THE COMMISSIONER OF INCOME TAX, MADRAS AND ANOTHER vs. S. V. ANGIDI CHETTIAR

CIVIL APPEAL No. 6/1961Supreme Court1962 INSC 1118 January 1962Bench: 5 JudgesAuthor: BHUVNESHWAR PRASAD SINHA, J.L. KAPUR, M. HIDAYATULLAH, J.C. SHAH, J.R. MUDHOLKAR11 pages
AI SummaryAllowed

What did the Supreme Court hold?

The Supreme Court held that the principle in C. A. Abraham v. Income-tax Officer, Kottayam, is applicable to registered firms as well as unregistered firms. Section 44 of the Act, which deals with the assessment of discontinued businesses, applies to registered firms, and there is nothing in the section or its context to indicate otherwise. The Court further held that the penalty provisions under Section 28 are applicable to registered firms in the event of defaults contemplated by clauses (a), (b), or (c). By virtue of Section 44, assessment proceedings can be continued against a registered firm even after its dissolution, as if it had not been dissolved. The power to impose a penalty under Section 28 depends on the satisfaction of the Income-tax Officer in the course of assessment proceedings, which must occur before the proceedings are concluded. The Court found no evidence that the Income-tax Officer was not satisfied about the concealment of income during the assessment proceedings for the year 1949-50, noting an endorsement on the assessment order indicating action under Section 28. The High Court was in error in holding that penalty could not be imposed after dissolution. The appeals were allowed, and the High Court's orders were set aside.

What were the facts?

The assessee, a registered firm named S. V. Veerappan Chettiar & Co., concealed particulars of its income for assessment years 1947-48, 1949-50, and 1950-51. The Income-tax Officer imposed penalties totaling Rs. 35,000/-. The firm was dissolved by agreement on April 13, 1951, and further by the death of a partner on May 5, 1953. The Income-tax Officer imposed penalties on May 20, 1954. The High Court, on a writ petition, quashed the penalty orders, holding that the Income-tax Officer lacked jurisdiction to impose penalties after the firm's dissolution. The Commissioner of Income-tax appealed this decision.

What were the issues?

1. Whether the Income-tax Officer has the power to impose a penalty under Section 28(1) of the Indian Income-tax Act, 1922, on a registered firm after its dissolution. (Question of law) 2. Whether Section 44 of the Indian Income-tax Act, 1922, which provides for the assessment of discontinued businesses, applies to registered firms. (Question of law) 3. Whether the penalty provisions under Section 28 are applicable to a registered firm even if it is not directly liable to pay income-tax or super-tax. (Question of law) Assessee's Contention (as understood from the High Court's decision): The Income-tax Officer could not impose a penalty after the firm's dissolution, as the firm ceased to exist. The High Court accepted this plea. Revenue's Contention: The revenue argued that the principle laid down in C. A. Abraham v. Income-tax Officer, Kottayam, which allowed penalty imposition on dissolved unregistered firms, was also applicable to registered firms. They further contended that penalty provisions under Section 28 are applicable to registered firms, and Section 44 allows assessment proceedings to continue even after dissolution. They also argued that the satisfaction of the Income-tax Officer regarding concealment during assessment proceedings was sufficient for imposing penalty.

Which sections of the Income-tax Act were involved?

Section 28,Section 44,Section 23(5)

AI-generated summary — verify with the full judgment below

Cited by 52 judgments on BharatTax

See all citing judgments →

Counted from the text of the judgments hosted here. Most recent first.

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. T

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 28

All 1,686 judgments and leading authorities on Section 28 →

Recent GST High Court judgments

Search GST case law →