Re-assessment of income must be conducted in the hands of the parent where the minor's income is clubbed, affirming the principle of proper jurisdiction under the Income Tax Act.

ORDER

PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER

This appeal is filed by the asssee as against the appellate order dated 13-03-2024 passed by Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “ld.CIT(A)] arising out of the re-assessment order passed under section 147 read with section 144B of the Income Tax Act, 1961 (hereinafter referred to as "the Act") relating to the assessment year 2015-16.

2. Brief facts of the case are that eassessee is an individual who has filed his original Return of Income for the Asst. Year 2015-16 on 26.09.2025 declaring total income of Rs.2,71,630/-. The return was taken up for limited scrutiny assessment and regular assessment u/s. 143(3) of the Act was completed on 29.9.2017 accepting the returned income. It is thereafter, the assessment was reopened by issuance of notice dated 26.3.2021 issued under section 148 of the Act, recording the reason that the investment in immovable property is not declared in the Return of Income. In response, the assessee submitted that the land was purchased in the name of his minor son Varun Yogesh Bhansali and for the Asst. Year 2015-16, the income of the minor child was clubbed with his mother Purvi Y. Bhansali (PAN: ADEPB8180F), hence, if the case is to be reopened for re-assessment, it should be done in the hands of the mother and not in the case of the father viz. the assessee herein, since the income of the minor is clubbed in the hands of the mother, as per clause (a) of Explanation to section 64 of the Act. The assessee also filed before the AO details of the Return of Income filed by the mother Purvi Y. Bhansali wherein minor son income is offered to tax. The AO considered the above submissions of the assessee and held that in the Sale Agreement the PAN: AARPB6394H of the father [assessee herein] referred as the Natural Guardian representing the minor son, therefore the claim cannot be accepted. However, in the case of the other co-owners of purchase of land viz. Shri Dhaneshbhai Parshottamdas Soni, where the case was referred to the DVO to determine the valuation of the immovable property and the same was being pending, Therefore the difference of Rs.1,34,00,000/= between the rate as per stamp duty valuation of Rs.2.55 Crs and purchase consideration of Rs.1.21 crs and minor son’s 1/3rd share on the above of Rs.44,66,666/= is added u/s.56 as the income of the assessee and demanded tax thereon.

3. Aggrieved against the reassessment order, the assessee filed an appeal before the ld.CIT(A) who has confirmed the addition made by the AO. Aggrieved with the appellate order, the assessee is in appeal before us raising the following Grounds of Appeal:

“1. The Ld. AO has erred in law and on facts of the case in reopening the assessment u/s. 147 of the Act. Under the facts and circumstances of the case, the action of reopening is without jurisdiction and is not permissible either in law or on facts.

2. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in making addition of Rs.39,50,333/- u/s. 56(2)(vii)(b)(ii) of the Act.

3. Both the lower authorities failed to appreciate that there is no "receipt" of immovable property by the appellant as contemplated u/s. Section 56(2)(vii)(b) of the Act.

4. Both the lower authorities failed to appreciate that no addition u/s. 56(2)(vii)(b) of the Act in respect of receipt of immovable property by the minor can be made in the hands of his father (the appellant) when the minor's income has been clubbed in the hands of his mother.

5. The Ld. CIT(A) has erred in law and on facts of the case in blindly accepting the value computed by DVO without any independent verification and without dealing with the objections raised by the appellan