SUBBA RAO, C. J. :- The Income-tax Appellate Tribunal, Madras has submitted the following question under S. 66 (1) of the Indian Income-tax Act.

"Whether the levy of penalty of Rs. 15,000/-on the assesses is valid in law." The assessee, Mahankali Subbarao and Nageswararao, Eluru, was a Hindu undivided family, which carried on business at Eluru and Vijayavada as agents of the Standard Vacuum Oil Co., for sale of petrol, kerosene oil etc. The family comprised of two brothers, Subbarao and Nageswararao. It is now found that they became divided on 05-04-1943. In respect of the year 1943-44, the assessee filed a return on 15-07-1947 declaring a total income of Rs. 32,073.

The Income-tax Officer did not accept the figure but added a sum of Rs. 40,000/- on the ground that the assessee had dealings in black-market and suppressed his income therefrom. He also took proceedings under S. 28 of the Income-tax Act and imposed penalty of Rs. 21,960/- by his order dated 29-01-1947. The question is whether the members of a disrupted family are liable to pay penalty under S. 28 of the Act.

2. Section 25-A of the Income-tax Act reads :

(1) Where, at the time of making an assessment under S. 23,