The Income-tax Officer cannot impose a penalty on a Hindu undivided family under Section 28(1)(c) of the Income-tax Act, 1922, after it has become disrupted, and the machinery prescribed by Section 25A of the Act cannot be applied to the proceedings taken under Section 28 for imposing penalty on the family after it has disrupted.

Ramaswami, J.

1. In this case the assesses is a Hindu undivided family under the name of Sanichar San Bhim Sah of Katrasgarh which was assessed to income-tax for the assessment year 1945-46. In the course of the assessment proceeding the income-tax Officer found that the Hindu undivided family had deliberately concealed its income. The assessee had concealed its income in the shape of cash credits and the assessee had further maintained three sets of accounts for the purpose of concealing its income. In a statement made under Sec.37, Income-tax Act, Bhim Sah, a member of the undivided family, conceded that three sets of accounts were maintained in order to conceal the income. Bhim Sah further admitted that the "paicha khata in the books originally produced really represented sales that were sought to be concealed".

Finally the Income-tax Officer determined the total income of the assessee for the assessment year 1945-46, to be Rs. 70,440. This amount was reduced on appeal to the Appellate Assistant Commissioner by Rs. 10,488. Meanwhile the Income-tax Officer started a proceeding under Sec.28 (1) (c) of the Act against the undivided Hindu family for deliberate concealment of its income. The notice under Sec.28 (1) (c), was issued by the Income-tax Officer on 23-3-1946- In, the course of assessment for the assessment year 1947-48 the assessee claimed that a partition had taken place among the members of the Hindu undivided family with effect from 13-2-1946. The Income-tax Officer investigated the claim and found that there was actual disruption of the Hindu undivided family and the brothers. Bhim Sah and Arjun Sah had become separate. On 18-3-1949, the Income-tax Officer passed an order under Sec.25A of the Act holding that the Hindu, undivided family had become separate with effect from the 13-2-1946. Meanwhile the proceeding taken under Sec.28 (1) of the Act continued and on 24-4-1950, the Income-tax Officer passed an order imposing a penalty of Rs. 22,000 upon the Hindu undivided family for concealment of its income for the-assessment year 1945-46. The Income-tax Officer further ordered that the divided members of the family should pay the penalty imposed. An appeal was taken by the members of the family against the order of the Income-tax Officer to the Appellate Assistant Commissioner. The-appeal was allowed and the Appellate Assistant Commissioner cancelled the penalty imposed by the Income-tax Officer on the ground that there was no provision in the Income-tax Act authorising the Income-tax Officer to impose penalty on. a Hindu undivided family which had ceased to exist. The Income-tax Officer appealed to the Appellate Tribunal against the order of the Appellate Assistant Commissioner. The appeal was dismissed by the Tribunal and the order passed by the Appellate Assistant Commissioner was confirmed.

2. At the instance of the Income-tax Depart-ment the Tribunal has stated a case on the following questions of law:

"(1) whether in the facts and circumstances of the case the Income-tax Officer could impose a penalty on 24-4-50 under Sec.28 (1) (c) of the Act in respect of concealment of income by the Hindu undivided family of Sanichar Sah Bhim. Sah whose members had become separated with effect from 14-2-46? and (2) Whether in the facts and circumstances of the case the procedure prescribed by Sec.25A of the Act could be applied to the proceedings taken under Section 28 of the Act in respect of concealment of Income by the Hindu undivided family of Sanichar Sah Bhim Sah whose members had become separated with effect from 14-2-46"?

3. Sec.28 (1) (c) of the Act states :

"If the Income-tax Officer is satisfied that any person... .(c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty.... in addition to any tax payable by him, a sum not exceeding one and a half times the amount of the income-tax and super-