COMMISSIONER OF INCOME TAX Vs. SANICHAR SAH BHIM SAH

JUDGEMENT

(1.) IN this case the assessee is an HUF under the name of Sanichar Sha of Katragarh was assessed to income -tax for the asst. year 1945 -46. In the course of the assessment proceeding the ITO found that the HUF 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 S. 37 of the IT 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 ITO determined the total income of the assessee for the asst. year 1945 -46 to be Rs. 70,440. This amount was reduced on appeal to the AAC by Rs. 10,488. Meanwhile the ITO started a proceeding under S. 28 (1)(c) of the Act against the HUF for deliberate concealment of its income. The notice under S. 28 (1)(c) was issued by the ITO on the 23rd of March, 1946. In the course of assessment for the asst. yr. 1947 -48 the assessee claimed that a partition had taken place among the members of the HUF w.e.f. 13th Feb., 1946. The ITO investigated the claim and found that there was actual disruption of the HUF and the brothers Bhim Sah and Arjun Sah had become separate. On 18th March, 1949, the ITO passed an order under S. 25A of the Act holding that the HUF had become separate w.e.f. the 13th Feb., 1946. Meanwhile the proceeding taken under S. 28(1) of the Act continued and on the 24th April, 1950, the ITO passed an order imposing a penalty of Rs. 22,000 upon the HUF for concealment of its income for the asst. year 1945 -46. The ITO 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 ITO to the AAC. The appeal was allowed and the AAC cancelled the penalty imposed by the ITO on the ground that there was no provision in the IT Act authorising the ITO to impose penalty on an HUF which had ceased to exist. The ITO appealed to the Tribunal against the order of the AAC. The appeal was dismissed by the Tribunal and the order passed by the AAC was confirmed.

(2.) AT the instance of the IT Department the Tribunal has stated a case on the following questions of law :

(3.) THE second question is whether the machinery prescribed by S. 25A of the Act could be applied to the proceedings taken under S. 28 of the Act for imposing penalty on the HUF of Sanichar Sah Bhim Sah whose members had become separated w.e.f. the 14th Feb., 1946. The argument put forward by Mr. Bahadur on behalf of the IT Department was that the machinery prescribed by s. 25A could be applied for recovery of the penalty imposed on the HUF even after they had become separated. In my opinion the argument is unsound. Sec. 25A(1) states : "Where, at the time of making an assessment under S. 23, it is claimed by or on behalf of any member of a HUF hitherto assessed as that a partition has taken place among the members of such family, the ITO shall make such inquiry there into as he may think fit, and, if he is satisfied that the joint family property has been partitioned among the various members or groups of members in definite portions he shall record an order to that effect." Sec. 25A(2) is in the following terms : "Where such an order has been passed, or where any person has succeeded to a business, profession or vocation formerly carried on by an HUF whose joint family property has been partitioned on or after the last day on which it carried on such business, profession or vocation, the ITO shall make an assessment of the total income received by or on behalf of the joint family as such, as if no partition had taken place, and each member or group of members shall, in addition to any income - tax for which he or it may be separately liable and notwithstanding anything contained in sub -s. (1) of S. 14, be liable for a share of the tax on the income so assessed according to the portion of the joint family property allotted to him or it ; and the ITO shall make assessment accordingly on the various members and groups of members in accordance with the provisions of S. 23." It is manifest that S. 25A refers to assessment of an HUF which had become separated in the course of the assessment year. The section does not, in my opinion, lay down the machinery for the imposition of penalty on an HUF which had become disrupted. This is clear from the opening words of S. 25A(1) -"Where at the time of making an assessment under S. 23." This view is also borne out by the language of S. 25A(2) which states that "the member or group of members" shall be liable for a share of the tax on the income assessed. Sec. 25A(2) does not say that the member or group of members shall be liable to pay a share of the penalty imposed upon an HUF. It cannot be argued and it was not argued on behalf of the IT Department that the expression "tax" in S. 25A includes penalty also, for the Legislature has made a sharp distinction between tax and penalty in enacting the various provisions of the IT Act. For instance, ss. 45 and 46 refer to the time and manner of recovery of tax from the assessee and S. 47 deals with the recovery of penalty. For these reasons I am of opinion that the machinery prescribed by S. 25A cannot be applied to the proceedings taken under S. 28 of the Act for imposing penalty on an HUF after it had disrupted and after the ITO had made an order under S. 25A. On behalf of the IT Department Mr. Bahadur made the submission that S. 25A should be applied by analogy to the proceedings taken under S. 28 because the penalty imposed on an HUF cannot be otherwise recovered. It is clear that there is a gap in the provisions of the Act ; but it is not the function of the Court to fill up the gap. The function of the Court is to interpret and not to legislate and the Court cannot fill up the gap under the guise of interpretation. That would be legislation and not adjudication. If there is a gap, it is for the Legislature to provide the remedy by enacting suitable amending legislation.