Pune ITAT: Income Already Taxed Cannot Be Added Again as Unexplained Money

Jayendra Rohidas Navale Vs ITO (ITAT Pune)

Pune ITAT: Income Already Offered to Tax Cannot Be Added Again as Unexplained Money – Absence of TDS or Payer Confirmation No Ground for Double Taxation

The Pune ITAT deleted additions under Section 69A in the hands of both husband and wife arising from cash of ₹71.56 lakh deposited in the wife’s bank account, holding that once the underlying amount had already been disclosed as income and subjected to tax in the husband’s hands, the same amount could not again be treated as unexplained money.

The husband, Jayendra Navale, had filed his return declaring total income of about ₹93.67 lakh. During reassessment, he admitted that ₹71.56 lakh deposited in his wife’s bank account belonged to him and explained that it represented commission income received from Samruddha Jeevan Multistate Multipurpose Co-operative Society Ltd., which he subsequently gifted to his wife.

The AO rejected the explanation mainly because the Society had not deducted TDS under Section 194H and the assessee could not furnish confirmation from the Society. Consequently, ₹71.56 lakh was added in the husband’s hands under Section 69A on a protective basis, which the CIT(A) confirmed.

Before the Tribunal, however, the assessee demonstrated from his Profit & Loss Account that he had already disclosed ₹91.74 lakh under the head “Sales,” representing the commission income, and had declared total taxable income of about ₹93.67 lakh. His cash book and capital account also reflected the commission receipts and subsequent gift to his wife.

The ITAT accepted this explanation. It held that once commission income had already been declared and tax paid thereon, merely because the payer had not deducted TDS or furnished confirmation could not justify adding the very same amount again. Such an addition would result in double taxation of the same income. The Tribunal further found that the husband’s opening capital together with current-year income was sufficient to explain the gift to his wife.

Corresponding Section 69A Addition in Wife’s Hands Also Deleted

In the wife Gauri Navale’s case, the AO had separately treated the cash deposited in her bank account as unexplained under Section 69A, rejecting her explanation that it represented a gift from her husband.

The Tribunal held that since it had already accepted that the husband possessed sufficient disclosed income to make the gift, and the husband himself admitted depositing the money into his wife’s account out of his income, there was no justification for making a Section 69A addition in the wife’s hands either. The addition was accordingly deleted.

Both appeals were therefore allowed in full.

Key takeaway: Where the source of a cash deposit is income already disclosed and taxed in the hands of the person providing the funds, the same amount cannot again be taxed under Section 69A merely because the payer of that income did not deduct TDS or furnish confirmation. Once the donor’s disclosed income and capacity to make the gift are established, taxing the same money again in either the donor’s or recipient’s hands would amount to impermissible double taxation.

FULL TEXT OF THE ORDER OF ITAT PUNE

The above appeals filed the respective assessees are directed against the separate orders dated 13.11.2025 and 19.08.2025 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2016-17 respectively. For the sake of convenience, both these appeals were heard together and are being disposed of by this common order.

2. First we take up ITA No.111/PUN/2026 as the lead case. Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 29.03.2018 declaring total income of Rs.93,67,280/- after deduction under Chapter VI-A of Rs.3,195/-. Subsequently, proceedings u/s 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) were initiated by recording the following reasons:

“…In this case, information was received from the system flagged by DIT system under the category of ‘High Risk CRIU/VRU’. The information received is reproduced as under:

‘In this case information was received from the office of the DDIT(Inv.), Unit-

1(4), Pune for Benami transaction in respect of property situated at Survey No. 150/7, Villa No. 2, Aaeska Garden Avenue, prathamesh Park, baner, Pune-411045.

During the course of proceedings under the PBPT Act, it is seen that Smt. Gauri Jayendra navale has purchased an immovable property from M/s Aaeshka Ridhi Realty which is situated at Survey No. 150/7, Villa No. 2, Aaeska Garden Avenue, prathamesh Park, baner, Pune-411045 vide purchase deed No. 8628/2015 dated 17/10/2015 for total consideration of Rs. 1,87,02,500/- against market value of Rs. 1,94,40,005/- (copy of Index-II enclosed)

Further, the source of the fund to purchase the said property is explained by Smt. Gauri J. Navale is as under:

(i). Fund of Rs. 51,84,961/- has been paid from Indusind Bank account No. 100023893114 which is in the name of Smt. Gauri J. Navale. On further analysis, it is seen that the huge cash amounting to Rs. 71,56,000/- deposited in bank account of Smt. Gauri J. Navale maintained in Indusind Bank account No. 100023893114 from where cheque payment is made for purchase of property.

The source of cash deposit has explained by Smt. Gauri J. Navale as gift received in cash from Shri. Jayendra Navale (Husband of Smt. Gari J. Navale). However, she has failed to prove the source of the cash received by way of gift from her husband.

The statement of Shri. Jayendra R. Navale was recorded u/s 19(2) of the PBPT- Act, 1988 on 20/11/2018. In his statement he has explained the source of cash deposit amounting to Rs. 71,56,000/- in bank account of his wife Smt. Gauri Navale as commission received from the company SJIMMCOSL on multiple occasions. However, he has no evidence to substantiate his claim of commission received in cash.

It is important to note that Shri. Jayendra R. Navale has not been allowed any code (IME Code) as commission agent by the company SJMMCSL (M/s. Samruddha Jeevan Multistate Multipurpose Co-op. Soc. Ltd.) which is must for commission agent. Therefore he can not be consider as commission agent of the company. The code was allowed to Smt. Gauri Navale who was working in SJMMCSL (M/s. Samruddha Jeevan Multistate Multipurpose Co-op. Soc. Ltd.) as team leader and Nov. 2014 she got the IME Code. Shri. Jayendra Navale claims that he was working under IME Code of his wife.

In view of the above, provisions of section 68 of IT Act is attracted in the case of Smt. Gauri J. Navale as she has failed to explain the source the cash deposit of Rs. 71,56,000/- in her bank account as well as in the case of Shri. Jayendra Navale who has claim some of Rs. 71,56,000/- as his income in his Return of Income being the commission received in cash from SJMMCSL (Copy of statement attached). In respect of the details of the person from whom unsecured loan of R. 17,86,600/- was taken, assessee has not submitted any details regarding the same.”

3. Accordingly notice u/s 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was issued. However, the assessee did not file any return in response to the notice u/s 148. The Assessing Officer thereafter issued notice u/s 142(1). The assessee in response to the same submitted that he has not filed return in response to the notice u/s 148 as he has already disclosed his income in the original return of income. The Assessing Officer, therefore, held that the assessee accepts that the amount of Rs.71,56,000/- belongs to him which he has deposited in the bank account of his wife. So far as the source of the same it was submitted by the assessee that he has received commission income from M/s. Samruddha Jeevan Multistate Multipurpose Co-Op. Society Ltd. In absence of any tax deducted by the said society u/s 194H and in absence of any confirmation filed by the assessee from the said society, the Assessing Officer rejected the claim of the assessee that he has received any income towards commission from the said society and therefore, the same remained unexplained. In view of the above, the Assessing Officer made addition of Rs.71,56,000/- as per the provisions of section 69A to the total income of the assessee on protective basis.

4. In appeal, the Ld. CIT(A) / NFAC upheld the addition made by the Assessing Officer.

5. Aggrieved with such order of the Ld. CIT(A) / NFAC the assessee is in appeal before the Tribunal by raising the following grounds:

1. On the facts and in the circumstances of the case and in law learned AO erred in both law and on the facts of the case by treating the cash deposit of Rs.76,06,600 as unexplained money under Section 69A of the Income Tax Act, 1961. The AO’s decision to add this amount to the appellant’s income was incorrect because the source of the cash deposit was a valid gift from the appellant’s husband, Mr. Jayendra Navale. This gift was made from his disclosed income for the Assessment Year (AY) 2016-17. Furthermore, the learned AO failed to properly consider the documentary evidence provided by the appellant to substantiate the claim, rejecting it without providing any valid reason. Therefore, the appellant respectfully requests the deletion of the entire addition.

Your appellant prays for deletion of entire addition. Your appellant craves for to add, alter amend, modify, delete any or all grounds of appeal before or during the course of hearing in the interest of principle of natural justice.

6. The Ld. Counsel for the assessee referring to pages 34 and 35 of the paper book drew the attention of the Bench to the reply given before the Assessing Officer vide letter dated 22.05.2023 where it was explained that he has received commission of Rs.71,56,000/- from M/s. Samruddha Jeevan Multistate Multipurpose Co-Op. Society Ltd. where his wife was working as an Assistant Marketing Manager during the financial year 2015-16. A copy of the gift deed dated 23.01.2017 was also furnished before the Assessing Officer wherein it was stated that an amount of Rs.71,56,000/- was gifted by the assessee to his wife.

7. Referring to page 7 of the paper book, he drew the attention of the Bench to the Profit and Loss Account for the year ending 31.03.2016 where the assessee has declared Rs.91,74,500/- towards “sales” which is nothing but the commission income received from M/s. Samruddha Jeevan Multistate Multipurpose Co-Op. Society Ltd.

8. Referring to pages 36 to 38 of the paper book he drew the attention of the Bench to the Cash Book showing the commission receipts and the subsequent gift to Mrs. Gauri Navale. He submitted that once the assessee has declared income of Rs.93,67,280/- after deduction of Rs.3,195/- under Chapter VI-A out of which he has made gift of Rs.71,56,000/-, addition of the same separately in the hands of the assessee is not justified. He accordingly submitted that the addition made by the Assessing Officer and sustained by the Ld. CIT(A) / NFAC be deleted.

9. The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC. He submitted that despite opportunities granted by the Assessing Officer the assessee failed to produce any confirmation from the said co-operative society showing the receipt of such commission and no TDS has been deducted by the said society for paying such huge commission. Therefore, the order of the Ld. CIT(A) / NFAC sustaining the addition made by the Assessing Officer is fully justified.

10. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We find the Assessing Officer in the instant case made addition of Rs.71,56,000/- on protective basis by invoking the provisions of section 69A on the ground that the assessee failed to furnish any documentary evidence in respect of the commission received from M/s. Samruddha Jeevan Multistate Multipurpose Co-Op. Society Ltd. We find the Ld. CIT(A) / NFAC sustained the addition made by the Assessing Officer. It is the submission of the Ld. Counsel for the assessee that when the assessee has already disclosed the income of Rs.93,70,476/-, which includes the commission received from M/s. Samruddha Jeevan Multistate Multipurpose Co-Op. Society Ltd., in the Profit and Loss Account, out of which the assessee has given gift of Rs.71,56,000/- to his wife, addition of the same amount again in the hands of the assessee will amount to double taxation.

11. We find some force in the above arguments of the Ld. Counsel for the assessee. A perusal of the Profit and Loss Account placed at page 7 of the paper book shows that the assessee in his income side of the Profit and Loss Account has shown the following:

Profit & Loss Account

For The Year Ended 31st March, 2016

12. We find out of the income declared during the year along with balance brought forward the assessee has given a gift of Rs.83,94,000/- to his wife which has been declared in the Capital Account. We, therefore, find some force in the argument of the Ld. Counsel for the assessee that once the commission income has already been declared by the assessee under the head “Sales” and paid taxes on the same, merely because the said society has not deducted any tax or did not furnish any confirmation, cannot be a ground to make addition of the same amount in the hands of the assessee which amounts to double taxation. Further, the opening capital as well as the income declared during the year is sufficient to give the amount of gift to his wife. We, therefore, set aside the order of the Ld. CIT(A) / NFAC and direct the Assessing Officer to delete the addition. The grounds raised by the assessee are accordingly allowed.

ITA No.2323/PUN/2025

13. Facts of the case, in brief, are that the assessee filed her return of income on 29.03.2017 declaring total income of Rs.38,02,630/-. The Assessing Officer in the order passed u/s 143(3) made addition of Rs.76,06,000/- being the cash deposit in the bank account on the ground that the assessee could not substantiate with evidence to his satisfaction that the deposit of the said cash is out of the gift received from her husband. According to the Assessing Officer, such gift received by the assessee from her husband is unreasonable and clearly an afterthought. He, therefore, made addition of Rs.76,06,000/- to the total income of the assessee u/s 69A of the Act. We find the Ld. CIT(A) / NFAC dismissed the appeal filed by the assessee by observing as under:

9.0 I have carefully reviewed the facts of the case, the submissions made by the appellant, and the relevant materials placed on record, including the report of the Assessing Officer.

The appellant has made cash deposits of Rs. 71,56,000/- in her bank account during the Financial Year 2015-16. She claims that these cash deposits were received as a gift from her husband, who earned cash commission for referring investors to Samrudha Jeevan Multipurpose Co-operative Society, where both the appellant and her husband were associated in different roles.

The appellant has submitted a cash book maintained by her husband, as well as sample copies of policies and certifications from the society, claiming they prove that her husband received commissions in cash for the policies issued. However, upon examining these documents, it is noted that:

1. The cash book is not corroborated by any independent evidence such as bank withdrawals or third-party verification, which raises concerns about its authenticity.

2. The sample policies and certifications submitted by the appellant do not mention any amounts received by her husband in cash or show any connection between the cash deposits in the appellant’s account and the claimed commission income. These documents do not provide the necessary proof to establish the source or legitimacy of the cash deposits.

3. The gift deed submitted by the appellant, executed on 23.01.2017, further weakens the claim, as it is dated long after the cash deposits were made in the appellant’s bank account during 2015-16, raising serious doubts about the timing and genuineness of the gift.

Given the above, it is clear that the appellant has not been able to satisfactorily prove the source of the cash deposits, nor has she provided convincing evidence to support the claim that the cash was a genuine gift from her husband.

Therefore, I find that the explanation provided by the appellant is not credible, and the addition of Rs. 71,56,000/- under section 69A of the Income-tax Act, 1961, is justified. As such, the appeal is dismissed, and the order of the Assessing Officer is confirmed.

10. In result, the appeal filed by the appellant, Smt. Gauri Jayendra Navale, for the AY 2016-17against the order passed u/s 143(3) of the Act is dismissed.

14. Aggrieved with such order of the Ld. CIT(A) / NFAC the assessee is in appeal before the Tribunal by raising the following grounds:

1. On the facts and in the circumstances of the case and in law learned AO erred in both law and on the facts of the case by treating the cash deposit of ₹76,06,600 as unexplained money under Section 69A of the Income Tax Act, 1961. The AO’s decision to add this amount to the appellant’s income was incorrect because the source of the cash deposit was a valid gift from the appellant’s husband, Mr. Jayendra Navale. This gift was made from his disclosed income for the Assessment Year (AY) 2016-17. Furthermore, the learned AO failed to properly consider the documentary evidence provided by the appellant to substantiate the claim, rejecting it without providing any valid reason. Therefore, the appellant respectfully requests the deletion of the entire addition.

Your appellant prays for deletion of entire addition. Your appellant craves for to add, alter amend, modify, delete any or all grounds of appeal before or during the course of hearing in the interest of principle of natural justice.

15. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. While deciding the case of the husband of the assessee in the preceding paragraphs we have already noted that the husband has sufficient income to give gift to his wife since he has declared income of Rs.93,67,280/- after claiming deduction of Rs.3,195/- under Chapter VI-A. Since the income in the hands of the husband has already been explained and the gift to his wife has been accepted by us, therefore, making addition in the hands of the wife is not justified since the husband has accepted to have deposited the money in the bank account of his wife out of his income. We, therefore, set aside the order of the Ld. CIT(A) / NFAC and direct the Assessing Officer to delete the addition. The grounds raised by the assessee are accordingly allowed.

16. In the result, both the appeals filed by the respective assessees are allowed.

Order pronounced in the open Court on 14th August, 2026.