M/S. GAURI SHANKAR, CHANDRABHAN versus C.I.T., U.P., LUCKNOW

Citation: [1976] SUPP. 1 S.C.R. 505 · Decided: 03-05-1976 · Supreme Court of India · Bench: A.C. GUPTA · Disposal: Dismissed
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Judgment (excerpt)

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M/S. GAURI SHANKAR, CHANDRABHAN 
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C.I.T., U.P., LUCKNOW 
May 3, 1976 
[A. C. GUPTA AND JASWANT SINGH, JJ.J 
505 
AsseJ.rn1ent jurisdiction of Income Tax Officer~urisdiction to continue to 
assess u undivided, despite partition under personal law. a HindU family whicll 
has hitherto been assessed in that status-Interpretation and scope of s. 25A(3) 
r<ad 1>ith s. 25A(I) of the Income Tax Act-Penalty imposed under s. 28(l)(c) 
of the Act for concealment of income by the Hindu Undivided Family prior to 
the actual date of recording of an order accepting the disruption of the Hindu 
Vfldivided Family is proper. 
In response to a show cause notice dated March 15, 1957, under s. 28(l)(c) 
of the Income Tax Act, before imposing a penalty for deliberate concealment 
of its income, the appellant, through ;ts authorised representni·.:e, voluntarily 
agreed to a sum of Rs. 15,000/- being treated as income of I-Iindu Un<li,·iJed 
Family. The Income Tax Officer, by his order dated March 20, 1958, ·added 
a sum of Rs. 68,550/ ... to the income of the appellant and imposed on it a 
penalty of R.. 26,000/- which on appeal was reduced to Rs. 15,000/-. Mean 
while, on March 19, 19157, the appellant filed an application under s. 25A of 
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.iie Act for an order recording partition of joint family property 
in definite 
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portions from June 22, 1956, claimin~ that date to be the date of partition. The 
Income Tax Officer, after due enquiries., accepted the disruption of the Hindu 
Un&vided Family as claimed by his order dated March 26, 1962. This led the 
appellaat to contend that, in view or the orders dated March 26, 1962, of the 
Incooie Tax Officer, the imposition of the penalty by him on March 20, 1958, 
was bad in law and could not be sustained. 
T1le Tribunal upheld the conten-
tions of the appellant resulting jn a reference under s. 66( 1) of the Act to 
the Hi~ Court of Allahabad (Lucknow Bench), which reversed the decision of 
the· Tribnna1. 
Ho"WCver, the High Court granted a 
certificat~ of Atne"s for 
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appeal to this Court. 
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Dismissing the appeals the Court, 
HELD: Sub--section (3) of s. 25A of the Income Tax Act en1bodies 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-s. (I) of s. 25A. So long as no order under s. 2S(A)(l) 
of the Act is recorded, the jurisdiction of .the Income Tax Officer to continue to 
as~ess as undivided desplte a partition under personal law, a Hindu family which 
has hitherto been asses.sed in that status, remain unaffected. 
[5080-H] 
Additional lnconte Tax Officer, Quddapah v. A. Thim1nayya & Anr. SS I.T.R. 
666; /dint Family of Udayan Chinubhai etc. v. Co1nmissioner of Income Tax, 
Gujarat (1967) 63 I.T.R. 416, applied. 
CommiMioner of Income Tax v. Sl>l11char Snh Bhim Salt (1957) 27 I.T.R. 
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307; S. A. Raiu Chattiar & Ors. v. Collector of Madras & Anr. (1956) 29 I.T.R. 
241; Mahankali Subba Rao Mahankllli Naeeswara.i Rao & Anr. v. Commissioner 
of Income Tax., Hyderabad (1957) 31 I.T.R. 867 and Comn1issioner of Incom~ 
Tax, Punjab v. Mathu Ram Prem Chand (1967) 66 I.T.R. 638, not appli-
cable. 
HELD FURTIIER: In the instant case, there was not a whisper of the appli-
cation under s. 25A (I) of the Act by the appellant on March 15, 1957, when 
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the penalty proceedings ""re initiated against it. 
EV<n ·on March 20, 1958, 
when the penalty was imposed, there was no order under s. 25A(l) of the 
Act. It was on1y on March 26, 1962, that the partition was recognised and order 
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506 
SUPREME COURT REPORTS (1976] SUPI'LliMENTARY 
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under s. 27A(l) of the Act was passed. 
There was, thus, no bar to lhe imposiw 
tion of the impugned penalty. 
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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 886 of 197.1. 
(From the judgment and order dated the 18.9.1969 of the Allaha-
bad High Court in L T. R. Misc. Case No. 836 of 1963.) 
G. C. Sharma, V. N. Ganpule, D. K. Jain, Anup Shanna and P. C. 
Kapur, for the appellant. 
B. Sen and S. P. Nayar, for the respondent 
The Judgment of the Court was delivered by 
JASWA)IT SINGH, J. This is an appeal by certificate of fitness grant-
ed by the High Court of Judicature at Allahabad under section 66-
A(2) of the Indian Income-tax Act, 1922 (hereinafter referred to as 
'the Act') from its judgment dated September 18, 1969 in I.T.R. Misc. 
Case No. 836 of 1963. 
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