Wife wins ITAT Kolkata case after tax notice over husband-sold joint property

ITAT deletes addition over joint property sale

KOLKATA: A woman who was issued an income tax notice after her husband sold their jointly owned property at a price below market value has won relief from the Income Tax Appellate Tribunal (ITAT), Kolkata. The tribunal deleted an addition of ₹7,09,781 that the income tax department had made in her hands under Section 56(2)(vii)(b) of the Income-tax Act, 1961.

The case, reported as 2026 (8) TMI 1579, arose from a property purchased jointly by Mrs Shome and her husband during the financial year 2014-15. The transaction was struck at a consideration of ₹16,31,438, but the market value assessed by the Stamp Valuation Authority was ₹30,51,000, a difference of about ₹14.20 lakh.

The department treated 50% of the difference, or ₹7,09,781, as income in Mrs Shome's hands under Section 56(2)(vii)(b), which applies when a property is acquired for inadequate consideration compared with its stamp-duty value.

The tax authorities had reopened her assessment after receiving information about the transaction, issuing a notice under Section 148 of the Income-tax Act, followed by an assessment order under Section 147 on 30 May 2023.

Tribunal's findings

The bench, comprising Judicial Member Yogesh Kumar S. and Accountant Member Rakesh Mishra, accepted that Mrs Shome had not contributed any amount towards the property's purchase. The tribunal noted that a payment trail, including bank statements and a cheque-wise breakdown, demonstrated that the entire consideration was funded by her husband.

Mrs Shome's counsel, Chartered Accountant Miraj D. Shah, argued that she was a nominal co-owner and had not received any benefit from the sale. The department's senior representative, Ujjawal Mandal, represented the income tax department.

In its order, the tribunal observed that the presumption of equal share in a jointly acquired property could not be sustained where contrary evidence existed. Referring to Section 45 of the Transfer of Property Act, 1882, the tribunal held that such a presumption applies only in the absence of evidence on respective contributions.

"Invocation of the provision of Section 56(2)(vii)(b) of the Act against the Assessee (Mrs Shome) who has not contributed any amount for the purchase of the immovable property cannot be sustained," the tribunal said.

The Kolkata bench delivered its order on 20 August 2026, with the judgment authored by the two-member bench.

Broader implications

Karanjot Singh Khurana, Partner at DMD Advocates, said that Mrs Shome won the case by producing evidence that she had not contributed to the property's acquisition.

The ruling highlights the evidentiary standard in joint property transactions. For taxpayers, it underscores the importance of maintaining proper documentation of the source of funds and the payment trail, particularly when a property is purchased jointly but the contributions of the co-purchasers are unequal.

Commissioner of Income Tax (Appeals) had earlier dismissed Mrs Shome's appeal on 26 August 2025, but the tribunal's order has now set aside the addition.