The Pune bench of the Income Tax Appellate Tribunal (ITAT) has established a significant precedent regarding income transfer between family members. According to reports from TaxGuru, the ITAT ruled that ₹71.56 lakh cash deposited in a wife's bank account cannot be treated as unexplained income when the source has already been explained. The ruling came in the cases of Jayendra Navale and his wife Gauri Navale for assessment year 2016-17, with the order pronounced on 14 August 2026. As per the latest tribunal order, the ITAT accepted the husband's explanation that the cash was a valid gift from disclosed income, rejecting the Assessing Officer's treatment of the amount as unexplained money under Section 69A.
The dispute relates to financial year 2015-16, when ₹71.56 lakh was deposited in Gauri's bank account, as reported by TaxGuru. Gauri explained that the cash was a gift from her husband, but the Assessing Officer (AO) was not satisfied with this explanation and treated the entire amount as unexplained money under Section 69A. The AO noted that the source claimed for the cash was commission income earned by Jayendra from Samruddha Jeevan Multistate Multipurpose Co-operative Society Ltd., but the society had not deducted tax at source under Section 194H. According to the latest tribunal findings, 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.
According to TaxGuru reports, Jayendra had already disclosed income for AY 2016-17, with his Profit & Loss Account showing ₹91.74 lakh under 'Sales' representing commission income from the society. He declared a total income of around ₹93.67 lakh after deductions. The ITAT found that his opening capital and current-year income were sufficient to make the gift, and Jayendra himself admitted that he had deposited the money into Gauri's bank account out of his income. As per the latest tribunal order, the husband's Profit & Loss Account showed commission income of ₹91.74 lakh, representing the commission received from Samruddha Jeevan Multistate Multipurpose Co-operative Society Ltd., with the total taxable income declared at ₹93,67,280 after claiming deduction of ₹3,195 under Chapter VI-A.
As reported by TaxGuru, the Tribunal held that once the husband's income and capacity to make the gift had been accepted, there was no justification for treating the same ₹71.56 lakh as unexplained money in Gauri's hands. The ITAT observed that doing so would amount to double taxation of the same income. The latest tribunal order explicitly stated that "merely because the payer of that income did not deduct TDS or furnish confirmation could not justify adding the very same amount again". The ruling also deleted a separate ₹71.56 lakh Section 69A addition made on a protective basis, holding that the commission income had already been disclosed and taxed. The tribunal found that "the Assessee has given a gift of ₹83,94,000 to his wife which has been declared in the Capital Account" and that "the opening capital as well as the income declared during the year is sufficient to give the amount of gift to his wife".
Under the Income Tax Act, gifts from relatives are fully exempt from taxation, as defined by any lineal ascendant or descendant of the individual, including spouses and Hindu undivided family members. For non-relatives, gifts exceeding ₹50,000 are taxable under Section 56 as income from other sources. However, gifts received on marriage occasions are fully exempt with no monetary limit. The taxation applies to money received without consideration where the stamp duty value exceeds ₹50,000, or for consideration less than stamp duty value by an amount exceeding ₹50,000. As per recent amendments, for immovable property transfers, the stamp duty value exceeding 105% of consideration with difference exceeding ₹50,000 becomes taxable. The ruling establishes that "the source of the cash deposit was a valid gift from the appellant's husband, Mr. Jayendra Navale, which was made from his disclosed income for the Assessment Year (AY) 2016-17".
