Capital Gain Tax paid by Wife need not be taxed again for Husband: ITAT deletes Income Tax Addition [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) held that a husband need not pay capital gain tax already paid by his wife.

The assessee filed its original return of income on 28.01.2014 declaring a total income of ₹.3,09,96,140/-.

Subsequently, the Assessing Officer received information from Income Tax Officer that the assessee has sold two immovable properties during the year under consideration amounting to ₹.1,33,40,000/- and ₹.2,32,18,150/-.

The Assessing Officer observed that the assessee has offered capital gain tax on transactions of ₹.2,32,18,150/-, however, did not offered the transactions of ₹.1,33,40,000/- in his return of income. In response, the assessee filed his return of income on 20.04.2021 declaring a total income of ₹.3,09,96,140/-. Accordingly, notices under Section 143(2) and 142(1) of the Income Tax Act were served on the assessee.

The assessee stated that due to some error, one of the property sold by the assessee has been declared in his wife's return and all the relevant taxes were paid to her account.

The Assessing Officer issued a show cause notice on 15.03.2022. In response, the assessee had continued to make the submissions that the assessee has failed to declare the same in his return of income, however, the same source of income was already declared in his wife's account and paid all the relevant taxes, the Assessing Officer rejected the submissions.

The aggrieved assessee filed objections before DRP. After considering the detailed submissions, DRP dismissed the ground raised by the assessee. DRP sustained the addition made by the Assessing Officer with the observation that the tax has to be levied on the right person on whom the tax is leviable. Aggrieved, The assessee appealed before the tribunal.

The assessee submitted that the Assessing Officer had come to know of this transaction with the information received from the Income Tax Officer, Ward and in this regard he relied on the case of Mahaver Kumar Jain v. CIT. he submitted that as per the above decision the Hon'ble Supreme Court held that there cannot be double taxation on the assessee.

Considering the rival submissions, the tribunal observed that the records submitted show that due to a mistake, the assessee had not declared one transaction involving capital gain on the sale of the property which was in the name of the assessee, and it in fact on record that the same was declared by the wife of the assessee in her return of income and duly paid the relevant tax on record. It is also a fact on record that both the assessee as well as assessee’s wife are falling under the same tax bracket.

The tribunal observed that the Assessing Officer had come to know that the assessee had failed to declare the above-said transaction in his return of income, however, he was aware of the fact the same income was declared by the wife of the assessee, even though the property was not in the name of the assessee’s wife and the same was duly accepted by the revenue and assessed to tax.

In order to do the right thing assessee has to revise his return of income at the same time even the wife of the assessee has to revise her return of income, we observe that at this point in time, this is not possible considering the fact that the issue involved relating to A.Y. 2013-14.

Since the assessee has brought on record that the assessee’s wife has paid the relevant tax in her return of income it shows that even though by mistake the assessee has remitted the relevant tax on this transaction.

The two-member bench consisting of S. Rifaur Rahman and Sandeep Singh Karail held that the same transaction cannot be charged to tax twice. Therefore, the Assessing Officer was directed to revise the assessment.

To Read the full text of the Order CLICK HERE

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