Jaswant Singh, J. - (1.) This is an appeal by certificate of fitness granted 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.
(2.) The facts giving rise to this appeal are:The appellant, a Hindu undivided family consisted of Gauri Shankar, the father, and his three sons viz. Chandrabhan, Bengali Lal and Brij Kishan Gauri Shankar, the karta of the family who was in charge of the affairs of the family during the relevant year which extended from April 13, 1945 to April 12, 1946, the assessment year being 1946-47, died on April 2, 1946. He was succeeded by his son, Chandrabhan as karta of the family. The appellant had, in the first instance, filed a return showing an income of Rs. 9,701/-. On scrutiny of the relevant material, the Income Tax Officer found a number of discrepancies in the accounts of the appellant and also noted the existence of cash credits to the appellant's account in the books of another firm viz. M/s. Tilyani Glass Works and a certain sum deposited in an account styled as Abdul Wahid Khan and Sons. He thereupon issued a notice dated March 15, 1957, calling upon the appellant to explain the discrepancies in the accounts as also in the cash credits and to show cause why a penalty under Section 28 (1) (c) of the Act be not imposed upon it. In response to the notice, a representative of the appellant appeared before the Income Tax Officer and voluntarily agreed to a sum of Rs. 15,000/- being treated as its income. After hearing the appellant's representative, the Income Tax Officer felt satisfied that the appellant had deliberately concealed its income and furnished an inaccurate return. Accordingly, by his order dated March 20, 1958, he added a sum of Rs. 68,550/- to the income of the appellant and imposed on it a penalty of Rs. 26,000/-. Meanwhile, on March 19, 1957, an application under Section 25-A of the Act was made to the Income Tax Officer for an order recording partition of joint family property in definite portions, which according to the application had taken place amongst the members of the Hindu undivided family on June 22, 1956. The Income Tax Officer on being satisfied after making enquiries that a complete partition of the joint family property has taken place, recorded an order under Section 25-A (1) of the Act on March 26, 1962, accepting the partition with effect from June 22, 1956, as claimed. Against the penalty of Rs. 26,000/- imposed by the Income Tax Officer by his order dated March 20, 1958, the appellant preferred an appeal to the Appellate Assistant Commissioner, who reduced the penalty to Rs. 15,000/-. Not satisfied with this reduction, the appellant went up in further appeal to the Income-tax Appellate Tribunal and raised before it a number of contentions. Amongst other things, it was urged before the Tribunal that since the Hindu undivided family had disrupted on June 22, 1956, as accepted by the Income Tax Officer in his aforesaid order dated March 26, 1962, passed under Section 25-A (1) of the Act, the imposition of the penalty by the Income-tax Officer on 20-3-1958, after the disruption of the family was bad in law and could not be sustained. While rejecting the other contentions raised on behalf of the appellant, the Tribunal upheld this contention by its order dated March 6, 1963. Thereupon the Commissioner of Income-tax, U. P. made an application before the Income-tax Appellate Tribunal under Section 66 (1) of the Act requesting that the following question of law arising from its decision be referred to the High Court:- "Whether in the facts and circumstances of the case the imposition of penalty under Section 28 (1) (c) on the Hindu undivided family after it had disrupted within the meaning of Section 25-A is bad in law."
(3.) Acceding to the request of the Commissioner of Income Tax, the Tribunal referred the above mentioned question to the High Court which answered the same in the negative. The appellant thereupon applied to the High Court and obtained the aforesaid certificate of fitness for appeal to this Court. This is how the matter is before us.;