Bombay High Court Quashes Reassessment Order Against Housewife When Property Was Purchased By Her Husband

The Bombay High Court has quashed a reassessment order against a housewife when the alleged investment was made by her husband.

The bench of Justice K. R. Shriram and Justice Neela Gokhale has observed, “We also have to notice that, surprisingly, the Principal Chief Commissioner of Income Tax has also accorded sanction for the issuance of this order instead of directing the AO to drop the proceedings against the petitioner.”

The petitioner/assessee, a housewife who had no income and therefore was not filing any income tax return, received a notice from the Income Tax Officer under Section 148A(b) of the Income Tax Act, 1961. In the notice, it was stated that the officer has information that suggests that income chargeable to tax for Assessment Year 2016–2017 has escaped assessment.

The petitioner submitted that the property was purchased by her husband, Mr. Pravin Patil, and all the payments were made by him. Petitioner also explained that Petitioner's name was included as a joint holder in the agreement for sale, but no payment has been made by Petitioner. A copy of the registered agreement for the property, the husband's bank details, etc. were made available.

The order under Section 148A(d) of the Act has been passed. It was stated in the order that the Assessing Officer (AO) has examined whether an assessment is needed, and the explanation and documents submitted by the assessee do not conclusively preclude the suggestion based on the information available that the income chargeable to tax has escaped assessment. The only basis on which the order has been passed is that the assessee has not submitted the details of the source of Rs. 88,75,000 paid for the purchase of property by her husband, the source, and the details of the receipt of the amount from the relatives, whereas the husband's income is only Rs. 18,49,980.

The department opposed the petition, but at the end he agreed that those details have to be sought from the husband for the husband's assessment and not from the petitioner herein because the AO has accepted that the petitioner has not made any payment for the purchase of property.

The court quashed and set aside the order passed under Section 148A(d) of the Act because it was not a fit case for reopening the assessment in the case of the petitioner.

Counsel For Petitioner: Govind Javeri

Counsel For Respondent: Arjun Gupta

Case Title: Kalpita Arun Lanjekar Versus Income Tax Officer

Case No.: Writ Petition No. 5966 Of 2023

Click Here To Read The Order