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Judgment
Veeraswami, J.—This reference-arises out of proceedings u/s 28(1)(c) of the income tax Act, 1922 and the question we are called upon to
consider is:
Whether the levy of penalty on the family of Nachiappa Chettiar after the re-union of Nachiappa Chettiar with his father Swaminatha Chettiar by
the deed, dated 11th June 1948 is valid u/s 28 of the Indian income tax Act on the facts and circumstances of the case
Swaminatha and his son Nachiappa constituted a joint Hindu family, but on January 20, 1940, by a deed of partition of that date, they became
divided. Nachiappa and his sons thereafter constituted a separate joint family and Nachiappa was assessed in the status of a joint Hindu family for
the years 1944-45 to 1948-49 except 1945-46. One June 11, 1948, there was a re-union between Swaminatha and Nachiappa, but the former
died on July 5, 1948. On March 27, 1952, notices were issued u/s 28(1)(c) calling upon Nachiappa, in the status of a joint Hindu family to show
cause why penalty should not be levied on the ground that he had failed to disclose the income for those years referable to certain investments as
share capital in two partnership firms by name K.M.N.N.S. Firm, Dindigul and N.S.N.R.M. Firm, Singampuneri. After hearing the Assessee, an
order of penalty followed which was, dated November 11, 1955, aggregating to Rs. 4,840. Throughout the penalty proceedings and the appeals
arising thereout, the Assessee''s contention was that its status as a joint Hindu family had come to an end with the re-union, so that the joint family
that had defaulted to disclose the particular income ceased to exist both when proceedings u/s 28(1)(c) were initiated and penalty was levied. This
contention did not prevail with the revenue authorities and the Tribunal.
Before us, learned Counsel for the Assessee has reiterated the same contention. He urges that the effect of the re-union was that the joint family-
status had been restored as between Swaminatha and Nachiappa as if the partition, between them had been cancelled, and so the joint family
consisting of Nachiappa and his sons after the death of Swaminatha, was not the same unit as the joint family of Nachiappa as it existed prior to the
re-union. In Mayne''s Hindu Law, eleventh edition, the effect of a re-union is stated thus:
The effect of a re-union is to restore the undivided status of the reuniting co-parceners....
We are not here concerned with the question whether the re-united coparcenery is exactly the same kind as the coparcenery before its
disruption. In Prankishen Paul Chowdry v. Mothooramohun Paul Chowdry (1865) 10 M.I.A. 403 the Privy Council held that the re-union of a
brother to the family remitted him to his former status as a member of a joint Hindu family and that he was entitled to share in the purchase made
by the other brother of his on the assumption that the purchase had been made out of the funds of the joint estate. This conclusion was reached on
principle even independent of the terms of re-union. This decision was referred to and applied in Kodali Kristnayya and Others Vs. Kodali
Guravayya and Others, . In that case Phillips J. following the Privy Council held that a re-union restored the re-uniting members to their original
joint status. The effect of a re-union was again considered by this Court in Babu alias Govinddoss, minor by next friend M. Lauldoss Vs.
Gokuldoss Govardhandoss and Others, . Venkatasubba Rao J. held to the same effect and following Narasimha Charlu v. Venkatasingaramma
ILR (1909) Mad. 165 observed that the state of re-union continued with the descendants of the re-uniting parties. In Rajah V. Rajeswara Rao
Garu and Another Vs. Chintapatla Venkata Rayanim Garu and Others, this Court stated that there was no distinction or difference between a joint
Hindu family and a re-united joint Hindu family for purposes of Section 3 of Madras Act IV of 1938. Counsel for the Assessee is, therefore, right
in his contention, in the light of these cases, that on re-union comes into existence a re-united joint Hindu family by restoring the re-uniting members
to their erstwhile status. But we do not see how this contention is of assistance to the Assessee. The question here is not whether on re-union the
re-uniting members are restored to the old status. The point is whether notwithstanding the re-union, the Assessee in his status as a joint Hindu
family continued to have that character at all material dates, particularly when the proceedings u/s 28(1)(c) were started and penalty was levied.
If the offending person for purposes of Section 28(1)(c) were the re-united joint family, there could of course be no proceedings initiated, or if
initiated there could be no penalty levied after disruption of such joint family. The continued existence of the offending person will be a condition to
the application of that section. That proposition is established by Commissioner of income tax v. S. Sah B. Sah ILR (1954) Pat. 1, S. A. Raju
Chettiar and Others Vs. Collector of Madras and Another, , Subba Rao v. Commissioner of income tax, Hyderabad ILR (1957) A.P. 59, C.A.
Abraham, Uppoottil, Kottayam Vs. The Income Tax Officer, Kottayam and Another, and M.R. Chinnaswami Gounder Vs. Commissioner of
Income Tax, Madras, . But the argument for the revenue is that the Assessee in the status of a Hindu joint family continued throughout unaffected
by the existence, disruption, re-union of the main joint family consisting of Swaminatha and Nachiappa and the subsequent death of Swaminatha
after re-union. The joint family consisting of Nachiappa and his sons, according to the Revenue, formed a sub-coparcenery which can, in law, co-
exist with the larger coparcenery consisting of Swaminatha and Nachiappa and that notwithstanding the re-union between the father and son and
the death of the former, no change was brought about to the existence or continued existence of the sub-coparcenery so that it is a person in
existence against whom proceedings u/s 28 could be validly directed.
On a careful consideration of the question we are inclined to think that the position taken up by the Revenue is well-founded. In Mayne''s Hindu
Law, eleventh edition, it is stated:
So long as a family remains an undivided family, two or more members of it, whether they be members of different, branches or of one and the
same branch of the family, can have no legal existence as a separate independent unity: but all the members of a branch, or of a sub-branch can
form a distinct and separate corporate unit within the larger corporate family and hold property as such.
Bashyam Ayyangar J., in Sudarsanam Maistri v. Narasimhulu Maistri ILR (1901) Mad. 149 recognizing this to be the correct legal position,
observed:
As regards the property of such family, the unobstructed heritage devolving on such family with its accretions, is owned by the family as a
corporate body, and one or more branches of that family, each forming a corporate body within a larger corporate body, may posses separate
unobstructed heritage'' which, with its accretions, may be exclusively owned by such branch as a corporate body.
These passages in Mayne�s Hindu Law and Sudarsanam Maistri v. Narasimhulu Maistri ILR (1901) Mad. 149 were cited with approval by
the Supreme Court in Bhagwan Dayal Vs. Mst. Reoti Devi, and with reference to them, is said:
The above passages clearly lay down the principle behind the rule. Hindu law recognizes only the entire joint family or one or mire branches of that
family as a corporate unit or units and that the property acquired by that unit in the manner recognized by law would as considered as joint family
property....
Coparcenery is a creature of Hindu Law...The law also recognizes a branch of the family as a subordinate corporate body.
It seems to be, therefore, the law that there can be a sub-coparcenery within a larger coparcenery. Two or more members alone of a branch or
not belonging to a branch but who are members of coparcenery cannot by themselves form a sub-coparcenery. But such a coparcenery may well
be constituted by each of the branches which in their turn constitute the bigger coparcenery. If a sub-coparcenery as a unit can legally exist within a
bigger coparcenery, it will follow that any change in the bigger coparcenery may not necessarily affect the status of a branch as a sub-coparcenery.
Irrespective of whether the major coparcenery was continued or disrupted, re-united and thereafter there hare been deaths of this or the other
coparcenery in the re-united family, the integrity of the sub-coparcenery will be maintained unless its status as such is disrupted.
On that view of the law, Nachiappa and his sons formed a branch which was in fact assessed as a joint Hindu family. When Nachiappa re-
united with his father, by that act no change in the joint family consisting of Nachiappa and his sons was brought about and it continued as a sub-
coparcenery within the coparcenery brought about by the re-union of the father and son. The death of Swaminatha no doubt made no difference to
the re-united joint Hindu family. But at the same time Nachiappa''s branch, constituted as it was as a sub-coparcenery, also continued unaffected
as a distinct and independent unit as before. It has to be held that then the penalty proceedings directed against the Assessee and the levy of
penalty would not be open to question on the ground that the Assessee in the status of a joint Hindu family has ceased to exist.
We answer the question referred to us against the Assessee with costs.