CA Final · Direct Tax Laws & International Taxation · Income of Other Persons included in Assessee's Total Income

Mr. Harish transferred a rented flat to his wife without adequate consideration. The flat's income was included in Harish's total income as income of another person, and the flat stands in the joint names of his wife and his brother. The Assessing Officer wants to recover the tax attributable to this included income. Under the provision on liability of a person in respect of income included in the income of another person, who can be asked to pay that portion of tax?

The wife and the brother, in whose joint names the flat stands, are jointly and severally liable for the tax attributable to the included income. The Assessing Officer must serve a notice of demand on them. The liability is not limited to the assessee in whose total income the income was included.

1. AOnly Harish, because the income has been included in his total income
2. BThe persons in whose names the asset stands, jointly and severally, on service of a notice of demand by the Assessing OfficerCorrect
3. COnly the person who first acquired the asset, whatever the present holding
4. DNeither person, because the tax can be recovered only from the assessee in whose total income the income is included