TMI Blog1957 (5) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... vy a penalty under section 28(1)(c). Those notices were dated 20th March, 1950, 27th September, 1950, and 15th November, 1951, respectively. The notices that related to 1947-48 and 1948-49 were thus issued before the dissolution of the firm, while that for 1949-50 was issued only after the partnership had been dissolved. Eventually, on 20th May, 1954. penalties were levied under section 28(1)(c) of the Act for each of the three assessment years. By that time the firm ceased to be in existence. Further Sundaram, who had been one of the partners, died on 5th March, 1953. In the course of the proceedings under section 28 of the Act before the Income-tax Officer none of the quondam partners raised the issue whether the Income-tax Officer had any jurisdiction to levy a penalty on the firm or on the partners of that firm after its dissolution. But that point was specifically taken by Veerappan Chettiar when he moved the Commissioner of Income-tax under section 33A of the Act to set aside the orders of the Income-tax Officer. The Commissioner rejected these petitions on 29th July, 1955. The petitioners applied under article 226 of the Constitution for the issue of a writ of certiorari, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under section 28(1) of the Act. As we pointed out, it was on the assessee, the firm, that the Income-tax Officer levied the penalties. The basic principle that was explained in Commissioner of Income-tax v. Sanichar Sah Bhim Sah [1955] 27 ITR 307 by the Patna High Court and by this Court in Raju Chettiar v. Collector of Madras [1956] 29 ITR 241 , is that a penalty could be levied under section 28(1) of the Act only on a person in existence on the date the penalty is imposed by the competent authority. In both these cases the assessee had been a Hindu undivided family, which however ceased to be in existence as a juristic entity on the date the penalties were levied under section 28(1) of the Act. In Raju Chettiar's case (supra), which was decided by us, we recorded at page 244; Thus both the requirements have to be satisfied on the date proceedings are initiated under section 28 of the Act; the person, and if that person is a Hindu undivided family that family must be in existence ; that family must be also in existence on the date the order imposing the penalty on that family as a 'person' is passed . The learned counsel for the Department relied on Mare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 25A, 'all the provisions of Chapter IV shall, so far as may be, apply to any such assessment.' Is section 28 a provision relating to any such assessment ? Section 28 is one of the sections in Chapter IV. It imposes a penalty for the concealment of income or the improper distribution of profits. The defaults made in furnishing a return of the total income, in complying with a notice under sub-section (4) of section 22 or sub-section (2) of section 23 and in concealing the particulars of income or deliberately furnishing inadequate particulars of such income are penalised, under that section. The defaults enumerated therein relate to the process of assessment. Section 28, therefore, is a provision enacted for facilitating the proper assessment of taxable income and can properly be said to apply to an assessment made under Chapter IV. We cannot say that there is a lacuna in section 44 such as that found in section 25A of the Act . If we may say so with respect to the learned Chief Justice, the levy of penalty under section 28(1) cannot be equated to assessment under Chapter IV within the meaning of section 44 of the Act. Nor is the penalty levied under section 28(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. Section 29, which is an example, runs: Notice of demand.-When any tax, penalty or interest is due in consequence of any order passed under or in pursuance of this Act, the Income-tax Officer shall serve upon the assessee or other person liable to pay such tax, penalty or interest a notice of demand in the prescribed form specifying the sum so payable . In Commissioner of Income-tax v. Sanichar Sah Bhim Sah [1955] 27 ITR 307, the learned Judge recorded at page 314 : It cannot be argued and it was not argued on behalf of the Income-tax Department that the expression 'tax' in section 25A includes penalty also, for the legislature has made a sharp distinction between tax and penalty in enacting the various provisions of the Income-tax Act . In Raju Chettiar v. Collector of Madras [1956] 29 ITR 241, we stated at page 245 : Section 47 of the Act provides for recovery of the penalty imposed. But that postulates the existence of a valid order imposing the penalty. Section 28 is a complete code in itself, regulating the procedure for the imposition of the penalties prescribed. The provisions for the assessment and levy of the tax will not as such a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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