2024 (2) TMI 463 - AT - Income Tax

Clubbing of income of wife u/s 64 - income as belongs to the assessee s wife accepted in scrutiny assessment, but taxing it in the hands of the assessee again on the ground that his wife was not actually carrying out any business - HELD THAT - Since the income of the wife of the assessee stands accepted in her hands by the Department in scrutiny assessment vide order passed u/s 143(3) of the Act, on returns filed in consequence to the search action conducted on her u/s 153A of the Act, we find that there is 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 Act. Having accepted the said income as belongs 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. In view of the above, all the appeals of the assessee are allowed.

Summary

Issues involved:
The judgment involves appeals related to the same assessee for different assessment years against the order passed by the CIT(A) under Section 250(6) of the Income-tax Act, 1961 for the Assessment Years 2013-14 to 2019-20.

Issue 1: Clubbing of income as per Section 64(1)(ii) of the Act
The appeals revolved around the clubbing of income of the wife of the assessee in the hands of the assessee as per the provisions of Section 64(1)(ii) of the Act. The additions were based on the statement of the assessee recorded during search, alleging that his wife did not perform any business activity. The ld. Counsel for the assessee argued that the income, including business income, had been returned and accepted in the wife's tax returns filed under Section 153A of the Act for all the impugned years. The Department had passed assessment orders accepting the wife's income, and thus, there was no basis to tax the same income again in the hands of the assessee under the clubbing provisions of Section 64(1)(ii) of the Act.

Decision:
The Tribunal allowed all the appeals of the assessee, concluding that since the income of the wife had been accepted in her hands by the Department in scrutiny assessments, the Revenue was precluded from taxing the same income in the hands of the assessee under the clubbing provisions of Section 64(1)(ii) of the Act. The Tribunal held that the Department could not take a contrary view and tax the income in the hands of the assessee, given that it had already been accepted as belonging to the wife in the scrutiny assessments. As a result, all the appeals filed by the assessee were allowed.

Separate Judgement:
There was no separate judgment delivered by the judges in this case.