JAYENDRA ROHIDAS NAVALE,PUNE vs. INCOME TAX OFFICER WARD 2(1), PUNE

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:

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

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

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.

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.

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.

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.

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.

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

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:

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

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:

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.

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.

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