YOGESH MAFATLAL BHANSALI,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-5(3)(1), AHMEDABAD

Facts

The assessee's original return for AY 2015-16 was assessed under Section 143(3). Reassessment proceedings were initiated under Section 147 alleging undeclared investment in immovable property purchased by the minor son. The assessee contended that the minor's income was clubbed with the mother's income as per Section 64, making the reassessment on the father (appellant) erroneous. The AO, and subsequently the Ld. CIT(A), upheld the addition in the father's hands, despite the clubbing provisions.

Held

The Income Tax Appellate Tribunal held that the reassessment proceedings initiated against the father (appellant) were bad in law because the minor son's income, including the property investment, was already clubbed with the mother's income and offered to tax. The AO failed to take cognizance of this fact. Consequently, the tribunal deleted the addition made in the hands of the father and quashed the entire reassessment proceedings.

Key Issues

Whether reassessment proceedings initiated against the father (appellant) were valid when the minor son's income, including property investment, was clubbed with the mother's income. Whether the addition under Section 56(2)(vii)(b) could be sustained in the father's hands under such circumstances.