Lalitha Boda Vs ITO (ITAT Hyderabad)
Husband’s Gift, Wife’s Tax- Can Late Disclosure Defeat Clubbing?
A Missing Disclosure Alters the Outcome
Capital gains arising from the sale of property gifted by a husband to his wife would ordinarily attract clubbing under section 64(1)(iv). However, the Hyderabad Tribunal rejected the wife’s claim because she disclosed the transaction only after the period for initiating reassessment against her husband had, according to the Revenue and the Tribunal, expired.
The Tribunal regarded the delayed disclosure as an attempt to prevent assessment in either spouse’s hands and sustained the capital gains addition of ₹75,725 in the wife’s assessment. The decision raises an important question: can an assessee’s conduct change the person in whose hands income is legally assessable?
A Fixed Deposit Triggered the Proceedings
The assessee had not filed her original return of income for assessment year 2012-13. The Assessing Officer received information that she, jointly with Smt. Boda Siddamma, had made a fixed deposit of ₹31,20,000 with Saptagiri Grameena Bank.
A notice under section 148 was issued on 28 August 2018. The assessee did not respond to that notice or the subsequent notices under section 142(1).
Eventually, through a show-cause notice dated 12 December 2019, the Assessing Officer proposed to treat 50% of the fixed deposit, amounting to ₹15,60,000, as unexplained money under section 69A.
