Yogesh Mafatlal Bhansali Vs ITO (ITAT Ahmedabad)
Conclusion: Reassessment proceedings initiated against a father after finding that the minor son’s income had already been clubbed in the mother’s income tax return was not valid as AO proceeded with re-assessment proceedings on the wrong assessee viz. the father which was against the provision of law. Further the clubbing of income in the hands of the mother, was also informed by assessee before the lower authorities, AO had not taken cognizance of the same and proceeded with re-assessment proceedings, which was clearly against the provisions of law.
Held: Assessee, i.e., the father of the minor, Mr. Yogesh Mafatlal Bhansali had originally filed his income tax return declaring a total income of ₹2,71,630, which was accepted after a limited scrutiny assessment under Section 143(3). However, the assessment was later reopened on the grounds that an investment in immovable property had not been disclosed. AO initiated reassessment proceedings, alleging that the minor son, Varun Yogesh Bhansali, had acquired land jointly with two others and that the differential value between the stamp duty valuation and the purchase price, amounting to ₹44,66,666 (the minor’s one-third share), should be taxed under Section 56(2)(vii)(b)(ii) in the father’s hands. Assessee, however, argued that under clause (a) of the Explanation to Section 64, the minor’s income had already been clubbed with the mother’s income, as reflected in her income tax return. He submitted documentary evidence, including the mother’s return, bank statements, and the sale agreement, showing that the purchase was financed through a loan from the child’s uncle. Despite these submissions, AO rejected the explanation, asserting that the sale agreement listed the father as the natural guardian. On appeal, CIT(A) confirmed the addition, and the assessee submitted an appeal before Tribunal. Assessee, argued that there was no default in disclosure on the part of the assessee, and it was not permissible under the law to reopen proceedings after four years against the wrong individual. He also contended, in the alternative, that even if any addition was to be made, it should have been restricted to ₹5,16,333, as per the valuation done by the Departmental Valuation Officer (DVO). It was held that without verification of the above details and records furnished by assessee, AO proceeded with re-assessment proceedings on the wrong assessee viz. the father [assessee herein] which was against the provision of law. Further the clubbing of income in the hands of the mother, was also informed by assessee before the lower authorities, AO had not taken cognizance of the same and proceeded with re-assessment proceedings, which was clearly against the provisions of law. Therefore, the entire re-assessment proceedings itself was bad in law and the same was liable to be quashed. Consequently, the addition made by the AO was hereby deleted.
