Issuance of Reassessment order against Housewife on Property being purchased by Husband is Invalid: Bombay HC [Read Order]

In a significant ruling, the Bombay High Court held that the issuance of reassessment order against housewife on property being purchased by husband is invalid.

The petitioner, a housewife who had no income and therefore, was not filing any income tax return, received a notice dated 19th February 2023 from Respondent No. 1, 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 which suggests that income chargeable to tax for Assessment Year 2016- 2017 has escaped assessment.

It was stated in the order that the Assessing Officer (“AO”) has examined whether assessment is needed and the explanation and documents submitted by 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 was, the assessee has not submitted the details of source of Rs. 88,75,000/- paid for purchase of property by her husband, source and the details of receipt of amount from the relatives, whereas the husband’s income is only Rs. 18,49,980/-.

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

A Division Bench of Justices Dr Neela Gokhale and KR Shriram observed that “We also have to notice that surprisingly the Principal Chief Commissioner of Income Tax has also accorded sanction for issuance of this order instead of directing the AO to drop the proceedings against Petitioner. In the circumstances, we hereby quash and set aside the order passed under Section 148A(d) of the Income Tax Act, because in our opinion, it is not a fit case for reopening the assessment in the case of Petitioner.”

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