Once Busines Income Of Wife Accepted During Scrutiny, AO Can't Tax Husband Again Stating Wife Was Not The One Carrying Business: Rajkot ITAT

The Bench of the ITAT comprising of Suchitra R. Kamble (Judicial Member) and Annapurna Gupta (Accountant Member) observed 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)

As per the brief facts of the case, in consequence to search action conducted, warrant u/s 132(1) was executed in the case of the assessee. Thereafter, assessment was framed in terms of Section 153A on the assessee. One common addition was made pertaining to the income allegedly earned by the wife of the assessee which was clubbed in the hands of the assessee as per the provisions of Section 64(1)(ii). It was contended by the assessee that all these additions were made based on the statement of the assessee recorded during search contending allegedly that his wife did not perform any business activity.

The Bench noted that the solitary issue involved in the case is to pertaining the clubbing of income of the wife of the assessee in the hands of the assessee in terms of provisions of Section 64(1)(ii).

The Bench accepted the contention of the assessee that the addition made in the hands of the assessee was not sustainable for the simple reason that this income including income from business, had been returned to tax in the hands of the wife of the assessee in returns filed u/s 153A and which had been accepted by the AO passing an assessment order u/s 143(3) r.ws. 153A in all the years.

The Bench found that Copy of the acknowledgment of return of income, computation of income, profit and loss account and assessment order in the case of the wife of the assessee for all the impugned assessment years have been already filed.

Therefore, on finding no reason for dismissal, the ITAT allowed the assessee's appeal.

Counsel for Appellant/Taxpayer: Mehul Ranpura

Counsel for Respondent/Department: Shramdeep Sinha

Case Title: Shri Ketan Prabhulal Dalsaniya verses The DCIT

Case Number: IT(SS)A No. 25/Rjt/2023

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