Ramaswami J.

1. In this case the assesses is a Hindu undivided family under the name of Sanichar San Bhim Sah of Katrasgarh which was assessed to Income Tax for the assessment year 1945-46. In the course of the assessment proceeding the Income Tax Officer found that the Hindu undivided family 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 Section 37, Income Tax 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 Income Tax Officer determined the total income of the assessee for the assessment year 1945-46, to be Rs. 70,440. This amount was reduced on appeal to the Appellate Assistant Commissioner by Rs. 10,488. Meanwhile the Income Tax Officer started a proceeding under Section 28 (1) (c) of the Act against the undivided Hindu family for deliberate concealment of its income. The notice under Section 28 (1) (c), was issued by the Income Tax Officer on 23-3-1946- In, the course of assessment for the assessment year 1947-48 the assessee claimed that a partition had taken place among the members of the Hindu undivided family with effect from 13-2-1946. The Income Tax Officer investigated the claim and found that there was actual disruption of the Hindu undivided family and the brothers. Bhim Sah and Arjun Sah had become separate. On 18-3-1949, the Income Tax Officer passed an order under Section 25A of the Act holding that the Hindu, undivided family had become separate with effect from the 13-2-1946.

Meanwhile the proceeding taken under Section 28 (1) of the Act continued and on 24-4-1950, the Income Tax Officer passed an order imposing a penalty of Rs. 22,000 upon the Hindu undivided family for concealment of its income for the-assessment year 1945-46. The Income Tax Officer 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 Income Tax Officer to the Appellate Assistant Commissioner. The-appeal was allowed and the Appellate Assistant Commissioner cancelled the penalty imposed by the Income Tax Officer on the ground that there was no provision in the Income Tax Act authorising the Income Tax Officer to impose penalty on. a Hindu undivided family which had ceased to exist. The Income Tax Officer appealed to the Appellate Tribunal against the order of the Appellate Assistant Commissioner. The appeal was dismissed by the Tribunal and the order passed by the Appellate Assistant Commissioner was confirmed.

2. At the instance of the Income Tax Depart-ment the Tribunal has stated a case on the following questions of law:

"(1) whether in the facts and circumstances of the case the Income Tax Officer could impose a penalty on 24-4-50 under Section 28 (1) (c) of the Act in respect of concealment of income by the Hindu undivided family of Sanichar Sah Bhim. Sah whose members had become separated with effect from 14-2-46 and (2) Whether in the facts and circumstances of the case the procedure prescribed by Section 25A of the Act could be applied to the proceedings taken under Section 28 of the Act in respect of concealment of Income by the Hindu undivided family of Sanichar Sah Bhim Sah whose members had become separated with effect from 14-2-46"

3. Section 28 (1) (c) of the Act states :

"If the Income Tax Officer is satisfied that any person... .(c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty.... 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 accepted as the correct income".

The expression person which occurs in Section 28 (1) (c), includes a Hindu undivided family for Section 2(9) of the Act defines a person to include a Hindu undivided family and local authority. Section 28 (3) is also important.

Section 28 (3) is in the following terms :

"No order shall be made under Sub-section (1) or Sub-section (2), unless the assessee or partner, as the case may be, has been heard, or has been given a reasonable opportunity of being heard".

The expression assessee in Section 28 (3), also refers to a Hindu undivided family in view of the definition given in Section 2 (2) of the Act. It is therefore clear that Section 28, authorises the Income Tax authorities to impose penalty on a Hindu undivided family. But the power of the Income Tax authorities to impose the penalty is subject to the peremptory condition that notice must be given to the Hindu undivided family to show cause. In other words, the penalty cannot be imposed by the Income Tax authorities unless the Hindu undivided family is heard or is given a reasonable opportunity of being heard before the final order is passed. It is also important to remember in this connection that a Hindu undivided family is a separate legal unit under the scheme of the Income Tax Act.

As I have already stated, Section 2 (9) defines a person to include a Hindu undivided family. Section 3 treats a Hindu undivided family as a separate legal entity for the purpose of imposing a charge of Income Tax. That is also the underlying basis of Section 25A of the Act. In the context of the Income Tax Act therefore a Hindu undivided family is a separate legal entity and is distinct from the members constituting a Hindu undivided family. In the present case the order of the Income Tax Officer under Section 25A, clearly shows that the Income Tax Officer accepted the claim that the family was separate from 10-2-1946. The notice under Section 23 (1) (c) of the Act was issued by the Income Tax Officer on 23-3-1946, against the divided members of the Hindu undivided family. The final order under Section 28 was passed by the Income Tax Officer on 24-4-1950, and the divided members of the family were directed to pay the penalty.

It is clear in these circumstances that the Hindu undivided family was not existing on the date the Income Tax Officer started the proceeding under Section 28 (1) (c), and also on the date the Income Tax Officer imposed the penalty. In my opinion the proceeding initiated by the Income Tax Officer under Section 28 (1) (c) of the Act is legally invalid since the Hindu undivided family was non-existent on that date. It follows that the order of the Income Tax Officer imposing the penalty on 24-4-1950, is also legally invalid.

4. The second question is whether the machinery prescribed by Section 25A of the Act could be applied to the proceedings taken under Section 28 of the Act for imposing penalty on the Hindu undivided family of Sanichar Sah Bhim Sah whose members had become separated with effect from 14-2-1946. The argument put forward by Mr. Bahadur on behalf of the Income Tax Department was that the machinery prescribed by Section 25A could be applied for recovery of the penalty imposed on the Hindu undivided family even after they had become separated. In my opinion the argument is unsound.

Section 25 A (1) states :

"Where at the time of making an assessment under Section 23, it is claimed by or on behalf of any member of a Hindu family hitherto assessed as undivided that a partition has taken, place, among the members of such family, the Income Tax Officer 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."

Section 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 a Hindu undivided family whose joint family property has been partitioned on or after the last day on which it carried on such business, profession or vocation, the Income Tax Officer 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-section (1) of Section 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 Income Tax Officer shall make assessments accordingly on the various members and groups of members in accordance with the provisions of Section 23."

It is manifest that Section 25A refers to assessment of a Hindu undivided family 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 a Hindu undivided family which had become disrupted. This is clear from the opening words, of Section 25A (1): "Where at the time of making an assessment under Section 23". This view is also borne out by the language of Section 25A(2) which states that "the member or group of members" shall be liable for a share of the tax on the income assessed. Section 25A (2) does not say that the member or group of members shall be liable to pay a share of the penalty imposed upon a Hindu undivided family. It cannot be argued and it was not argued on behalf of the Income Tax Department that the expression tax in Section 25A includes penalty also, for the legislature has made a sharp distinction between tax and penalty in enacting the various provisions of the Income tax Act.

For instance, Sections 45 and 46 refer to the time and manner of recovery of tax from the assessee and Section 47 deals with the recovery of penalty. For these reasons I am of opinion that the machinery prescribed by Section 25 A cannot be applied to the proceedings taken under Section 28 of the Act for imposing penalty on a Hindu undivided family after it had disrupted and after the Income Tax Officer had made an order under Section 25A. On behalf of the Income Tax Department Mr. Bahadur made the submission that Section 25A should be applied by analogy to the proceedings taken under Section 28 because the penalty imposed on a Hindu undivided family 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 gap. The function of the Court is to interpret land 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.

5. For the reasons I have expressed I hold that both the questions referred to the High Court must be answered against the Income Tax Department and in favour of the assessee. The Income Tax Department must pay the cost of the reference. Hearing fee Rs. 250.

Choudhary, J.

6. I agree.