Income Tax Appellate Tribunal - Kolkata
Jharna Ghosh, Kolkata vs Assessee on 17 June, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH: KOLKATA
[Before Shri Mahavir Singh, JM & Shri B. P. Jain, AM]
I.T.A No.752/Kol/2013
Assessment Year: 2005-06
Smt. Jharna Ghosh Vs. I.T.O Wd-54(4), Kolkata
Flat No. 1D, Samarpan, 3, Govt. Place (West),
82, Sarat Bose Rd., Kolkata-26 Kolkata - 01
(PAN: ADNPG 3179L)
(Appellant) (Respondent)
Date of hearing: 21.04.2015
Date of pronouncement: 17.06.2015
For the Appellant: Shri Soumitra Choudhury, Advocate &
Shri Tapan Chakrobarty, Advocate
For the Respondent: Shri N.B. Som, JCIT
ORDER
Per Shri Mahavir Singh, JM:
This appeal by assessee is arising out of order of CIT(A)-XXXVI, Kolkata in Appeal No. 227/CIT(A)-XXXVI/Kol/HG/10-11 dated 13.02.2013. Assessment was framed by ITO, Ward-54(4), Kolkata u/s. 264/143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Year 2005-06 vide his order dated 22.11.2010.
2. The first issue in this appeal of assessee is against the order of CIT(A) in rejecting the issue that the dead person's income cannot be added in the hands of spouse and for that the provisions of section 159 of the Act can be resorted to. For this , assessee has raised following ground nos. 2 to 7:
"2. For that on the acts of the case, Ld. C.I.T.(A) was wrong in not considering Sec.159 of the I.T. Act, therefore, the order passed by the Ld. C.I.T.(A) is completely arbitrary, unjustified and illegal.
3. For that on the acts of the case, Ld. C.I.T.(A) was wrong in not considering Sec.159 of the I.T. Act and dittoing the order of the AO, therefore, the whole assessment should have been cancelled, therefore, the order passed by the Ld. C.I.T.(A) is completely arbitrary, unjustified and illegal.
4. For that on the acts of the case, Ld. C.I.T.(A) was wrong in adding u/s. 69A on account of unexplained cash deposits in the bank amounting to Rs.8,60,500/- which is completely arbitrary, unjustified and illegal.2 ITA No.752/K/2013
Smt. Jharna Ghosh AY 2005-06
5. For that on the acts of the case, Ld. C.I.T.(A) was wrong in not considering the fact that Rs.12,48,00/- was deposited in the bank account of the assessee's husband Tarun Kumar Ghosh who has expired on 22.10.200-4 and the assessee was only the second holder, therefore, the Ld. C.I.T.(A) should have deleted Rs.12,48,000/- in place of Rs.3,87,500/- u/s. 69A, thus the order passed by the Ld. C.I.T.(A) is completely arbitrary, unjustified and illegal.
6. For that on the acts of the case, Ld. C.I.T.(A) was wrong in not considering the fact, that the assessee has only capitalized the asset of the deceased husband amounting to Rs.15,03,000/- and the said amount was not the income of the assessee, therefore, the whole addition should be deleted."
3. Briefly stated facts are that assessee is an advocate, whose husband late Tarun Kr. Ghosh was suffering from Cancer and was forced to sell his house property for his treatment. He died on 21.10.2004 and left behind his wife Smt. Jharna Ghosh (assessee) and one son. The AO while computing the total income of the assessee included the entire bank deposit in the name of her husband and the sale proceeds of the house property simply because the bank account was maintained jointly by assessee and her husband Lt. Tarun Kumar Ghosh. The assessee in support of her claim explained that the deposits added by AO are out of the sale of house property belonging to the husband for a sum of Rs.28.25 lakh and filed documents in the shape of 'agreement to sale'. The assessee's husband sold the house property for a sum of Rs.28.25 lakhs which was received by him partly by cash and partly by cheque and the assessee had no knowledge about how much was received by cash and how much by cheque. According to assessee, her husband received the consideration mostly in cash from the purchaser of the house property due to the reason of his treatment and for repayment of the loan taken from the HDFC Bank, 1, Middleton Street Branch, Kolkata. That to sell the house property it was to be released from the bank, wherein the house property was kept as mortgage for taking loan for reconstruction and development of the same. But original assessment was completed by the ITO, Ward-54(4), Kolkata and computed the total income at Rs.34,97,270/-, wherein he added the entire sale proceeds of her husband along with family pension etc., while computing the total income. The assessee filed a petition before CIT, Kol-XIX u/s. 264 of the Act and by virtue of order passed u/s. 264 of the Act the assessment was set aside and AO was directed to re- do the assessment afresh. The AO framed assessment u/s. 264 read with section 143(3) of the Act and again assessed at a total income of Rs.34,83,110/- by making 3 ITA No.752/K/2013 Smt. Jharna Ghosh AY 2005-06 the following additions:
"Total income as per return Rs.1,09,605/-
Add: Addition as discussed above
i) Unexplained money u/s 69 Rs.12,48,000/-
ii) Income not disclosed during the year Rs.15,03,000/-
iii) Income not disclosed during the year Rs. 6,12,500/-
iv) Disallowance as discussed above (rental income)Rs.10,000/-"
Aggrieved, assessee preferred appeal before CIT(A).
4. The CIT(A) confirmed all the additions and even additional ground raised by the assessee regarding section 159 of the act for treating the receipts of husband as income, by observing as under:-
"12. Vide the additional grounds, in particular ground No.1, the appellant has raised a new issue about non-considering the provisions of sec. 159 of the Act by the AO while framing the impugned assessment. Section 159 of the Act relates to the liability of the legal representative of the deceased assessee. According to sec. 159(2)(a) of the Act, any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of death of the deceased and for completing the proceedings by virtue of sec. 159(2)(c) of the Act, the provisions thereof are to be applied accordingly. Sub-section (3) of sec. 159 of the Act further provides that the legal representative of the deceased shall, for the purpose of this Act, be deemed to be an assessee. Therefore, the deceased is an original assessee and the legal representative becomes the deemed assessee for the purposes of completion of the proceedings and for recovery of any tax from the estate of the deceased in the hands of the legal representative. In the instant case, Sri Tarun Kumar Ghosh died leaving behind his wife, appellant herein, and son. Sri Tarun Kumar Ghosh, husband of the appellant, died on 21-10-2004. The return for the assessment year under dispute was signed and filed by Smt. Jharna Ghosh as an assessee and not by other heir, i.e., son. Notices u/s. 142(1) and 143(2) of the Act were issued on the appellant herein during original assessment proceedings as well as during second round of assessment proceeding in compliance with the direction of CIT u/s 264 of the Act and she appeared through his authorized representatives and produced the relevant documents on the basis of which impugned assessment was made. It is further pertinent to mention here that in the statement of facts filed along with the memorandum of appeal and grounds of appeal, issue in respect of application of provisions of sec. 159 of the Act has been pleaded. Even in the petition u/s. 264 of the Act filed before the CIT, the appellant has not raised the above issue. She has filed some documents, viz., copies of letter of agreement for sale of property, mutation certificate in favour of deceased husband, Will, probate of Will, valuation report of the house property, certificate from HDFC Bank in support of bank loan and statement of joint account with Standard Chartered Bank. As these documents were not produced before the AO during original assessment proceedings, the CIT to meet the ends of justice set aside the assessment order on the concerned issues and directed the AO to examine and made verifications with regard to the veracity of the submissions made by the appellant on the specific issues of additions made in the assessment order. Even during set aside proceedings, the appellant never raised the issue of applicability of sec. 159 of the Act vis-à-vis treating the appellant as legal representative of the deceased husband, rather she tied to establish that there was no capital gain on the sale of house property and there was no unexplained cash deposits in the bank account jointly held by her with her husband. The appellant has 4 ITA No.752/K/2013 Smt. Jharna Ghosh AY 2005-06 also not field any evidence or evidence from the Court by virtue of which the appellant should be treated as a legal representative. She raised this question for the first time at the later stage of appellate proceedings, that too after a gap of several years. In the written submissions filed by the appellant and her A/Rs and even in rejoinder to the remand report, the appellant never raised the issue that the appellant should be considered as a legal representative as per provisions of sec. 159 of the Act. It was only after remand report on the additional ground that the appellant has claimed that she should be considered and assessed as per sec. 159 of the Act. ITX appears rather curious that the appellant, who had voluntarily filed the return of income, has turned round and raised this new plea in appeal. Further, it would not be out of the context to mention that in the balance sheet signed and filed by the appellant, the house property, bank account etc., have been disclosed as her assets/liabilities and the appellant did not deny the contents in the balance sheet inasmuch as the said balance sheet was part of I.T return filed by her under her signature, not as a legal representative but as an individual assessee. Therefore, it cannot be said that the assessment was made on a dead person, for which provisions of sec. 159 of the Ac shall come into play while assessing the income and tax burden thereon for the assessment under dispute.
12.1 Keeping in view the above discussions, I decline to admit the additional grounds, in particular ground No.1, which was in respect of applicability of provisions of sec. 159 of the Act. As stated above, the other issues raised in the additional grounds are in line with the original grounds of appeal, which are being disposed as under".
On merits also, CIT(A) confirmed the additions, even though the receipts pertains to assessee's husband (since deceased), by observing as under:-
"13. Ground No.1: In this ground, the appellant has objected to the addition of Rs.12,48,000/- made by the AO u/s 69A of the Act on account of unexplained cash deposits in the bank. On verification of the bank account jointly held by the deceased husband and the appellant with Standard Chartered Bank, the AO observed that there was total cash deposits in the said bank in the sum of Rs.16,56,000/- between 10-04-2004 to 22-01-2005. When asked to explain, the appellant has stated that out of the said cash deposits, sum of Rs.12,48,000/- were deposited by cash out of the sale proceeds of the house property of her deceased husband on the following dates:-
Rs. 40,000/- deposited on 10-04-2004 Rs. 1,08,000/- deposited on 12-05-2004 Rs.10,00,000/- deposited on 03-06-2004 Rs. 1,00,000/- deposited on 09-06-2004 Rs.12,48,000/-
The AO has not accepted the said explanation of the appellant. According to him, as per registered sale deed obtained from the purchaser, the sale consideration was for Rs.10 lacs, out of which Rs.6,12,500/- was paid by Pay Order and balance of Rs.3,87,500/- was paid in cash on 03-06-2004. He, therefore, treated he entire cash deposit as unexplained money u/s. 69A of the Act and added the same in the hands of the appellant.
13.1 I have heard the A/R of the appellant, perused his written submissions, remand report of the AO and counter reply of the appellant vis-a-vis evidences filed in the paper book. The deceased husband of the appellant had acquired by virtue of a Will and Probate thereafter a house property situated at 11B, Kali Kumar Banerjee Lane, Kolkata-700 002. The said property was sold out by him to one Smt. Archana Datta. Referring to the letter of 5 ITA No.752/K/2013 Smt. Jharna Ghosh AY 2005-06 agreement for sale dated 14-08-2003 of Sri Sachidananda Panda, Advocate of the purchaser of the property, placed on pages 6 to 8 of the paper book, the A/R contended that the impugned house property was sold by Sri Tarun Kumar Ghosh during his life time to Smt. Archana Datta for a total consideration of Rs.28,25,000/- and the payments were received partly by cash and partly by cheque. He also filed a copy of letter dated 11-12- 2003 from Khaitan & Khaitan, Solicitors, Advocates & Notaries addressed to the appellant to state that as per confirmation of the Advocate of the purchaser the agreed price for sale was at Rs.28,25,000/- and out of this agreed price Rs.6,12,500/- was paid by Pay order as part of the consideration. He also filed a copy of valuation report dated 10-08-1999 ((pages 20 to 27 of the paper book) determining the fair market value of the property at Rs.16,97,000/- and indexed cost for AY 2005-06 at Rs.37,56,581/-, resulting in long-term capital loss of Rs.9,31,581/- (page 37 of the paper book). On verification of the bank account with Standard Chartered Bank maintained by Sri Tarun Kumar Ghosh as first holder and the appellant as second holder, the AO observed that there was total deposits of Rs.16,50,000/- in cash on different dates during the relevant previous year. When asked to explain the above deposits, it was explained by the ape that out of Rs.16,56,000/-, sum of Rs.12,48,000/- was deposited in the bank in cash between 10-04-2004 to 09-06-2004 out of the sale proceeds of the house property owned by deceased husband and balance amount of Rs.3,95,000/- being surplus out of withdrawal of Rs.10 lacs and the remaining Rs.13,000/- was out of appellant's professional income. The appellant failed to produce registered sale deed. The AO, therefore, obtained the sale deduction from the purchaser of the property and it was found that under memo of consideration, the proceeds for sale of impugned house property was Rs.10,00,000/- and the mode of payment was (i) Rs.6,12,500/- by Pay Order dated 31.10.2003 and (ii) Rs.3,87,500/- by cash on 03-06- 2004. Taking into consideration the registered sale deed having more evidentiary value than primary agreement for sale, the AO found mismatched with the declaration of the appellant and thus treated the sum of Rs.12,48,000/- as unexplained money u/s 69 of the Act and added the same in the hands of the appellant. In my considered opinion, registered sale deed depicts the actual transaction. The letter of Khaitan & Khaitan, referred to above, also states that price proposed by Advocate of the purchaser was Rs.28,25,00/- and payment of Rs.6,12,500/- being part consideration of the transaction was made by Pay Order. It is not explicitly confirmed that the actual sale price was Rs.28,25,000/-. It is thus evident that sale price the appellant is referring was only a proposed price. Finality of the transaction reaches when sale deed was executed and registered with the Registering Authority. As per registered sale deed obtained from the purchaser, the total consideration was for Rs.10 lac and part payment by Pay Order was made in the sum of Rs.6,12,500/- and balance of Rs.3,87,500/- by cash. Therefore, there is resemblance of part payment to the extent of Rs.6,12,500/-. The valuation report and indexation of cost as field by the appellant, in my opinion, render no help to the appellant. The actual consideration shall have to be taken and not on hypothesis basis for resolving the issue on dispute. Considering the totality of the facts and circumstances of the case and evidence on record, in my view, the appellant has failed to substantiate her clam with any evidentiary documents. However, I find that on 03-06-2004, there was cash deposit of Rs.10,00,000/- and as per sale deed payment of Rs.6,12,500/- was made by Pay Order and the balance of Rs.3,87,500/- was paid in cash on the said date, i.e. 03-06-2004. Therefore, so far as cash deposit of Rs.10 lacs on 03-06-2004 is concerned, the same is duly9 explained to the extent of Rs.3,87,500/-. Keeping this fact in mind, the addition is restricted to Rs.8,60,500/-. Appellant thus gests relief of Rs.3,87,500/- out of the total addition of Rs.12,48,00/-. This ground is partly allowed.
14. Ground No.2: Vide this ground the appellant challenges the addition of Rs.15,03,000/- made on account of capitalization of sale of house property owned by her deceased husband. The appellant in her balance sheet for the relevant year has capitalized the sum of Rs.15,03,00/- by stating "sale of house property (husband)".However, she has not taken this income in her P/L Account nor has disclosed the same in the computation of income. Therefore, this income constitutes undisclosed income and renders to be added back with 6 ITA No.752/K/2013 Smt. Jharna Ghosh AY 2005-06 the income disclose. In view of above, the addition is upheld and the appellant fails on this ground.
15. Ground No. 3: This ground relates to the addition of Rs.6,12,500/- made on account of sale price of property not disclosed during the assessment year under dispute. This amount of Rs.6,12,500/- was part of the sale price received by the deceased husband of the appellant by way of Pay Order. As stated above, as per registered sale deed, the purchaser out of total consideration of Rs.10 lacs paid by Pay Order the said sum of Rs.6,12,500/-. On verification of the bank statement, the AO observed that the said Pay Order had been encashed in the bank account. Therefore, this deposit cannot be treated as unexplained one. In view of the above, this addition does not merit to be upheld and, accordingly, deleted. This ground of the appellant is allowed."
5. As regards to the addition of unexplained money of Rs.12.48 lakh being alleged deposit of unexplained money in the bank account jointly held by deceased husband Tarun Kr. Ghosh and the assessee was claimed to be out of the sale proceeds of the house property. As regards to addition of Rs.15.03 lakh being the amount capitalized by assessee, which was out of sale proceeds on account of sale of house property owned by her deceased husband, the assessee filed evidences. As regards to the addition of Rs.6,12,500/- on account of sale price of property not disclosed in the return of income, the assessee has filed fresh evidences before the CIT(A). The evidences are as under:
(a) Copy of the Will of Smt. Biraj Basini Mitra, the sister of the father-in-law of the assessee dt. 15.02.1960
(b) The copy of probates dt. 11.07.1972
(c) Copy of Mutation Certificate dt. 31.08.99
(d) Copy of "agreement for sale" of the "property in question" dt. 09.09.2003
6. We find that the assessee is an advocate, whose husband late Tarun Kumar Ghosh suffering from Cancer died on 21-10-2004. Late Tarun Kumar Ghosh was forced to sale his house property and as per agreement he has received a sum of Rs. 28.25 lakhs partly by cash and partly by cheques. The sale deed was registered on 03-06-2004 i.e before the death of assessee's husband, late Tarun Kumar Ghosh. From the above facts, it is clear that the property in question was sold by assessee's late husband before his death and the receipts out of the sale proceeds are deposited in a joint bank account that of assessee and her late husband. Once this is the position the entire receipts are to be assessed in the hands of late husband although 7 ITA No.752/K/2013 Smt. Jharna Ghosh AY 2005-06 through legal heirs by adopting the procedure prescribed u/s. 159 of the Act. Neither the AO nor the CIT(A) has gone into this aspect despite the fact that the very issue was raised before the CIT(A). In term of the facts and circumstances, the estate of the deceased person can be assessed by adopting the procedure prescribed u/s.159 of the Act. Accordingly, the receipts out of the sale proceeds of the house property of deceased husband added in the hands of the assessee by the AO and confirmed by CIT(A) is hereby deleted. The revenue, if law permits, can take action on legal heirs to tax the estate of the deceased husband of the assessee after adopting the procedure prescribed u/s. 159 of the Act. Accordingly, this legal issue is deciding in favour of the assessee and assessment of unexplained money of Rs. 12.48 lakhs, income not disclosed during the year Rs.15.03 lakhs and income not disclosed during the year Rs.6,12,500/- is deleted.
7. The next issue in this appeal of assessee is in regard to the order of CIT(A) confirming the disallowance of rent of Rs.10,000/-.
8. We have heard rival contentions and gone through the facts of the case. Briefly stated facts are that the assessee is an advocate and debited a sum of Rs.56,000/- as rent for the accommodation taken on rent for the purpose of profession and residence. The AO disallowed a sum of Rs.10,000/- for non business purposes. The CIT(A) also confirmed the action of the AO. The assessee could not explain before us how the assessee has made the rent for residence. In the absence of any explanation, we are of the view that the lower authorities have rightly made a disallowance of Rs.10,000/- and we confirm the same.
9. In the result, appeal of assessee is partly allowed.
10. Order is pronounced in the open court on 17th June, 2015.
Sd/- Sd/-
(B. P. Jain) (Mahavir Singh)
Accountant Member Judicial Member
Dated : 17th June, 2015
Jd.(Sr.P.S.)
8 ITA No.752/K/2013
Smt. Jharna Ghosh AY 2005-06
Copy of the order forwarded to:
1. APPELLANT -Smt. Jharna Ghosh, Flat No. 1D, Samarpan, 82, Sarat Bose Road, Kolkata-700026.
2 Respondent - ITO, Ward-54(4), 3, Govt. Place (W), Kolkata-01.
3. The CIT(A), Kolkata
4. CIT Kolkata
5. DR, Kolkata Benches, Kolkata /True Copy, By order, Asstt. Registrar.