Income already declared by Wife: ITAT quashes Addition as ‘Undisclosed Income’ at the Hands of Husband [Read Order]

The Rajkot bench of the Income Tax Appellate Tribunal ( ITAT ) has quashed the addition of income as ‘undisclosed income’ at the hands of the husband, citing that the income was already declared by the wife.

Mr. Mehul Ranpura representing the assessee pointed out that in consequence to search action conducted in the group cases of Coral Group of Morbi on 03.01.2019, warrant u/s 132(1) of the Act was also executed in the case of the assessee.

He pointed out that one common addition was made in all the years 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) of the Income Tax Act. Further contended 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.

It was contended that in all the appeals accordingly there was a solitary issue involved pertaining to 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) of the Income Tax Act.

Further contended that this 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 under Section 153A of the Income Tax Act and which had been accepted by the Assessing Officer passing an assessment order u/s 143(3) r.ws. 153A of the Income Tax Act in all the years.

 The two member bench of the tribunal comprising Suchithra R Kamble ( Judicial member ) and Annapurna Gupta ( Accountant member ) found that there was  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 Income Tax Act. Having accepted the said income as belonging to the assessee’s wife in scrutiny assessment, the Department is now debarred from taking a contrary view and taxing it in the hands of the assessee on the ground that his wife was not actually carrying out any business. Accordingly, the appeal filed by assessee was allowed.

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