Judgment :- SRINIVASAN J. The assessee had been assessed as an individual for the assessment year 1950-51. In the course of the assessment proceedings of the assessee for that year, it was discovered that two sums of Rs. 15, 000 and Rs. 10, 000 had been debited in the names of Ratnaswami and Ramaswami, the two sons of the assessee. The assessee stated that he had advanced these moneys to the two sons to enable them to carry on independent businesses in groundnut decortication. Each of these two sons was said to have been carrying on such business in partnership with another person with a right to a 7/8ths share in the profits therefrom. The relevant accounts of the two sons purported to disclose losses, but the Income-tax Officer computed the profits of Ratnaswami and Ramaswami at Rs. 4, 400 and Rs. 9.800, respectively. It was further held by the Income-tax Officer that the businesses were not the independent businesses of the two sons but were ventures which belonged to the assessee and were conducted by the himself. It was found that all the accounts were maintained by the in his books and that there was a free flow of funds from the assessee's business to the sons' businesses and vice versa. From these facts, the Income tax Officer concluded that the income from these businesses should be added to that of the assessee's regular business, and an assessment was made accordingly. That assessment has become final. Thereafter, the Income-tax Officer started proceedings under section 28 of the Act. He finally held that the assessee had concealed particulars of his income and imposed a penalty of Rs. 7, 500 under section 28(1)(c). Successive appeals to the Appellate Assistant Commissioner and to the Tribunal failed The application of the assessee for a reference under section 66(1) of the Act failing, the assessee moved this court under section 66(2). This court directed the Tribunal to state a case and refer the following question "Whether, on the facts and in the circumstances of the case, the levy of penalty of Rs. 7, 500 under section 28(1)(c) of the Act on the assessee is valid in law ?" * for the determination of this court. This court directed the Tribunal to state a case and refer the following question "Whether, on the facts and in the circumstances of the case, the levy of penalty of Rs. 7, 500 under section 28(1)(c) of the Act on the assessee is valid in law ?" * for the determination of this court. While directing the reference, this court instructed the Tribunal to state whether the plea of good faith advanced by the assessee, particularly in view of the fact that the businesses resulted in loss, was investigated and considered Mr. K. Srinivasan, learned counsel for the assessee, principally contended that the two businesses did not yield any profit at all and it was only by a process of an estimate adopted by the Income-tax Officer that what was a loss according to the books stood converted to a profit and brought to tax. He points out that when the businesses according to the accounts resulted in a loss, the assessee, if the businesses were really his own, would have been fully justified in taking into account those losses for the purpose of reducing the profits in his own business. The fact that he made no attempt to do so is urged by the learned counsel to show that the businesses were really not those of the assessee, but were the separate businesses of his sons. The feature that the same premises as that of the assessee was utilised by the sons or that the assessee advanced moneys to the sons whenever required could not possibly give a different complexion to the case We must concede that there is considerable force in the argument advanced by the learned counsel. In addition to this argument, learned counsel further urges that the imposition of the penalty in the instant case is not valid in law. It appears that by an order made under section 25A, the Income-tax Officer accepted the position that the Hindu undivided family consisting of the assessee and his sons became disrupted on April 13, 1946. It was also found that the family had all along been joint and that fact stood fully confirmed by an examination of the account books for the years 1912 to 1927. The business itself had been held in certain appeals to be joint family business. It was also found that the family had all along been joint and that fact stood fully confirmed by an examination of the account books for the years 1912 to 1927. The business itself had been held in certain appeals to be joint family business. The question accordingly arises whether even assuming that the penalty provisions were attracted, in view of the disruption of the family, no penalty could be imposed on the karta of the erstwhile family, after disruptionMr. Balasubrahmanyan, for the department, contends that the question in this form was not raised before the departmental authorities or the Tribunal ; but the very orders passed by these officers took note of these features and the question stands referred to us, in our minds, comprehends this issue as well In a decision of this court in Raju Chettiar v. Collector of Madras, penalty proceedings were initiated in September, 1944. The order imposing penalty was made on the 18th of March, 1948. In between, on the 25th of January, 1946, the partition of the family took place. The application under section 25A of the Income-tax Act was allowed on the 31st December, 1948. The karta of the family died after paying a portion of the penalty. Proceedings were taken by the income-tax department against the other members of the family for recovery of the balance of the penalty, and at that stage, they came to this court for the issue of a writ of prohibition. The decision of this court was that when the family had ceased to exist in January, 1946, it was not a "person" for the purposes of the Income-tax Act, in March, 1948, when the penalty was imposed. The learned judges observe that in order that the proceedings under section 28 may be validity launched and completed, in the case of a Hindu undivided family, two conditions were necessary : the family should be in existence when the proceedings are initiated, and it should also be in existence when the order imposing the penalty on that family as a person is passed. This decision has been followed by the Andhra Pradesh High Court in Mahankali Subba Rao and Nageswara Rao v. Commissioner of Income-tax Mr. This decision has been followed by the Andhra Pradesh High Court in Mahankali Subba Rao and Nageswara Rao v. Commissioner of Income-tax Mr. Balasubrahmanyan, for the department, contends that it has been recognised in decisions of the Supreme Court that the personality of a joint Hindu family is deemed to continue even after the disruption of the family for the purpose of proceedings under section 34, and if that is so, the same principle should be applicable in the case of proceedings under section 28. Reference has been made to Lakshminarain Bhadani v. Commissioner of Income-tax. That was a case where, after the family had become divided and orders had been passed under section 25A of the Income-tax Act, the Income-tax Officer purported to start proceedings under section 34 to bring to tax income that had escaped assessment during the time when the family existed. The relevant notice was issued in the name of the joint Hindu family and served upon the person who had been the karta during the year in question. The validity of such a course was upheld by the Supreme Court in the decision cited above. We are however unable to agree that the principle of that decision would apply to proceedings under section 28. Section 28 is well-recognised to be a species of penal proceeding intended to impose a penalty upon a contumacious assessee. The law does not contemplate the imposition of a vicarious penalty on a person other than the one who is responsible for the offence. Mr. Balasubrahmanyan's suggestion that the decision in Raja Chettiar v. Collector of Madras would require re-consideration for the reason that the decision of the Supreme Court in Lakshminarain Bhadani v. Commissioner of Income-tax was not cited before the learned judges does not appear to us to be acceptableMr. Srinivasan further contends that the income in the present case was undoubtedly income which belonged to the Hindu undivided family. Reference in this regard has been made to Commissioner of Income-tax v. Palaniappa Chettiar. It is unnecessary to refer to the facts of this decision, for it has been decided in other appeals in the case of this very assessee that the family had been a Hindu undivided family for several decades in the past and that the earlier assessments made on the assessee as an individual had all been incorrectly made. It is unnecessary to refer to the facts of this decision, for it has been decided in other appeals in the case of this very assessee that the family had been a Hindu undivided family for several decades in the past and that the earlier assessments made on the assessee as an individual had all been incorrectly made. But, whatever that may be, the findings referred to unmistakably establish that the income in question, the concealment of which is the subject-matter of section 28 proceedings, is income of the Hindu undivided family, and if any proceedings can be taken in that regard, it can only be taken against the Hindu undivided family. Though the proceedings were initiated at a time when the Hindu undivided family was in existence, the completion of the proceedings and the imposition of the penalty were on a date when the Hindu undivided family had ceased to exist. It seems to us that the principle of the decision in Raja Chettiar v. Collector of Madras fully applies. We are also satisfied on the facts that having regard to the resuls of the business, it was most unlikely that the assessee would not have included the results of these two businesses in his return had they really formed part of his business, for such a course would have been definitely to his advantage. This important feature, which is almost conclusive in favour of the contention of the petitioner, has failed to be noticed by the Tribunal We accordingly answer the question in favour of the assessee. In the peculiar circumstances, we make no order as to costs.