HC Quashes Reassessment as Wife Wasn’t Required to Explain Source of Funds Used by Husband to Buy Property Jointly

Case Details: Kalpita Arun Lanjekar vs. ITO - [2024] 160 taxmann.com 726 (Bombay)

Judiciary and Counsel Details

• • K.R. Shriram & Dr Neela Gokhale, JJ.
  • Govind Javeri for the Petitioner.
  • Arjun Gupta for the Respondent.

Facts of the Case

The assessee, a housewife without income, was not filing any income tax return. The assessee received a notice under section 148A(b) stating that the Assessing Officer had information suggesting that income chargeable to tax had escaped assessment.

The assessee submitted that her husband purchased the property and made all the payments. The assessee also explained that the assessee’s name was included as a joint holder in the agreement for sale, but the assessee had made no payment. To substantiate the claim, the assessee furnished a copy of the registered agreement for the property, the husband’s bank details, etc.

Considering such details and documents provided by the assessee as inadequate, the Assessing Officer (AO) passed an order under section 148A(d). Aggrieved by the order, the assessee filed a writ petition before the Bombay High Court.

High Court Held

The High Court held that the only basis on which the order had been passed was that the assessee had not submitted the details of the source of Rs. 88.75 lakhs paid for the purchase of property by her husband, as the husband’s income was only Rs. 18.50 lakhs.

Though the AO strongly opposed the petition, in the end, he agreed that those details have to be sought from the husband for the husband’s assessment and not from the assessee because the AO accepted that the assessee had not made any payment for the purchase of the property.

Consequently, the order passed under section 148A(d) was quashed and set aside.