Joint Property owned by Husband and Wife Purchased is Entirely Husband's Investment: ITAT deletes Addition made in Wife’s Hands [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has deleted an addition of ₹70,46,028 made in the hands of the wife, holding that the investment in a jointly owned property was entirely made by her husband and not by her.

The Assessing Officer reopened the assessment for AY 2011-12 on the basis of information from the sub-registrar showing the assessee’s name as a joint owner of a flat in Kolkata.

Since the assessee had not filed a return of income and did not respond to notices, the AO completed the assessment ex parte, treating the amount as unexplained investment under Sections 147/144 of the Income Tax Act, 1961. On appeal, the NFAC upheld the addition.

Before the bench, the assessee explained that her husband, Shyamlendu Chatterjee, had sold a property in Gurgaon and invested the capital gains in the purchase of the Kolkata flat, claiming deduction under Section 54 in his return of income for AY 2011-12.

The purchase deed showed that although the assessee was a joint holder, the entire consideration was paid by her husband, who had duly disclosed the transaction in his return, which was accepted by the Department without dispute.

The Tribunal observed that no evidence indicated any investment by the assessee herself, and the Revenue had also taken no action against her husband, who was the actual investor.

Accordingly, the bench of Madhumita Roy (JM) and Manish Agarwal (AM) held that the addition in the hands of the assessee was unsustainable since she was only a joint holder in name and not a contributor to the purchase. Therefore, the bench deleted the addition of ₹70,46,028.

The appeal was allowed partly.

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