TMI Blog1960 (11) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... posted and false credit entries of loans alleged to have been borrowed from several persons were made. The conditions prescribed by section 28(1)(c) for imposing penalty were, therefore, fulfilled. Appeal dismissed. - Civil Appeal No. 517 of 1958 - - - Dated:- 29-11-1960 - KAPUR, J.L., HIDAYATULLAH, M. AND SHAH, J.C., JJ. For the Appellant : G. B. Pai and Sardar Bahadur For the Respondent : Hardyal Hardy and D. Gupta JUDGMENT SHAH, J C. A. Abraham, hereinafter referred to as the appellant, and one M. P. Thomas, carried on business in food grains in partnership in the name and style of M. P. Thomas Company at Kottayam. M. P. Thomas died on October 11, 1949. For the account years 1123, 1124 and 1125 M. E., corresponding to August 1947-July 1948, August 1948-July 1949 and August 1949-July 1950, the appellant submitted as a partner returns of the income of the firm as an unregistered firm. In the course of the assessment proceedings, it was discovered that the firm had carried on transactions in different commodities in fictitious names and had failed to disclose substantial income earned therein. By order dated November 29, 1954, the Income-tax Officer assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evade payment of tax, deliberately concealed material particulars of his income. Even though the firm was carrying on transactions in food grains in diverse names, no entries, in respect of those transactions in the books of account were posted and false credit entries of loans alleged to have been borrowed from several persons were made. The conditions prescribed by section 28(1)(c) for imposing penalty were, therefore, fulfilled. But, says the appellant, the assessee firm had ceased to exist on the death of M. P. Thomas, and in the absence of a provision in the Indian Income-tax Act whereby liability to pay penalty may be imposed after dissolution against the firm under section 28(1)(c) of the Act, the order was illegal. Section 44 of the Act at the material time stood as follows : " Where any business......... carried on by a firm . . . . has been discontinued ......... every person who was at the time of such discontinuance ......... a partner of such firm.......... shall in respect of the income, profits and gains of the firm ....... be jointly and severally liable to assessment under Chapter IV and for the amount of tax payable and all the provisions of Chapter IV shall, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A deals with power to assess individual members of certain companies on the income deemed to have been distributed as dividend, section 23B deals with assessment in case of departure from taxable territories, section 24B deals with collection of tax out of the estate of deceased persons, section 25 deals with assessment in case of discontinued business, section 25A with assessment after partition of Hindu undivided families and sections 29, 31, 33 and 35 deal with the issue of demand notices and the filing of appeals and for reviewing assessment and section 34 deals with assessment of incomes which have escaped assessment. The expression " assessment " used in these sections is not used merely in the sense of computation of income and there is in our judgment no ground for holding that when by section 44, it is declared that the partners or members of the association shall be jointly and severally liable to assessment, it is only intended to declare the liability to computation of income under section 23 and not to the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof. Nor has the expression, " all the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uage, to hold that such was the intention of the Legislature. Here the language used does not even tend to such an interpretation. In interpreting a fiscal statute the court cannot proceed to make good deficiencies if there be any ; the court must interpret the statute as it stands and in case of doubt in a manner favourable to the taxpayer. But where, as in the present case, by the use of words capable of comprehensive import, provision is made for imposing liability for penalty upon taxpayers guilty of fraud, gross negligence or contumacious conduct, an assumption that the words were used in a restricted sense so as to defeat the avowed object of the Legislature qua a certain class will not be lightly made. Counsel for the appellant relying upon Mahankali Subba Rao v. Commissioner of Income-tax, in which it was held that an order imposing penalty under section 28(1)(c) of the Indian Income-tax Act upon a Hindu joint family after it had disrupted, and the disruption was accepted under section 25A(1) is invalid, because, there is a lacuna in the Act, submitted that a similar lacuna exists in the Act in relation to dissolved firms. But whether on the dissolution of a Hindu joint f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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