Kalpana Misra Vs ITO (ITAT Delhi)
Husband’s Bank Transfers Explain Wife’s Fixed Deposits; Interest on Gifted Funds Is Clubbed with Husband: Delhi ITAT
A fixed deposit cannot be treated as unexplained merely because it appears in a housewife’s bank account when the investment is traceable to documented transfers from her husband. If those transfers are gifts, however, the income earned from the gifted funds attracts the clubbing provision. The Delhi ITAT applied both principles in Kalpana Misra v. ITO, ITA No. 5270/Del/2026, for AY 2019–20, pronounced on 29 September 2026.
The case also highlights a separate accounting problem: in a flexi savings account, money may move repeatedly between the savings balance and linked deposits. Adding up deposit entries without examining their reversals can overstate the amount actually invested.
Why the Assessment Was Reopened
The assessee was a housewife who had not filed a return of income for AY 2019–20. Information available to the AO through the Insight portal indicated time deposits of ₹35,70,000 with Axis Bank and interest income of ₹68,078. The AO treated these amounts as income that had escaped assessment and issued a notice under Section 148 on 30 March 2023.
No return was filed in response to that notice. The reassessment was completed on a best judgment basis, adding ₹35,70,000 as unexplained investment and ₹68,078 as interest income in the assessee’s hands. The CIT(A) upheld the assessment.
