2 weeks ago
ITAT: Income deposited in wife's account cannot be taxed twice
A man named Jayendra put some of his own money into his wife Gauri's bank account as a gift.
The tax office saw the money and asked Gauri where it came from.
She said it was a gift from her husband.
The tax office did not believe her and said the money was unexplained.
They asked her to pay tax on it.
But Jayendra had already told the tax office about this money and had already paid tax on it.
The money came from his work earning commission for a cooperative society.
A special tax court called the ITAT looked at the case.
The court said you cannot make people pay tax twice on the same money.
So the court said Gauri does not have to pay tax on the gift, and Jayendra does not have to pay tax again either.
The Pune bench of the Income Tax Appellate Tribunal (ITAT) deleted additions of ₹71.56 lakh made in the hands of Jayendra Navale and his wife Gauri Navale for assessment year 2016-17.
The dispute concerned ₹71.56 lakh deposited in Gauri's bank account during financial year 2015-16, which the Assessing Officer treated as unexplained money under Section 69A.
Gauri explained the cash was a gift from her husband, who had already disclosed and paid tax on commission income from Samruddha Jeevan Multistate Multipurpose Co-operative Society Ltd.
The Assessing Officer doubted the source because the society had not deducted tax at source under Section 194H, which applies to commission or brokerage payments.
The ITAT held that taxing the same amount again would amount to double taxation and also deleted the protective Section 69A addition made against Jayendra.
- Who
- Jayendra Navale and his wife Gauri Navale, with the Pune bench of the Income Tax Appellate Tribunal (ITAT) deciding their appeals.
- What
- The ITAT ruled that ₹71.56 lakh deposited in Gauri's bank account could not be taxed as unexplained income because her husband had already disclosed and paid tax on the money.
- Where
- Pune bench of the Income Tax Appellate Tribunal, India.
- When
- The order was pronounced on 14 August, relating to assessment year 2016-17 and financial year 2015-16.
- Why
- To prevent double taxation of the same income, as the source was sufficiently explained through the husband's disclosed commission income.
Taxpayer's view
Tax department's view
Taxation of money gifted to wife
Taxpayer's view
The money was a gift from the husband's already-disclosed and taxed commission income, so taxing it again in the wife's hands amounts to double taxation.
Tax department's view
The source of the cash deposit was not satisfactorily established because the payer society did not deduct TDS under Section 194H and no confirmation from the payer was provided.
Key facts
- Tribunal
- Pune bench of the Income Tax Appellate Tribunal (ITAT)
- Amount in dispute
- ₹71.56 lakh
- Assessment year
- 2016-17
- Order date
- 14 August
- Legal provision
- Section 69A (unexplained money)
- Husband's declared income
- Around ₹93.67 lakh after deductions
- Commission income shown
- ₹91.74 lakh under 'Sales' in Profit & Loss Account
- Payer
- Samruddha Jeevan Multistate Multipurpose Co-operative Society Ltd.
Sources
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