Recently, a matter landed up before the Bombay High Court, where a reopening notice under Section 148 of the Income Tax Act was wrongly issued to a spouse, solely because her name appeared in a property purchased by her husband, and the Court quashed the reopening notice and held that a housewife having no income cannot be saddled with notices to justify source of income to purchase of any property which was actually purchased by the spouse in the joint name of himself and his wife.
Reference was made to the decision in the case of Kalpita Arun Lanjekar Vs. Income Tax Officer (2024) 160 taxmann.com 726 (Bombay), whereunder, a similar transaction, the Coordinate Bench has quashed a reassessment notice issued to a housewife to prove the negative when a flat was purchased by her husband in the joint name of himself and the wife, purely for the sake of convenience. The Court therefore clarified that the mere appearance of the name of the spouse in the purchase agreement does not render the other as the owner, to disclose the transaction in the return, and failure to do so would not warrant reopening notice alleging income escaping assessment.
The Division Bench comprising Justice B.P. Colabawalla and Justice Firdosh P. Pooniwalla has observed that after the notices were issued u/s 133(6), the Petitioner not only informed the Income Tax Department that she had not contributed anything towards the purchase of the impugned flat and that her name was added only for the sake of convenience, but also produced the Purchase Agreement as well as the bank statement of her husband, which indicated that the entire consideration was paid by the husband.
The Bench was also surprised to note that when the duly stamped agreement for sale, as well as the bank statement evidencing the purchase of the flat from the husband’s income, was duly corroborated, how could the AO have formed an opinion as to escapement of income at the hands of the Petitioner, and at the same time issued notices u/s 148 as well as u/s 133(6) to the husband of the Petitioner, alleging escapement of income for the very same transaction.
Briefly, the return filed by the Petitioner landed her with a notice u/s 133(6) from the Income Tax Department seeking information regarding a purchase of an immovable property, which could have an implication on her taxable income. In response to the details sought regarding the purchase of the said immovable property for Rs. 6.75 crores, the Petitioner explained that she was a housewife and the said purchase was done entirely by her husband from his own funds/sources. Not having paid any consideration for the purchase of the said flat, she expressed difficulty in providing any bank statement as well as a source of income for such a purchase.
Ignoring her plea, her name was added as a joint second owner of the flat. When she was asked to submit the Purchase Deed as well as payment details, the petitioner not only furnished the Purchase Agreement of the flat but also the bank statement of her husband, which reflected that the entire consideration paid for the purchase of the said flat was from the funds of her husband. Not finding the source of income of her husband to be satisfactory, the Petitioner was issued with a reopening notice u/s 148, which has been challenged in this case.
Case Relied On:
Kalpita Arun Lanjekar Vs. Income Tax Officer – (2024) 160 taxmann.com 726 (Bombay)
Appearances:
Advocates Sham V. Walve, Abhishek Khandelwal, and Bhavik Chheda, for the Petitioner
Advocate Mamta Omle, for the Respondents
