Case Law Details
Pramila Mahadev Tadkase Vs ITO (Karnataka High Court)
Introduction: In a recent judgment, the Karnataka High Court addressed the validity of income tax reassessment notices issued beyond the statutory three-year period. The case involves Pramila Mahadev Tadkase and the Income Tax Officer (ITO), focusing on the reassessment for the Assessment Year 2016-17. The central issue revolves around the petitioner’s capital gain, with the reassessment initiated due to the absence of a return and unexplained income.
Detailed Analysis: The Income Tax Department issued notices under Section 148A(b) of the Income Tax Act on January 11, 2023, and February 24, 2023, for the Assessment Year 2016-17. The notices cited the sale of an immovable property during the financial year 2015-16 for Rs. 69,30,000, and since no return was filed, the income from capital gains was deemed unexplained and untaxed. The petitioner, a permanent resident of Canada, responded, providing details of the property transaction, including the deduction of Tax Deducted at Source (TDS) by the purchaser.
Despite the petitioner’s response, the second respondent issued an Adjudication Order on March 31, 2023, under Section 148A(d) of the IT Act, rejecting the explanation and opining that the entire TDS had been made in the petitioner’s name, requiring the corresponding income to be offered. The petitioner challenged this decision, arguing joint ownership of the property with her husband and the complete TDS being made in his name due to the lack of a PAN.
The court noted that as per Section 149 of the IT Act, a reassessment notice cannot be issued after three years unless the income amount likely to escape assessment is fifty lakh or more. The court also acknowledged that the entire sale consideration was received by the petitioner’s husband, and TDS was attributed to her PAN due to the husband’s lack of a PAN.
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This case is an eye opening for capital gain matter related to joint property
1. When buying a property make sure the source of funds and percentage of contribution is clearly documented with % of holding and supposed proof of funds.
2. Apply for PAN and hold it valid.
3. Filing of Income-tax return knowledge from a CA.
4. Don’t consult unknown source if and but things.
5. Any finance and TDS is deduced even if it is just Rs.25.00 on any source of income file your IT Return and get Assessment Order. TDS Refund Rs.25.00 won’t be effected as minimum refund should be Rs.100.00. But your Income Tax knowledge is maintained and no excuse of ignorance of law.