LATE SMT. MOHINI PURI THROUGH,JAMMU vs. THE INCOME-TAX OFFICER, JAMMU

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A. No. 76/Asr/2013 Assessment Year: 2004-05

Late Mohini Puri vs. Income Tax Officer, [through LR Pradeep Puri] Ward-2(2), Jammu Jammu [PAN: AJAPP 1384K] (Appellant) (Respondent)

Appellant by : Sh. P. N. Arora (Adv.) Respondent by: Sh. Charan Dass (D.R.) Date of Hearing: 26.02.2019 Date of Pronouncement: 29.03.2019

ORDER Per Sanjay Arora, AM: This is an Appeal by the Assessee arising out of the Order by the Commissioner of Income Tax (Appeals), Jammu ('CIT(A)' for short) dated 27.07.2012, partly allowing the assessee’s appeal contesting her assessment u/s. 143(3) r/w s.147 of the Income Tax Act, 1961 ('the Act' hereinafter) dated 29.12.2011 for the Assessment Year (AY) 2004-05.

2 ITA No. 76/Asr/2013 (AY 2004-05) Late Mohini Puri v. ITO son, Pradeep Puri; Smt. Mohini Puri having expired on 20.01.2013. Through-out the said period, the assessee was in Delhi undergoing medical treatment at Gangaram Hospital. Her condition was critical, with she suffering from paralysis and loss of speech. The appeal was filed after the performing her last rites on 24.01.2013. This is accompanied by an affidavit by Sh. Pradeep Puri as the only legal heir of his mother, Mohini Puri, the assessee and, further, supported by a certificate dated 25.01.2013 from Gangaram Hospital (copy on record). The reasons for the delay in the filing of the appeal, duly documented, clearly bear it out to be a case of sufficient cause, beyond the control of the assessee. The delay being fully explained, was, accordingly, condoned, and the hearing in the matter proceed with.

3 ITA No. 76/Asr/2013 (AY 2004-05) Late Mohini Puri v. ITO whereupon only the assessee’s legal ground becomes eligible for being admitted. So, however, the notice dated 31.3.2011, even if sent per speed post on the same date, could not in the ordinary course be served on the same day. The date (04.4.2011) accordingly appears correct, and the Revenue not bringing any material on record to exhibit that the notice was indeed served on 31.03.2011. The plea is accordingly admitted. On merits, however, the same only needs to be stated to be rejected, being in incongruence with the express provision of law (section 149), as well as the law as explained by the Hon’ble jurisdictional High Court and the Apex Court. The issue of notice u/s. 148 on 31.3.2011 is not in dispute, having in fact also been sent through speed post on that date. Section 149 provides for the time limitation for the reopening of assessment u/s. 147. The same is with reference to the issue of notice u/s. 148(1) and not its service. This forms the basis of the decisions cited by the ld. DR supra per his written submissions dated 13.7.2018 (copy on record). The issue in fact stands settled by the decision in R.K. Upadhyaya v. Shamabhai P. Patel [1987] 166 ITR 163 (SC), holding the initiation of reassessment proceedings per a notice issued in time, but served subsequent, as valid, as also held in NBI Ltd. v. ITO [1982] 136 ITR 679 (Del) and ITO v. Lalchand Aggarwal [2012] 134 ITD 91 (Agra)(TM), i.e., besides the decisions in Jai Hanuman Trading Co. (supra) and Sheo Kumari Devi (supra). Reference in this context may also be made to the decision in Grover Nursing Home v. ITO [2001] 248 ITR 493 (P&H). The order by the tribunal in Ranjit Singh Arora (supra) is, with respect, without reference to the provisions of law or judicial pronouncements. The assessee’s claim is without any basis in law.

5.1 The principal issue in appeal is qua the assessment of Rs.16 lacs, admittedly received by the assessee, claiming to be deposited in the bank account of Shyam

4 ITA No. 76/Asr/2013 (AY 2004-05) Late Mohini Puri v. ITO Puri (HUF), i.e., the Hindu Undivided Family of the assessee’s husband. The same was explained to be the sale proceeds of the sale of a shop at Srinagar belonging to the assessee’s deceased son. It was explained that he was killed by the extremists on 07.02.1990, and his shop burnt in mob violence. Evidence to this effect is enclosed at PB pgs. 49-57 by way of a letter dated 08.02.1990 by the Governor, J&K at PB pg. 49. The family had to migrate to from Srinagar, leaving behind their home and hearth, to Jammu. The shop was sold during the relevant year, i.e., f.y. 2003-04, through broker/s, who had come to Jammu, and given cash for and on behalf of the buyer/s. Sh. Shyam Puri waiving his rights in the property, the entire consideration was received by the assessee as her sons’ only legal heir, and which explained the returning of the capital loss of Rs.2.52 lacs on the said sale transaction. The explanation being unsubstantiated, was not found satisfactory by the Assessing Officer (AO). The cash received, stated to be deposited in the bank account of Shyam Puri (HUF) was also protectively assessed in its’ hands u/s. 69A.

5.2 The addition for Rs.16 lacs, substantively made in the assessee’s hands, was, however, deleted in appeal by the first appellate authority against its protective assessment in the case of Shyam Puri (HUF) (vide order dated 05.02.2013 / PB pgs. 74-83), holding as under:

‘The sale transactions of property at Srinagar and of gold have been shown in her return of income for A.Y. 2004-05. In the assessment order of Mrs. Mohini Puri dated 29.12.2011 for AY 2004-05, the AO has taxed in para no. 4, the entire receipt of Rs.16 lacs in her hand. Therefore this amount can not be taxed again in the present case. Both the sources either opening balance from withdrawal from PNB/SB/8248 or the sale proceeds of property and gold was adequate to explain the deposit of Rs.18,30,000/-. Even if erstwhile AR of the appellant faultered in explaining as to whether it was from ‘X’ source or ‘Y’ source, nevertheless, the facts remain that this much money was available for further deposit. Thus it can not be treated as contradiction. In my opinion, as far as you have money in both the hands, it is immaterial whether you pay out of left hand or right hand.

5 ITA No. 76/Asr/2013 (AY 2004-05) Late Mohini Puri v. ITO As per A/R of the appellant the couple was under threat and as a result they sold all the properties including the shop in question as a distress sale to brokers after assassination of the son. They did not go to Srinagar but brokers for finalizing the sale of properties came to Jammu in subsequent years. All the documents of the property was burnt in fire after the assassination on 7th Feb., 1990. Evidence of death and fire was placed on record. The second objection raised by the A.O. is regarding deposit of cash on different dates. As per appellant the reason for deposit of cash on different dates during the month of May 2003 cannot be ascertained as Mr. Shyam Puri expired on 16.02.2010 and Mrs. Mohini Puri was not in a position to narrate due to paralysis for the last 17 years, ultimately she also died on 20.01.2013. In my opinion the source of money is important and deposit in installments is not core to the issue in this case, particularly when the source is explainable and entire deposit is made within a month of May, 2003. The AO has not pointed out as to what could be the source of deposits in installments, if not sale proceeds. From the above discussion, I am of the view that there was an adequate source of Rs.20,30,000/- in May, 2003. 6.3 Moreover apart from above facts, on legal ground also the addition u/s. 69/69A on legal heir is not tenable. In case of C. SELVAKUMAR vs. INCOME TAX OFFICER ITAT, COCHIN BENCH (2006) 6 SOT 646 (Coch) it was held that “In the absence of any material to show that legal heirs of original (deceased) assessee were in any manner involved in the transactions of fictitious fixed deposits made by original assessee, no addition under s. 69/69A could be made in the hands of legal heirs’.

5.3 Relying thereon, it was submitted by the ld. counsel for the assessee, Sh. Arora, that a similar addition in respect of sale of the late sons’ Godown by the assessee for Rs.6 lacs during the previous year relevant to AY 2005-06, was also deleted in first appeal vide order dated 30.6.2014 (PB pgs. 90-100), holding as under: ‘Regarding the addition on account of bogus sale of godown at Rs.6 lakhs, the appellant has given the detailed account of the circumstances in which the head of the family was killed and entire family had to shift from Srinagar to Jammu. He has also given the details of how distress sale was made and the cash amount of Rs.6 lakhs received on account of sale of godown was deposited on 16/10/2004 in the presence of brokers in account no. 3386000100086690 Pnb Nehru Market, Jammu. Copy of bank statement was also enclosed by the appellant as annexure 4. Considering the facts and circumstances of the case, the addition made on this count is also deleted.’ It was, accordingly, argued by Sh. Arora that a similar view be adopted in the instant case as well, particularly as the Revenue has not appealed against the order in the case of Shyam Puri (HUF). The addition, it was further submitted, could not

6 ITA No. 76/Asr/2013 (AY 2004-05) Late Mohini Puri v. ITO be sustained as section 68, which had been invoked, could not be in the absence of the assessee maintaining any books of account. The Revenue’s case, on the other hand, is that transaction of sale of shop cannot be accepted in the absence of any evidence of the said sale. Even accepting that the sale deed was, on account of, as stated, the State Government’s instruction of not registering the sale transactions of migrants – though there is nothing on record to evidence that, not registered, the sale agreement had not been produced at any stage. The cash has been deposited in the bank account not in lump-sum, which would be the case where received by way of sale consideration, but in installments, over a period of one month, in May, 2003. The deletion in the hands of Shyam Puri (HUF), where the assessment was made on a protective basis, would not be determinative of the issue. In fact, it was vehemently pleaded in that appeal that the amount had already been brought to tax in the hands of the assessee and, therefore, could not possibly be taxed again, and which had also weighed with the first appellate authority in deciding the appeal in case of Shyam Puri (HUF).

7 ITA No. 76/Asr/2013 (AY 2004-05) Late Mohini Puri v. ITO predicates on the rule of law. All this, however, only implies that the capital loss claimed by the assessee (at Rs.2.52 lacs) on the said sale cannot be allowed. And, nothing more. This is, even as observed by the Bench during hearing, as there is nothing to evidence the receipt of cash by the assessee, onus of which is on the Revenue. As such, either way, the amount cannot be assessed in the assessee’s hands as unexplained receipt. That is, if the explanation of it being the sale proceeds of the (assessee’s son) shop is accepted, it would, subject to validation of computation, not commented upon at any stage, lead to her incurring a capital loss by the assessee. If, on the hand, not accepted, there is no evidence of such receipt by the assessee. For section 68 to be invoked there should be a credit in the assessee’s books of account, which are again non-existent. The acceptance of the sum being received from the assessee, i.e., in the case of Shyam Puri (HUF), cannot operate to prejudice the assessee as the assessee is not a party to those proceedings. True, the assesssee cannot take a different stand in her case, and the principle of approbate and reprobate, applicable to tax proceedings, apply, so that the receipt by the assessee is admitted. But then, where so, the assessee’s explanation would in that case have to be accepted in full, i.e., of it being the sale proceed by her sons’ shop. Her explanation cannot be accepted in part. In fact, matters are to be decided on the basis of evidence. It is for such reasons, that it is oft-stated by the higher courts of law that the substantive and protective assessments are heard and decided together by the appellate authorities. The assessment in case of Shyam Puri (HUF) has become conclusive inasmuch as it is not pending in further appeal. No case for bringing the sum of Rs.16 lacs in the assessee’s hands is made out. Per contra, the assessee cannot be allowed capital loss of Rs.2.52 lacs, i.e., as claimed. I decide accordingly.

8 ITA No. 76/Asr/2013 (AY 2004-05) Late Mohini Puri v. ITO 7. The only other ground raised in appeal is in respect of the addition on account of credit entries in the assessee’s bank account with PNB, Purani Mandi, Jammu, at Rs.1,44,124. The assessee, who claims the same to be dividend or interest from shares or debentures, exempt u/s. 10(34D), or, alternatively, maturity proceeds of UTI-MIP(IV), could not substantiate either with any document, resulting in the same being assessed as unexplained credit in her bank account, i.e., u/s. 69A, the assessee being admittedly in receipt of money to that extent, so that the onus to satisfactorily explain the nature and source of the same – the said bank deposits, was on her. The same stood confirmed in appeal for the same reason, so that the assessee is in further appeal.

9 ITA No. 76/Asr/2013 (AY 2004-05) Late Mohini Puri v. ITO Representative), 171 A/D, Gandhi Nagar, Jammu (2) The Respondent: Income Tax Officer, Ward-2(2), Jammu (3) The CIT(Appeals), Jammu True Copy (4) The CIT concerned (5) The Sr. DR, I.T.A.T By Order