The Bombay High Court has nullified a reassessment order against a housewife, noting that the property was purchased solely by her husband. The Income-tax (I-T) authorities, on noting a high-value transaction of purchase of property valued at more than Rs. 30 lakhs, had held that income had escaped assessment. Thus, a reassessment order was passed under section 148A (b) of the I-T Act for the financial year 2015-16.
Tax experts point out that when an individual transacts in real-estate, it is likely that the I-T authorities will serve a notice under section 148A seeking details on the source of income to fund such property with bank statements, details of other joint holders and a copy of the I-T return that has been filed.It is necessary to reply to such a notice within the timeframe which is generally 30 days.
In this case, the housewife submitted the required details and explained that the property was purchased by her husband. While her name was included as a joint holder in the purchase agreement, no payment had been made by her, she added. A copy of the registered deed and her husband’s bank details were also submitted.
However, a reassessment order was passed. The I-T officer noted that her husband’s income was only Rs. 18.50 lakh. The order was passed mainly because she did not submit details of the source of Rs. 88.75 lakh paid for purchase of property by the husband, including the source and details of money received by him from relatives.
During the court hearings, the I-T department finally accepted that the details should be sought from the husband and not from the housewife, as the I-T officer had accepted that she had not made any payment towards the property purchase.
The Bombay high court ended its order with a stinging remark. It expressed surprise that the Principal Commissioner had sanctioned the issue of the reassessment order instead of directing the I-T officer to drop the proceedings against the housewife.
Tax experts point out that when an individual transacts in real-estate, it is likely that the I-T authorities will serve a notice under section 148A seeking details on the source of income to fund such property with bank statements, details of other joint holders and a copy of the I-T return that has been filed.It is necessary to reply to such a notice within the timeframe which is generally 30 days.
In this case, the housewife submitted the required details and explained that the property was purchased by her husband. While her name was included as a joint holder in the purchase agreement, no payment had been made by her, she added. A copy of the registered deed and her husband’s bank details were also submitted.
However, a reassessment order was passed. The I-T officer noted that her husband’s income was only Rs. 18.50 lakh. The order was passed mainly because she did not submit details of the source of Rs. 88.75 lakh paid for purchase of property by the husband, including the source and details of money received by him from relatives.
During the court hearings, the I-T department finally accepted that the details should be sought from the husband and not from the housewife, as the I-T officer had accepted that she had not made any payment towards the property purchase.
The Bombay high court ended its order with a stinging remark. It expressed surprise that the Principal Commissioner had sanctioned the issue of the reassessment order instead of directing the I-T officer to drop the proceedings against the housewife.
