AO Can’t Tax Husband for Business Income taxed to Wife during Scrutiny

Ketan Prabhulal Dalsaniya Vs DCIT (ITAT Indore)

The case of Ketan Prabhulal Dalsaniya Vs DCIT before the Income Tax Appellate Tribunal (ITAT) in Indore sheds light on the complexities surrounding the clubbing of income between spouses. This article delves into the details of the case and the implications of the tribunal’s ruling.

The crux of the matter revolved around the addition of income allegedly earned by Ketan Prabhulal Dalsaniya’s wife, which was clubbed with his income as per Section 64(1)(ii) of the Income-tax Act. This addition stemmed from a statement made by Dalsaniya during a search conducted in the Coral Group of Morbi.

The contention put forth by Dalsaniya’s counsel was that the income, including business income, had already been disclosed and taxed in the returns filed by his wife under Section 153A of the Act. These returns had been accepted by the Assessing Officer in scrutiny assessments for the respective years.

During the proceedings, it became evident that there was no rebuttal from the Department to challenge the factual assertion made by Dalsaniya’s counsel. Consequently, the tribunal ruled in favor of Dalsaniya, asserting that once the income of the wife had been accepted in her scrutiny assessments, the Department couldn’t tax the same income again in the hands of the husband.

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