# MareddevKrishna Reddy v. Income-tax Officer, Tenali

- **Citation:** [1962] Supp. 2 S.C.R. 640
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Case number:** Civil Appeals Nos. 6 to 8 of 1961
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mareddevkrishna-reddy-v-income-tax-officer-tenali-2332
- **Pages:** 11

## Headnote

January ,9.
I
J
,-t
f
!140
SW~J!jNE[:OP,R'l;'-RlpPOR~S·.f~Q.621 SUPP.
I
?
...
_ __.
•
~.
THE COMMISSIONER. OF ~QPME TAXA ,-
. ,.·, '. ,!>fi\'DR~~,A~R A~O'.If.I;ER
-.~rt~
l
f
(l)..
"
l
$.'y. ANGIDI CHETTIAR'-
(B:P.:Sf.NkA, c. J., J. L. r(Apm·'. 11:r. E:rnlvATef.c.uH,
J. C: SHAH and J. R .. MunHOLii:AR, J,J.)'
61, •
'
,•]
\l
1
'
I
~ Income #a)j-Penalt11 pn concealed income-'-Power lo
itliJ!Ose penally 6'n A~regislerea firm· after dissolution-0.qndition
,Jo• the ~xercise 'O.f ,.iufis{Ji'ition b11 Tncci~-tax Officer-Indian
Incp11JeJa:t'Ac~, J92Z.(Jt•cf1.922J. ss. 28,' 44.
/ A registered
1
fim;i' c6ncealed Particulars of incorn! ""'bile
syb111ittin_g _its, ~etur.i.l§ fordbb'i v.ars 1947-48,
1949-50 and
/9oq-s~, .. The, .1 Irlpolije-t'!I'.
,Offi~er imposed
penalty under
s.2\l. (l) of the Indian Income-tax Act,
19?2. • Tlie High
Court was moved for a Wtit of certiofari, subllJ.i;ting that the
Incqme-tax Qfficenc;ould hot impose jjehalty under ,the said
S':,ctioQ,as he ~&9. in(o1mation that ,.the .registered
firm was
?issolv!'d ·an Awjl j3 .• l?~.l. hY. ?l:r~~m~nt,,;ind in any event
on M"av·5, 19S3, by theJl.e~•h, of on.e pf,tl\e., partners. The
Higll Cb'lfrt issued tlit \\Ii-ft '!i.nd' qtashecf the order imposing
l
If
(
•
I'
P
pena ty.
•
.
He(d;tthat the.ptin'ciple lfaid llof>t in ·o. A. Abraha"if
case [196li ~. S.-C. ,&, 7J5,5, 1 i• as'rlluch'app1icable to a registered ~irl!l a~. ~o an unrrgistei;ed fjrm., , Thor~ is -.nothing in s.4{
of th
1e 1Act "or the context jn \\1 hich...it..-~occurs
to jndicate· that
it does not apply to regi~'tercd firm.
~
"!"!
Held, further'; ·thit lhe 'pe~a'iiy provision;' u~cl~r s. ~8
would ij\ the"evsn;.of t~e default cbotemplated br els. (_a)
(b) or (c) be applicable 1n the course of assessment of a reinstered firm.
If tlie registf'rerl firm
is exposed to liability
of paying penalty because ~t ha1t commiltrd any of the defaults contemplated hy els. (a), lb) or \c) by
virtue of s.44 the
asse~sn1ent proceedings are liable to be
continued against the
rf'gistered firm evcrn after Ji·.-.sulution as if it has r.ot been
dissolved ..
The power to impose pena!ty under. s. ¥8 depends upon
the satiifaction of the IncoJie.tax Off1crr in the course nf
proceedi~gs under the i~ct.
It cannot le exercised if he is
not sathfied about the existence of CAnditions specified in cl.
(a), (b) or (c) Lefore the
proccedin~s arc concluded. The
procc~dings f'1r levy of penalty has, ,ho\vever1 not to be con11nenced by the Incorne-tax Offi~er, befo1c complr.tion of the
asseSSII}ent proc:eedings by hini.
Sa~isfaction before the conl
2 S.C.R.
SUPREME COURT REPORTS
641
clusion of the proceeding under the Act and not the issue of
notice of intimation of any step for imposing penalty is a
condition for the . exercise of the jurisdiction.
0. A. Abraham v. Income-tax Officer, Kottayam, [1961]
2 S. C. R. 765, applied.
MareddevKrishna Reddy v. Income-tax Officer, Tenali
[1957] 31 I. T. R. 678 and Khushiram Murarilal v. Commiasioner of Income-tax, Central, Calcutta, [1954] 25 I. T. R. 572,
approved.

## Text

January ,9.
I
J
,-t
f
!140
SW~J!jNE[:OP,R'l;'-RlpPOR~S·.f~Q.621 SUPP.
I
?
...
_ __.
•
~.
THE COMMISSIONER. OF ~QPME TAXA ,-
. ,.·, '. ,!>fi\'DR~~,A~R A~O'.If.I;ER
-.~rt~
l
f
(l)..
"
l
$.'y. ANGIDI CHETTIAR'-
(B:P.:Sf.NkA, c. J., J. L. r(Apm·'. 11:r. E:rnlvATef.c.uH,
J. C: SHAH and J. R .. MunHOLii:AR, J,J.)'
61, •
'
,•]
\l
1
'
I
~ Income #a)j-Penalt11 pn concealed income-'-Power lo
itliJ!Ose penally 6'n A~regislerea firm· after dissolution-0.qndition
,Jo• the ~xercise 'O.f ,.iufis{Ji'ition b11 Tncci~-tax Officer-Indian
Incp11JeJa:t'Ac~, J92Z.(Jt•cf1.922J. ss. 28,' 44.
/ A registered
1
fim;i' c6ncealed Particulars of incorn! ""'bile
syb111ittin_g _its, ~etur.i.l§ fordbb'i v.ars 1947-48,
1949-50 and
/9oq-s~, .. The, .1 Irlpolije-t'!I'.
,Offi~er imposed
penalty under
s.2\l. (l) of the Indian Income-tax Act,
19?2. • Tlie High
Court was moved for a Wtit of certiofari, subllJ.i;ting that the
Incqme-tax Qfficenc;ould hot impose jjehalty under ,the said
S':,ctioQ,as he ~&9. in(o1mation that ,.the .registered
firm was
?issolv!'d ·an Awjl j3 .• l?~.l. hY. ?l:r~~m~nt,,;ind in any event
on M"av·5, 19S3, by theJl.e~•h, of on.e pf,tl\e., partners. The
Higll Cb'lfrt issued tlit \\Ii-ft '!i.nd' qtashecf the order imposing
l
If
(
•
I'
P
pena ty.
•
.
He(d;tthat the.ptin'ciple lfaid llof>t in ·o. A. Abraha"if
case [196li ~. S.-C. ,&, 7J5,5, 1 i• as'rlluch'app1icable to a registered ~irl!l a~. ~o an unrrgistei;ed fjrm., , Thor~ is -.nothing in s.4{
of th
1e 1Act "or the context jn \\1 hich...it..-~occurs
to jndicate· that
it does not apply to regi~'tercd firm.
~
"!"!
Held, further'; ·thit lhe 'pe~a'iiy provision;' u~cl~r s. ~8
would ij\ the"evsn;.of t~e default cbotemplated br els. (_a)
(b) or (c) be applicable 1n the course of assessment of a reinstered firm.
If tlie registf'rerl firm
is exposed to liability
of paying penalty because ~t ha1t commiltrd any of the defaults contemplated hy els. (a), lb) or \c) by
virtue of s.44 the
asse~sn1ent proceedings are liable to be
continued against the
rf'gistered firm evcrn after Ji·.-.sulution as if it has r.ot been
dissolved ..
The power to impose pena!ty under. s. ¥8 depends upon
the satiifaction of the IncoJie.tax Off1crr in the course nf
proceedi~gs under the i~ct.
It cannot le exercised if he is
not sathfied about the existence of CAnditions specified in cl.
(a), (b) or (c) Lefore the
proccedin~s arc concluded. The
procc~dings f'1r levy of penalty has, ,ho\vever1 not to be con11nenced by the Incorne-tax Offi~er, befo1c complr.tion of the
asseSSII}ent proc:eedings by hini.
Sa~isfaction before the conl
2 S.C.R.
SUPREME COURT REPORTS
641
clusion of the proceeding under the Act and not the issue of
notice of intimation of any step for imposing penalty is a
condition for the . exercise of the jurisdiction.
0. A. Abraham v. Income-tax Officer, Kottayam, [1961]
2 S. C. R. 765, applied.
MareddevKrishna Reddy v. Income-tax Officer, Tenali
[1957] 31 I. T. R. 678 and Khushiram Murarilal v. Commiasioner of Income-tax, Central, Calcutta, [1954] 25 I. T. R. 572,
approved.
CIVIL APPELLATE JURISDICTION : Civil Appeals
Nos. 6 to 8 of 1961.
Appeals from the judgment and order dated
Mav 3, 1957 of the Madras High Court in Writ
Petition Nos. 943 to 945 of 1955.
K. N. Rajagopala Sastri and P.D. Menon, for
the appellants.
V. S. Venkataram and K. P. Bhat, for responflents.
1962. January 18.-The Judgment of the Court
was delivered by
SHAH, J.-These a,re three appeals with certificates of fitness granted by the High Court of Madras
against orders passed in Petitions for the issue of
writs of certiorari setting aside orders imposing
penalty upon the firm of Messrs. S. V. Veerappan
Chettiar & Co. passed by the Income-tax Officer
under s. 28(l)(c) of the Indian Income-tax Act.
Four persons carried on business in cloth at
Virudhunagar in the name and style of S. V.
Veerappan Chettiar & Co.-hereinafter ca.!led the
firm. The firm was registered under Art. 26A of
the Indian Income.tax Act, 1922, for the assessment years 19!7-48, 1949-50·and 1950-51. The firm
concealed particulars of its income in submitting its
returns, and the Income-tax Officer, Virudhunagar
in the course of assessment proceedings directed, by
order dated May 20, 1954, payment of penalty of
Rs. 20,000/- for the year 1947.48, Rs. 10,000/-for the
JB6Z
T 1u Comntilsio111r of
lncom..tax, M•dr..,
v.
S. V.Antidi
Chcttiar
SMA].
1962
1}, c-.;,,;..,,, of
l•eomNax,Madtas
v.
S. V, A111idi
CMu1ot
S/WiJ;
642 SUPREilE COURT REPORTS [Hlu:?] SUPP.
year 1949-50 :-nd Rs. 5,000(.for the year 1950-51.
Against the orders imposing ponalty, one of the
partners of the firm moved the Commissioner of
Income-tax, Madras in revision but without succeBB.
Thereafter, petitions under Art. 226 of the Constitution for issur of writs of certiorari or other appro·
priate writs oalling for records relating to the orders
dated May 20, 1954, passed by the Income-tax
Officer, Virudhunagar, in respect of tho three assessment orders and tho record relating to the order of
the Commissioner and for quaahing tho penalty
orders were filed by two partners of the firm
in the High Court at Madras. It was submitted
by the petitioners that by agreement between the
partners the firm stood <liBBolved on April 13, 1951,
and intimation in that behalf was given to the
Income-tax Officer, and that in any event the furn
stood dissolved on May 5, 1953, when one of the
partners died and the Income-tax Officer could not,
in exercise of the power under s. 28( I) make an
order imposing penalty after dissolution of the firm.
The High Court accepted the plea of the petitioners
and directed that the orders of the Income-tax
Officer dated May 20, 1954, and the further action
of the Commissioner thereon declining to revise the
order of the Incom'l-tax Officer in each of the peti·
tions be set aside. Against the orders paBBed by t.he
liigh Court the Commissioner appPals to this Court.
This Court
in a recent judgment--C. A.
Abraham v. Income-tax Officer, Kottayam (')-held
that the Income-tax Offioer had power under s. 28
of the Income-tax Act to impoee penalty in the
course of aBBessment of a firm even if the firm stood
at the date of tho order diBBolved by the death of
one of its partners. In so holding, this Court
observed that s. 44 of the Income· tax Act sets up
machinery for assessing tax liability of a firm which
has discontinued its business and that the expres·
sion "assessment"
in the different sections of
(I) [1961) 2 S.C.R. 765.
2S.C.R.
SUPREME COURT REPORTS .
643
Chapter IV of the Income-tax Act was not used
merely in the sense of computation of income, and
whens. 44 declared that the partners or members of
the firm shall be jointly and severally liable to
assessment, it referred to the liability to computation of income under s.23 as well as the application
of the procedure• for declaration and imposition of
tax liability and the machinery for enforcement
thereof.
Counsel for the appellants, however, contended that C. A. Abraham's rose was one of an unregistered firm and the principle of that case has no
application where the firm is a registered firm. But
s. 44 makes the provisions of Chapter IV, so far as
may be, applicable to assessment when any business,
profession or vocation carried on by a firm h-ts
been discontinued : the section declares liability of
all discontinued firms and not merely of unregistered firms. There is nothing in s. 44 or the context
in which it occur to indicate that it does not apply
to registered firms. This Court in C. A. Abraham's
rose approved the decision of. the Andhra Pradesh
High Court in Mareddy Krishna Re,ddy v. lncome-tax
Officer, Tenali, (') which was a case of a registered
firm, which was dissolved before imposition of
penalty.
Counsel then argued that in any event, no
penalty under s. 28 can be imposed against a registered firm either before or after dissolution, even if
the defaults set out in els. (a), (b) or (c) are proved.
This, counsel submits, is the result of the
scheme of the Act under s. 23(5) for asaessment of
tax liability of a registered firm. This plea was not
set up in the petition, and there is no reference to
it in the judgment of the High c~mrt and even in
the statement of the case filed in this Court there is
no trace of it. On that ground alone the plea raised
by the appollant is liable to be rejected. Even if the
appellant is permitted to raise the contention there
G I)
[1957] 31 l. T. R. 678.
1962
The Commissioner of
lnrom11-t~.Y, M adr•s
'"·
s. V. AngidiCMUiar
SluzhJ.
1962
Tiu C!1mmiriio~ of
lnc11mt-'4x, .ll adras
'.
S. V. A t1&idi
Clutti4r
Shah].
644 SUPREME COURT REPORTS [l!l62] SlJPP.
is, in our judgment, no force in it. Section 28(1)
of the Act (in so far as it is mat..rial to these
appeals) providP-s :
"If the Income-tax Officer
x
x
x
x
x
x in the course of any proceedings
und<·r this Act is satisfied that any person-
(a} has without reasonablo <',ause
failed to furnish the return of his total
income which he was required to furnish
by notice given under sub-B<'ction ( 1) or
sub·section (2) of section 22 or section 34
or has without reasonable cause failed to
furnish it within the time allowed and in
the manner required by such notice, or
(b)
has without reasonable cause
failed to comply with a notice under subsection (4) of section 22 or sub-section (2)
of section 23, or
(c) bas concealed the particulars of
his
income .or deliberately furnished
inaccurate particulars of ~uch income,
he or it may direct tba.t such persons
shall by way of penalty, in the case referred
to in els.use (a), in addition to the amount of
the income-tax and super-tax, if any, payable
by him, & sum not exooeding one and a ha.If
tim<'s that amount, and in the caBCB referred
to in clauses (b) and (c), in addition to any
tax payable by .him, a sum not exceeding one
and a half times the amount of the income-tax
and super-tax, if any, which would have been
avoided if the income as returned
by such
person had been acoopted as the correct
income".
The expreBBio11
"person" is defined in s. 2(a)
of the Act as· including "a Hindu
undivided
family and a local authority". That evidently is
not
an
exhaustive definition
and
recourae
2 S.C.R.
SUPREME COURT REPOR~S
645
is permissible to the. General Clauses Act whioh
says in s. 3( 42) that a "person" includes "any
company or association or body of individuals
whether incorporated or not." A firm is manifestly
a body of individuals and would therefore fall
within the definition of "person", and may be
exposfld to an order for payment · of penalty in the
circumstances set out in cl!. (a}, (b) and (c} of s. 28
of the Income-tax Act. That a firm, registered
or unregistered, may be liable to pay penalty has
been further clarified by proviso (d) which declares
the quantum of penalty payable by fiims, registered as well as unregistered. Counsel for
the
appellant however contends . that even if a fi~m be
regarded as a person within the meaning of the
operative part of s. 28 and the proviso thereof,
because of an obvious defect in drafting no liability
for payment of penalty can be imposed upon a
registered firm and in support of that contention
he relies
upon the
last
clause of the Ist
sub-section which provides for
imposition
of
penalty "in addition
to
any tait
payable
by him". Counsel submits that only the person
liable to pay tax, may if found guilty of wrongful
conduct specified in. els. (a), (b) and (c) be ordered
to pay penalty, and. by the scheme adopted by the
Legislature for imposing tait liability upon registered firms under s. 23(5) tax is never payable by a
registered firm. Counsel says that when the
Legislature by Act 40of1940 enacted cl. (d) of the
proviso; only the quantum of penal liability of a
registered firm was declared but the liability could
not still be enforced because by the substantive
provision, it depended solely upon the existence of
an enforceable obligation ofthe firm, and so long
as 4n obligation was not imposed upon the firm to
pay tax by an adequate amendment of s. 23 (5), the
li&bility though quantified W&!l unenf9rce&ble. It
is urged that there were two defects in s. 28(1), as
origina.lly drafted : ( 1) that t)te (ltinalty could be
1962
Thi Commissiorur of
InerJme-tax, .tl adriJs
v,
8. V. Angidi
Chettiar
Shah].
7111 CommUJiofw of
ltu#t•IU, Madras
v.
s. v. Jl.,iii
· Cittti.r
5hhJ.
6!6 SUPREME COURT REPORTS [1062] SUPP.
imposed only upon a person who was liable to pa.y
income-tax or super-tax, and (2) that the penalty
which may be imposed wa.s a. multiple of the
income-tax and super-tax if any, which would have
been a.voided if the income as returned by such
person would bavo been accepted as the correct
income, and by tho enactment of ol. (d) to the
proviso, the second defect was removed, but not
first.
In support of this argument, counsel relied
upon s. 23(5) as it stood, before it waa amended by
s. 14 ofthe Finance, Act of 1956.
The clause
provided that where an assossee is a. firm and the
total income of the firm ha.a been &BBessed under
sub-s. (1), sub·s. (3) or sub-s. (4), as the case may
be, the sum payable by the firm shall not be
determined but the total income of each partner
of the firm, including therein his share of its
income, profits or gaina of the previous year ahall
be asseBSed and the sum payable by him on the
basis 0f such assossment shall
be determined.
Under this scheme the income of the registered
firm was to be computed but ta.x was not a&l!CBl!ed
on the total income of the registered firm : the
income was distributed aocording to the terms of the
agreement amongst the partnel'I of the registered
firm, and added to the separate income of the
partners and ta.x was levied on the partners
individually. Relying upon this scheme of levying
tax, it was urged by counsel for the respondent
that as the registered firm was not liable to pay
tax it could not be rendered liable to pay penalty
under s. 28 ( 1) ( c).
Section 28, a.a it was originally enacted, was
somewhat obscure. The penalty which could be
impoeed in caaes referred to in ols. (b) and (c) was
to be a llUIII not exceeding one and a. half times the
a.mount of the ta.x which would have been avoided if the income as returned by such person had
been aceepted as the correct income. But the
Legi.sfature did not give any indication whether the
2 S.C.R.
SUPREME COURT REPORTS
647
penalty was related to the tax avoided by the
partners of the firm, or by the firm on the footing
ttiat it was to be regarded as an unregistered firm.
By a. 23( 5), income· tax not being made payable by
the firm but by the individual partneri of a
registered firm the legislative intention was not
clearly expressed. The Legislature to rectify the
defect fixed an artificial basis for computing the
penalty payable by a registered firm : it provided
that in the cases referred to in els. ( b) and ( c),
the amount of the income-tax and super-tax which
would have been avoided if the income as returned
had been accepted as the correct income, shall be
taken to be the difference betwfen the amount of
the tax which would have been payable by an
unregistered firm, on an income equal to tht> firm's
total income. But the
provision relating to
imposition of liability to pay penalty by registered
firms was clearly expressed. The assumption that
the expression "any tax" used ins. 28 ( 1) is intended
to indicate that there must be some tax payable by
the assessee before penalty could be imposed is
wholly unwarranted. The futility of the assumption is exhibited by the terms of cl. (b).
Penalty
may be imposed for failure to comply with the
notice under sub-s. (4) of s. 22 or sub-s, (2) of s. 23
even if the assessee has no assessable income.
To the imposition on of a penalty liability to
pay tax by the person against whom the penalty
is sought to be imposed is therefore not a condition precedent.
The Calcutta High Court in Khushiram Murarilal v. Commissioner of Income-tax, Central Calcutta(')
was called upon to deal
with the submission
made before us in this case. In that case the question which fell to be determined was whether imposition of a penalty on a registered firm under
s. 28 (1) (b) of the Income Tax Act was justified in
law. It was urged in that case on behalf of tho
(I) [1954]25 I. T. R. 572.
li62
The Commissioner of
Incame~tax, Jladras
\'.
s. V. Angidi
Chettiar
Shah].
1161
n. C.....Usiootr •!
l11C011V-l4X, M °""
v.
s. v. "•1iJi
Cj,uiu
SA.Ji J,
· 648 SUPREME COURT REPORTS (1962] SUPP.
a.sl!eSSCe-a. registered firm -that inasmuch as under s. 28 (I) (b) a. person can be ma.de liable to pay
penalty, in addition to the amount of income-tax
and eupor-ta.x, if any, pa.ya.hie by him in ca.sea falling under els. (bl and ( c), no order for payment of
penalty ca.n be made against a. registered firm, beoau.eo under the Income Ta.x Act no tax is ma.de
payable by the firm.
Chief Justice Cha.kra.va.rtti,
speaking for tho Court, observed," ............... even
when construed by its own language tho concluding para.graph of section 28 (l) cannot be said to
make it a condition precedent that a person must
be liable to pa.y some income-tax or it ma.y be also
super-tax if ho is to hr made liable for a penalty.
Clause (b) of the proviso to my mind emphasizes
that meaning of the concluding para.graph of Section 28 (I) a.nd rests on an a.ssumption that under
that provision a person may be chargeable to penalty although he ma.y not be
ohargeablo to tax."
The learned Chief Justice also obaerved, " ......... it
wa.s not really necessary for ola.u116 (d) ef the pro-
. viso to enact 1pecifioally that a. registered firm
would be liable to pay a penalty despite the fact
that it could not be charged and was not, in fa.ct,
charged to income-tax or super-tax. The whole
argument of Dr. Sen Gupta was that tho concluding paragraph o! Section 28 (1) had loft a ga.p which
had been attempted to be filled up by clause (d)
of ilie proviso, but the attempt had not been suoceAful. In my view the gap which undoubtedly
existed in the concluding paragraph of section 28 (I)
was only a.n absenoe of a. provision regarding the
quantum of the penalty that .oould be leTied from a.
regi.ltered firm because tho quantum depends upon
the amount of income-tax payable".
In our view the lea.med Chief Justice was
right is so
e. nunoiating the law. Under a. 23 (5)
of the Indian Income-tax Act, before it was amend-
·.a· in 1956, ~·the case of a regiltered firm the tax
payable by the firm italf waa not required to be
2 S.C.R.
SUPREME COURT REPORTS
6!9
determined but the total income of each partner of
the firni including therein the share of its income,
profits and gains of the previous year was required
to be assessed and the sum p11yable by him on the
basis of such assessment was to be determined. But
this was merely a method of collection of tax due
from the firm.
The penalty provisions under s. 28 would
therefore in tho event of the default contemplated
by els. (a}, (b) or ( c) be applicable in the course of
assessment of a registered firm. If a registered
firm is exposed to liability of paying pcncilty, by
committing any of the defaults contemplated by
els. (a), (b) or (c) by virtue of s. 44, notwithstanding the dissolution of tlie firm the assessment proceedings are liable to be continued
against the
registered firm, as if it has not been dissolved.
Counsel contended th'l.t in any event, penalty
for the assessment year 1949-50 could not be imposed
upon the assessee firm because there was no evidence that the Income-tax Officer was satisfied in
the course of any assessment proceedings under the
Income-tax Act that the firm
had concealed the
particulars of its income or had deliberately furnished inaccurate particulars of the income. The power
to impose penalty under s.28 depends upon the satisfaction of the Income-tax Officer in the course of
proceedings under the Act: it cannot be exercised
if he is not satisfied about the existence of conditions specified in els. (a), (b) or (c) before the proceedings are concluded.
The proceeding to levy
penalty has, however, not to be commenced by the
Income Tax Officer before the completion of the
assessment prpceedings by the Income-tax Officer.
Satisfaction before conclusion of the proceeding under
the Act, and not the issue of a notice of initia·
tion of any step for imposing penalty is a condition
for the exercise of the jurisdiction. There is no
evidence on the record that the Income-tax Officer
1962
Tht Commissiomr of
Income-lax, Madras
v.
S. V Ant:idi
Chettfor
Sh,h J,
19' 2
74'C-isfton.rof
laeotN-to.x, Madror
••
S. I'. A n1idi
0/wtliar
Bi..h J.
€50 SUPREME COURT REPORTS [l9ti2) SUPP.
was not satisfied in the course of the assessment
proceeding that the firm had concealed its income.
The assessment order is dated November 10, 1951,
and there is an endorsement at the foot of the
assessment order by the Incomt.-tax Officer that
action under s. 28 had been taken for
concealment
of income indicating clearly that the Income-tax
Officer waa satiBfied in the course of the assessment
proceeding that the firm had conoealed its income.
In our view, the High Court was in error ·in
holding that penalty could not be imposed under
s. 28 (l) (c) upon the firm Messrs. S. V. Veerappan
Chettiar & Co.,.after its disaolution.
The appeals will therefore be allowed and
the orders pB.118Cd by thl" High Court will be set
a.aide and the petitions filed by the respondents dismissed with ooats in this Court and the High Court.
One hearing fee.
Appeals allowed.
PALAKDHARI SINGH & OTHEHS.
1).
THE STATE OF UTl'AR PRADE.<::H
A~'TI ANOTHER
(J.L. KAPUR and RAGHUBAR DAYAL, JJ.)
/,imitation-Panchayati Adaiat-Fine i111po8fd on con·
i>i<lion-RUO!ltry aftu expiry of .i:r: year1-IJ barred-U .P.
l'amhayat Had Act, 19,7. (U.P; XXVI of 1947) 88. 54, 83, 94lndian Penal Code, 1860 (XI.I of 1960) B. 70.
The appellant was convicted by the Panchayati Adalat
for theft and sentenced to pay a fine of Rs. 75/- in 1950.
The conviction and sentence was confirm_ed in 1953 by the
High Court in revision.
In 1958 proceedings were taken to
recover the fine. The appellant contended that the recovery
was barred by s. 70 The Indian Penal Code.
Th~ .rcspon·
dent contended thats. 70 was not applicable to conv1ruons by
Pauchayati Adalats and that the limitation started from the
date of the order of the High Court.