapah A Thimmayya  Anr1 and Joint family of Udayan Chinubhai etc vs Commissioner of Income tax Gujarat2 where it was held that so longr as No order under section 25 aI of the Act is recorded the jurisdiction of the Income tax officer to continue to assess as undivided despite partition under personal law a Hindu family which has hitherto been asseesed in that status remains unaffected
It will be profitable in this connection 1 2 509 to refer to the following observation made in A Thimmayya s case supra The section makes two substantive provisions i that a Hindu undivided family Which has been assessed to tax shall he deemed for The purposes of The Act to continue to be treated as undivided and therefore liable to be take in that stats unless an order is passed in respect of that family recording partition of its property as contemplated by sub station t and ii if at the time of making an assessment it is claimed by or on behalf the members of the family that the property of the joint family has been partitioned the members or groups of members in definite portions ie a complete partition of the entire estate is made resulting in such physical division of the estate as it is capable of being made
the Income tax Officer shall hold an inquiry and if he is satisfied that the partition had taken place the shall record an order to that effect 
The Income tax Officer may assess the income of the Hindu family hither to assessed as undivided notwithstanding partition is no claim in that behalf has been make to him or is he is not satisfied about the truth of the claim that the joint family property has been partitioned in definite politics if on account of some error or inadvertence he fails Lo dispose of the claim
In all these cases his jurisdiction to assess the income of the family hitherto assessed as undivided remain unaffected for the procedure for making assessment of tax is statutory
In face of the aforesaid decisions of this court it is Court it is not necessary to burden the record by discussing the decisions cited by counsel for the appellant
In the present case there was not a whisper of the application under section 25 A1 of the Act by the appellant on March 15 1957 when the penalty proceedings were initiated against it
Even on March 20 1958 when the penalty was imposed there was no order under section 25 A1  of the Act
It was only on March 26 1962 that the partition was recognised and order under section 25 A1 of the Act was passed
There was thus no bar to the imposition of the impugned penalty
Accordingly we find no force in the contention of counsel for the appellant and are of the opinion that the question as was in the rightly by the High Court


Summary:
In response to a show cause notice dated March 15 1957 under section 281c of the Income Tax Act before imposing a penalty for deliberate concealment of its income the appellant through its authorised representative voluntarily agreed to a slum of Rs 15000 being treated as income of Hindu Undivided Family
The Income Tax officer by his order dated March 201958 added a sum of Rs 68550 to the income of the appellant and imposed on it a penalty of Rs 26000 which on appeal was reduced to Rs 15000 
Meanwhile on March 19 1957 the appellant filed an application under section 25A of the Act for an order recording partition of joint family property in definite portions from June 22 1956 claiming that date to be the date of partition
The Income Tax officer after due enquiries accepted the disruption of the Hindu Undivided Family as claimed by his order dated March 26 1962
This led the appellant to contend that in view of  the orders dated March 26 1962 of the Income Tax officer the imposition of the penalty by him on March 20 1958 was bad in law and could not be sustained
The Tribunal uphold the contentions of the appellant resulting in a reference under section 661 of the Act to the High Court of Allahabad Lucknow Bench which reversed the decision or the Tribunal
However the High Court granted a certificate of fitness for appeal to this Court
Dismissing the appeals the Court  HELD Sub section 3 of section 25A of the Income Tax Act 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 section 25A
So long as no order under section 25A1 1 of the Act is recorded the jurisdiction of the Income Tax officer to continue to assess as undivided despite a partition under personal law a Hindu family which has hitherto been assessed in that status remain unaffected
508G H Additional Income Tax Officer Quddapah vs A Thimmayya vs Commissioner of Income Tax Gujrat  applied
Commissioner of Income Tax vs Sanchar Sah Bhim Sah section A Raju Chattiar  Ors
vs Collector of Madras  Anr  Mahankali Subba Rao Mahankali Nageswara Rao  Anr
v Commissioner of income Tax
Hyderabad and Commissioner of Income Tax Punjab vs Mothu Ram Prem Chand  not applicable