While accepting that the income discovered to be belonging to the taxpayer’s wife in scrutiny assessment was duly offered to tax, the Rajkot ITAT condemned the I-T Department from taking the opposite opinion and taxing it in the hands of the assessee according to the foundation that his wife was not functioning any business.
The Bench of the ITAT comprising of Suchitra R. Kamble (Judicial Member) and Annapurna Gupta (Accountant Member) noted that “since the income of the wife of the assessee stands accepted in her hands by the Department in scrutiny assessment vide order passed u/s 143(3) of the Act, on returns filed in consequence to the search action conducted on her u/s 153A of the Act, we find that there is no case with the Revenue now to tax the same income in the hands of the assessee also in terms of the clubbing provisions of Section 64(1)(ii) of the Act.” (Para 8)
Concerning the case, in effect to search action conducted, a warrant under section 132(1) was initiated in the case of the taxpayer. Subsequently, the assessment was formulated under Section 153A on the taxpayer.
One common addition was made about the income allegedly made by the wife of the taxpayer which was clubbed in the hands of the taxpayer under the provisions of Section 64(1)(ii).
The taxpayer contended that all such additions were incurred established on the statement of the taxpayer recorded at the time of the search contending allegedly that his wife did not conduct any business activity.
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The Bench observed that the solitary issue engaged in the case is the clubbing of income of the wife of the taxpayer in the hands of the taxpayer as per provisions of Section 64(1)(ii).
The contention of the taxpayer is been accepted by the Bench that the addition incurred in the hands of the taxpayer was not sustainable for the uncomplicated reason that the same income comprised of the income from the business, had been returned to tax in the hands of taxpayers wife in returns filed under section 153A and which had been accepted by the AO passing an assessment order under section 143(3) r.ws. 153A in all the years.
The Bench discovered that a Copy of the acknowledgement of income return, calculation of income, profit and loss account, and assessment order in the taxpayer’s wife’s case for all the impugned assessment years has been already filed.
ITAT permitted the petition of the taxpayers to find no cause for dismissal.
| Case Title | Shri Ketan Prabhulal Dalsaniya Vs. The DCIT |
| Citation | IT(SS)A Nos. 25 to 30/Rjt/2023 & ITA No. 96/Rjt/2023 |
| Date | 07.02.2024 |
| Assessee by | Shri Mehul Ranpura, AR |
| Revenue by | Shri Shramdeep Sinha, CIT-DR |
| Rajkot ITAT | Read Order |