The ITO, Ward-13(4), Ahmedabad V. Smt. Tanujaben A.Relia, Ahmedabad

ITA 1518/AHD/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85647 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 07-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Unexplained investment; Capital asset; Gift; Business income
• Section: 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD 00 , ! ' #$, % & BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ ITA NO. 1518/AHD/2010 WITH CO NO.202/AHD/2010 % ) *)/ ASSESSMENT YEAR: 2007-08 ITO, WARD - 13(4) AHMEDABAD. VS SMT.TANUJABEN A. RELIA ARCHER HOUSE OPP: GUJARAT TENNIS ACADEMY ASHRAM ROAD, AHMEDABAD. PAN : AFEPR 4210 E +, / (APPELLANT) -. +, / (RESPONDENT) REVENUE BY : SHRI NIMESH YADAV, SR.DR ASSESSEE(S) BY : SHRI S.N. DIVETIA / DATE OF HEARING : 19/01/2015 / DATE OF PRONOUNCEMENT: 23/01/2015 // O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS-OBJECTION FILED BY THE ASSESS EE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XXI, AH MEDABAD DATED 8.2.2010. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF T HE APPEAL: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.25 LAKHS MADE BY THE AO ON ACCOUNT O F UNEXPLAINED INVESTMENT IN PAINTING. 2. IT IS THE CLAIM OF THE ASSESSEE THAT THE SAID P AINTING WAS RECEIVED ON ACCOUNT OF GIFT FROM SHRI M.F.HUSSAIN. HOWEVER, IT IS ITA NO.1518/AHD/2010 WITH CO 2 SEEN THAT HE IS NOT A RELATIVE AS PER THE PROVISION S OF SECTION 2(41) OF THE INCOME TAX ACT, 1961. 3. THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE IN SUPPORT OF ALLEGED GIFT RECEIVED FROM THE ALLEGED DONOR. THER EFORE, THE LD.CIT(A) SHOULD NOT HAVE ACCEPTED THE UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE AS AN ALLEGED GIFT FROM SHRI M .F. HUSSAIN, THE ALLEGED DONOR. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE AO OBSE RVED THAT IN THE PROFIT & LOSS ACCOUNT FILED WITH THE RETURN OF INCO ME, THE ASSESSE HAS SHOWN RS.25.00 LAKHS UNDER THE HEAD SALE OF PAINTI NG. HOWEVER, NO INCOME UNDER THE HEAD CAPITAL GAIN IS SHOWN BY TH E ASSESSEE. THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE. IN RE PLY TO THE SAME, THE ASSESSEE VIDE LETTER DATED 9.11.2009 SUBMITTED AS U NDER: TO THE BEST OF MY KNOWLEDGE, HE HAS GIVEN PAINTING S AS GIFT TO MAY PERSONS. HE HAS GIVEN PAINTINGS TO LUCKY TEA S TALL, OPP: CITY COLLLEGE, LAL DARWAJA WHERE HE USED TO HAVE A CUP OF TEA. THUS, HE HAS GIVING PAINTINGS AS GIFT TO KNOWN OR U NKNOWN PERSONS, WHILE IN OUR CASE HE IS MOST RESPECTIVE PE RSON AND STAYED AND ENJOYED OUR HOSPITALITY. SINCE THE AO DID NOT FIND THE EXPLANATION OF THE AS SESSEE ACCEPTABLE, HE HELD THAT THOUGH THE ASSESSEE HAS CONTENDED THAT TH E PAINTINGS FROM SHRI MF HUSSAIN WAS RECEIVED AS GIFT BEFORE 2000, T HIS IS WITHOUT ANY EVIDENCE. THE PAINTINGS HAS BEEN SOLD DURING THE Y EAR UNDER CONSIDERATION FOR RS.25 LAKHS, AND THEREFORE, THE R EALIZABLE VALUE OF THE GIFT IS TAXABLE IN THIS YEAR ITSELF, AND ADDED RS.2 5 LAKHS TO THE INCOME OF THE ASSESSEE, AS UNEXPLAINED INVESTMENT IN PAINTING S. 4. ON APPEAL, THE CIT(A) DELETED THE ADDITION BY OB SERVING AS UNDER: I HAVE GONE THROUGH THE ASST. ORDER PASSED BY AO A ND THE WRITTEN SUBMISSION FILED BY THE APPELLANT. I HAVE ALSO CONS IDERED THE EVIDENCE PRODUCED BY THE APPELLANT IN HIS PAPER BOOK. I FIND THAT THE MAIN CONTROVERSY INVOLVED IN THIS APPEAL REVOLVES ROUND THE ISSUE AS TO WHETHER THE APPELLANT HAD IN FACT RECEIVED THE PAIN TINGS BY WAY OF GIFT FROM SHRI M.F. HUSSAIN. THE APPELLANT HAS SUBSTANTI ATED THIS CLAIM BY PRODUCING CIRCUMSTANTIAL EVIDENCE, SINCE SHRI HUSSA IN IS NOT IN ITA NO.1518/AHD/2010 WITH CO 3 POSITION TO APPEAR IN PERSON BEFORE AO. THE APPELLA NT HAS CLAIMED THAT HER FAMILY IS HAVING VERY CLOSER INTIMACY WITH SHRI HUSSAIN AND THIS IS EVIDENT FROM THE PHOTOGRAPHS, PAINTINGS, NEWSPAPERS , REPORTS ETC., PRODUCED BY HER. THE APPELLANT HAS ALSO PRODUCED A VERY IMPORTANT EVIDENCE SUCH AS PHOTOGRAPHS SHOWING SHRI HUSSAIN W ITH THE APPELLANT AND HER HUSBAND OR AT HER RESIDENCE ETC. THE APPELL ANT HAS ALSO PRODUCED PAPER BOOK SUBMITTED IN THE CASE OF HER HU SBAND SHRI ANIL RELIA BEFORE CIT(A)-XI,AHMEDABAD IN APPEAL AGAINST ASSESSMENTFOR A.Y. 2006-07. FROM WHICH THE FOLLOWING MATERIAL IS RELEVANT. SR. NO. PARTICULARS I EVENT PAGE NO. 1. CONFIRMATION AND LETTER DTD. 10.10.2001 BY SHRI M. F. HUSSAIN 88 2. ARTICLE PUBLISHED IN THE NEWSPAPER ON 02.06.02 SHOW ING PHOTOGRAPH IN WHICH SHRI M. F. HUSSAIN IS TAKING DINNER WITH APPELLANT AT HIS RESIDENCE. THE ARTICLE MENTIONS THAT 'THE WHOLE WORLD RUNS BEHIND HUSSAIN BUT HUSSAIN RUNS BEHIND ANIL'. IT ALSO STAT ES HOW THE APPELLANT MET SHRI HUSSAIN 91 & 141 3. SKETCH OF THE APPELLANT HIMSELF MADE BY SHRI M. F. HUSSAIN ON 07.09.97 AT AHMEDABAD. 97 4. PAINTING GIVEN TO THE APPELLANT & HIS WIFE SMT. TAN UJA ON 23.09.97 98 5. PAINTING GIVEN TO THE APPELLANT ON HIS BIRTHDAY BY SHRI M. F. HUSSAIN ON 06.02.2002 AT BARISTA CAF. 99 6. PAINTING GIVEN TO THE APPELLANT & HIS WIFE SMT. TAN UJA ON 05.10.2001 100 7. PAINTING GIVEN TO THE APPELLANT & HIS WIFE SMT. TAN UJA ON 22.03.06 ON THE MENU CARD OF A RESTAURANT AT DUBAI. 101 8. PAINTING GIVEN TO THE APPELLANT QUOTING SOME WORDS ON HIS 'DHOBAN BAI' ON 25.03.2005. 102 9. PAINTING GIVEN TO THE APPELLANT & HIS WIFE SMT. TAN UJA ON 12.12.97AT 'THAIKING RESTAURANT' AT HYDERABAD. 103 10. PAINTING GIVEN TO THE APPELLANT & HIS WIFE SMT. TAN UJA ON 30.12.95 SHOWING MR. HUSSAIN HIMSELF. 104 11 PAINTING GIVEN ON BIRTHDAY ON 23.09.01 105 12 THE PHOTOGRAPH OF THE APPELLANT WITH HUSSAINS HORSE S & MOTHER SERIES PUBLISHED IN SIMPLY GUJARATI MAGAZINE IN OCT, 08. 138 ITA NO.1518/AHD/2010 WITH CO 4 13 NEWS PAPER REPORT FROM AHMEDABAD TIMES DTD. 19. 08. 2000 GIVING DETAILS ABOUT GAJA GAMINI AND APPELLANT'S CONTRIBUT ION. 140 14 NEWS PAPER REPORT FROM THE 'ASIAN AGE' DTD.13.11.01 SHOWING HUSSAIN AT APPELLANT'S RESIDENCE. 143 3.4 THE A.O HIMSELF HAS GIVEN FINDINGS IN PARA- 4.1 AND 4.2 OF HIS ORDER THAT: ' IT IS TRUE THAT THE ASSESSEE HAS BEEN ABLE TO PRO DUCE A C.D CONTAINING MORE THAN 200 PHOTOGRAPHS WITH SHRI M.F.HUSAIN, WHI CH WILL DEFINITELY ESTABLISH THE CORDIAL RELATIONSHIP WITH THE ASSESSE E. THIS FACT IS NOT DENIED BY THE UNDERSIGNED FOR THE REASON THAT THE S AME WAS CLEARLY ESTABLISHED BY THE ASSESSEE BY WAY OF A C.D. CONTAI NING VARIOUS PHOTOGRAPHS WITH SHRI M.F.HUSAIN. THE ASSESSEE VIDE HER LETTER DATED 7.12.2009 HAS ON CE AGAIN REITERATED HER CORDIAL RELATIONSHIP WITH SHRI M.F. HUSAIN BY FURNI SHING A COPY OF LETTER ADDRESSED TO ANIL ( I.E HUSBAND OF THE ASSESSEE ) A ND TANUJA ( I.E THE ASSESSEE) SIGNED BY SHRI M.F.HUSAIN ON 10.10.2001 A T AHMEDABAD, WHICH READS AS UNDER:- 'ANIL AND TANUJ OUR RELATIONSHIP IS MORE THAN 10 YEARS OLD AND IT I S LIKE A HEARTY BONDAGE WITH YOU. I APPRECIATE YOUR KEENNESS AND DEDICATION TO ME. YOU ARE ONE OF THE REASONS WHY I FOND OF AHMEDABAD. THAT IS WHY I USE TO COME AHMEDABAD AND STAY WITH YOUR FAMILY. I FEEL LIKE HOME WITH YOUR FAMILY . I MADE MANY PAINTINGS AT YOUR HOME DURING MY STAY AND GIFT ED YOU AND YOUR FAMILY. I MUST SAY THAT YOU HAVE ACTED VAR IOUS ROLE IN MY CREATIVITY. MY DREAM OF MAKING FILM 'GAJ AGAMINI' TRUE BECAUSE OF YOU AND AHMEDABAD. SD/-M.F.HUSAIN' 3.5 THE APPELLANT ALSO POINTED OUT THAT HER HUSBAND MET SHRI MF. HUSSAIN WHILE HE WAS WORKING ON HUSSAIN-DOSHI NI GU FA IN EARLY 1990 AT AHMEDABAD AND IT RESULTED IN A DEEP FRIENDSHIP BASE D ON MUTUAL ADMIRATION AND INTEREST IN ART. HER HUSBAND WAS ALS O ASSOCIATED WITH MR. HUSSAIN DURING MADHURI DIXIT FACE AND DID THE GRAPH ICS FOR THE EN-FIRE SERIES ON THE ACTRESS. AND HE ALSO DESIGNED A BOOK TITLE 'ARTS IN CINEMA' WHICH IS A BOOK ON HUSSAIN 'S INTERPRETATION ON CIN EMA THROUGH PAINTINGS WHICH LATER ON WAS TRANSLATED IN SCREEN VERSION AS 'GAJAGAMINI'. THE APPELLANT HAS ALSO PLACED ON RECORD A PHOTOGRAPH SH OWING THE PAINTING GIVEN AS A GIFT BY SHRI HUSSAIN TO LUCKY TEA STALL, LAL DARWAJA, ANMEDABAD IN SUPPORT OF HIS CONTENTION THAT SHRI HU SSAIN USED TO GIVE HIS PAINTINGS TO THE FRIENDS AND ADMIRERS. THE APPE LLANT HAS PRODUCED AS MANY AS 255 PRINT OUTS OF THE PHOTOGRAPS SHOWING AP PELLANT AND HER ITA NO.1518/AHD/2010 WITH CO 5 HUSBAND WITH SHRI HUSSAIN WHILE HE WAS AT HER RESID ENCE OR WORKING ON THE PAINTINGS ETC. UNDER THE CIRCUMSTANCES, IT IS R EASONABLE TO CONCLUDE THAT SHRI HUSSAIN HAD VERY HOMELY AND CORDIAL RELAT IONS WITH THE FAMILY OF THE APPELLANT AND IT WAS CUSTOMARY FOR SHRI HUSSAIN TO GIVE HIS PAINTINGS. IT IS ALSO NOTICED FROM THE ASSESSMENT ORDER PASSED BY JT.CIT RANGE-6, AHMEDABAD ON 30.12.2008 FOR A.Y.2006-07 IN CASE OF SHRI ANIL RELIA THAT THE ONLY ISSUE AGITATED BY AO RELATES TO THE HEAD O F INCOME UNDER WHICH THE SALE PROCEEDS OF THE PAINTINGS WOULD BE C HARGEABLE TO TAX, I.E. EITHER AS BUSINESS INCOME OR CAPITAL GAIN. IT IS NO TICED THAT THE ISSUE RELATING TO GIFT OF PAINTINGS HAS NOT BEEN RAISED BY AO IN T HIS ASSESSMENT, THOUGH THE APPELLANT IN ORDER TO CLAIM THAT THE PAINTINGS WERE PERSONAL EFFECTS HAS RAISED CONTENTION IN THIS REGARD. THEREFORE, THE RE LIANCE BY AO ON THE ASSESSMENT ORDER FOR A.Y. 06-07 IN CASE OF APPELLAN T'S HUSBAND IS NOT JUSTIFIED TO THAT EXTENT. EVEN THE CONTENTION RAISE D BY AO RELATING TO GIFT TAX IS ALSO MISPLACED BECAUSE GIFT TAX ACT HAS ALREADY BEEN REPEALED FROM 31.3.1998. THE NEXT CONTENTION OF AO TO HOLD THAT T HE PAINTINGS WERE ACQUIRED DURING THE YEAR IN QUESTION IS ALSO NOT AC CEPTABLE. IN VIEW OF THE EXPLANATION OFFERED BY THE APPELLANT REGARDING GIFT ACCEPTED ON THE BASIS OF CIRCUMSTANTIAL EVIDENCE. THE APPELLANT HAS ALSO PRO DUCED VARIOUS PHOTOGRAPHS SHOWING EVEN DATES MENTIONED AGAINST IT . EVEN A REASONABLE INFERENCE COULD ALSO BE DRAWN THAT ALL SUCH PAINTIN GS COULD NOT HAVE BEEN ACQUIRED BY THE APPELLANT IN THIS YEAR BECAUSE SHRI HUSSAIN IS NOT IN THIS COUNTRY SINCE LONG AND HENCE THE SAME COULD HAVE BE EN ACQUIRED ONLY IN EARLIER YEARS WHEN HE WAS IN INDIA. THEREFORE, THE AO WAS NOT JUSTIFIED IN HOLDING THE SALE CONSIDERATION OF THE PAINTINGS OF RS.25 LAKHS AS UNEXPLAINED INVESTMENT MADE BY THE APPELLANT IN THI S YEAR. THE ADDITION OF RS.25 LAKHS MADE BY AO IS HEREBY DELETED. 5. AFTER HEARING SUBMISSIONS OF THE DR AND AR AND P ERUSING THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILA BLE ON RECORD, WE FIND THAT THE DR COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE FINDINGS OF THE CIT(A). NO MATERIAL COULD BE BROUGHT BEFORE US TO S HOW THAT, IN FACT, RS.25.00 LAKHS WAS INVESTED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION FOR ACQUIRING THE PAINTINGS IN QUESTI ON, AND AS PER THE PROVISIONS OF SECTION 69 OF THE ACT, THE ONUS WAS O N THE DEPARTMENT. WE, THEREFORE, DO NOT FIND ANY GOOD REASON TO INTER FERE WITH THE ORDER OF THE CIT(A), WHICH IS ACCORDINGLY CONFIRMED, AND THE GROUNDS OF THE APPEAL OF THE REVENUE ARE DISMISSED. 6. IN THE CO, THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS: ITA NO.1518/AHD/2010 WITH CO 6 1. THE LD.CIT(A) HAS FAILED TO APPRECIATE THAT PAI NTINGS HELD BY THE ASSESSEE WERE PERSONAL EFFECT U/S.2(14) OF TH E ACT AND HENCE NOT CAPITAL ASSET. THE PROFIT ON SALE THER EOF WAS NOT LIABLE TO CAPITAL GAINS. 2. THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE PAI NTINGS SOLD WERE NOT PERSONAL EFFECT U/S.2(14) OF THE ACT, AN D AS SUCH NOT EXEMPT FROM CAPITAL GAINS. 7. THE CIT(A) HAS HELD AS UNDER: 4. THE NEXT GROUND OF APPEAL RELATING TO EXEMPTION OF SALE PROCEEDS OF PAINTINGS ON THE GROUND OF PERSONAL EFF ECT U/S.2(14) IS REJECTED BECAUSE AO HAS NOT DISPUTED THIS CLAIM IN THE ASSESSMENT ORDER. HENCE, THIS GROUND IS DISMISSED . 8. WE FIND THAT NO SPECIFIC GRIEVANCE COULD BE POIN TED OUT BY THE ASSESSEE FROM THE ABOVE ORDER OF THE CIT(A), THEREF ORE, THE GROUNDS OF THE CO OF THE ASSESSEE ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CO OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 23 RD DAY OF JANUARY, 2015 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 23 /01/2015 / 0 -%$12 32*$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ( ) / THE CIT(A)-III, AHMEDABAD 5. $%& '' , , )*++ / DR, ITAT, AHMEDABAD 6. &,- . / GUARD FILE. / ' / BY ORDER, TRUE COPY 4/ !5 ( DY./ASSTT.REGISTRAR)