Mr. Kishore Gidwaney, New Delhi V. ITO, New Delhi

ITA 3249/DEL/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2108 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 02-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARUL SINGH
• Keywords: Income from undisclosed sources; Additional evidence; Question of law; Cost of acquisition; Assessment record; Tax effect; Set aside
• Section: 54F; 133(6); 13; 131; 68

Judgement Text

I.T.A.NO.3249/DEL/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER . . /. I.T.A NO.3249/DEL/2016 / ASSESSMENT YEAR:2011-12 KISHORE GIDWANEY B-389, NEW FRIENDS COLONY, NEW DELHI. VS. ITO WARD 22(2) C.R. BUILDING, NEW DELHI. PAN NO. AAJPG3295J APPELLANT / RESPONDENT /ASSESSEE BY SHRI R.S. SINGHVI, CA SHRI SATYAJEET GOEL, CA /REVENUE BY MS. PARUL SINGH, SR. DR / DATE OF HEARING: 19.11.2020 /PRONOUNCEMENT ON 0 2 .1 2 .20 20 /O R D E R PER BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-10, NEW DELHI DATED 31.03.2016 FOR AY 2011-12 ON THE FOLLOWING GROUNDS : - 1. (I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING ADDITION OF RS. 1,7 3,27,000/- AS UNEXPLAINED DEPOSIT IN THE BANK ACCOUNT WITH STA NDARD CHARTERED BANK, NEW FRIENDS COLONY, NEW DELHI. (II) THAT THE DEPOSIT IS REPRESENTED BY SALE OF PAINTING S AND HAVING FURNISHED THE CONFIRMATION, AFFIDAVIT ALONG WITH PERMANENT ACCOUNT NUMBER OF THE PURCHASERS, THERE I S NO GROUND OR BASIS FOR ADVERSE INFERENCE AGAINST THE A SSESSEE. (III) THAT OWNERSHIP OF PAINTINGS AND GENUINENESS OF SALE IS FULLY I.T.A.NO.3249/DEL/2016 2 SUPPORTED AND CORROBORATED FROM EVIDENCE FURNISHED ON RECORD AND ADVERSE INFERENCE IS MERELY ON THE BASIS OF PRESUMPTION AND SURMISES PARTICULARLY WHEN PART OF SALE PROCEEDINGS WAS DULY ACCEPTED. 2. THAT THE CIT(A) WAS ALSO NOT JUSTIFIED IN NOT ACCEP TING THE CLAIM OF EXEMPTION U/S 54F EVEN THOUGH THE CLAIM WA S IN CONFORMITY WITH PROVISIONS OF SEC. 54F. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES THROUGH VIDEO CONFERENCING AND PERUSED THE MATERIAL ON RECO RD. 3. THE FACTS OF THE CASE ARE THAT ASSESSEE FILED RE TURN OF INCOME DECLARING INCOME OF RS. 12,20,170/-. AO ISSUED STA TUTORY NOTICES FOR COMPLETION OF THE ASSESSMENT. THE ASSESSEE HAD SHO WN INCOME FROM CONSULTANCY OF OLD CARS AND INCOME FROM OTHER SOURC ES. THE AO WAS IN POSSESSION OF AIR INFORMATION WITH REGARD TO DEPOSI T OF CASH IN VARIOUS BANK ACCOUNTS. THE AO CALLED FOR BANK STATEMENTS F ROM VARIOUS BANKS, WHEREIN ASSESSEE WAS MAINTAINING BANK ACCOUNTS. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO AFTER AFFORDING THE OPPORTUNITY TO THE ASSESSEE, ASKED TO EXPLAIN THE SOURCE OF DEPOSITS M ADE IN THE VARIOUS BANK ACCOUNTS. 3.1 IN RESPECT OF BANK ACCOUNT NO. XXXXXX480 MAINTA INED WITH UNION BANK OF INDIA, SUNDAR NAGAR BRANCH, THERE WERE TOTA L DEPOSITS OF RS. 32,10,000/-. THE AO ASKED THE ASSESSEE TO EXPLAIN WITH DOCUMENTARY EVIDENCES THE CREDIT ENTRIES OF RS. 25,000/- AND RS . 40,000/- DATED 19.03.2011, BUT THE SAME REMAINED UNEXPLAINED. THE AO, THEREFORE, TREATED THE SAME AS INCOME FROM UNDISCLOSED SOURCES . I.T.A.NO.3249/DEL/2016 3 3.2 IN RESPECT OF BANK ACCOUNT NO. XXXXX7646 MAINTA INED WITH STANDARD CHARTERED BANK, NEW FRIENDS COLONY, DELHI IN THE NA ME OF M/S G CORPORATION, THERE WAS CASH DEPOSIT OF RS. 45,000/- APART FROM OTHER DEPOSITS OF RS. 28,77,742/-. THE AO ASKED THE ASSE SSEE TO EXPLAIN THE SOURCE OF CASH DEPOSITS SUPPORTED BY DOCUMENTARY EV IDENCE AND ALSO SOURCE OF OTHER DEPOSITS OF RS. 28,77,742/-. BUT A SSESSEE FAILED TO EXPLAIN THE SAME, THEREFORE, AO MADE ADDITION OF RS . 29,22,742/- TREATING THESE DEPOSITS MADE FROM UNDISCLOSED SOURC ES. 3.3 IN RESPECT OF BANK ACCOUNT NO. XXXXXX6844 WITH M/S STANDARD CHARTERED BANK, NEW FRIENDS COLONY IN THE NAME OF A SSESSEE, THERE WAS CASH DEPOSITS OF RS. 2,82,87,000/- AND OTHER DEPOSI TS OF RS. 1,63,87,867/-, AO ASKED THE ASSESSEE TO EXPLAIN SOU RCE OF THE CASH DEPOSITS. THE ASSESSEE FILED SUBMISSIONS EXPLAININ G THE SOURCE OF THE SAME. IT WAS EXPLAINED BY THE ASSESSEE THAT CASH D EPOSITS WERE MADE FROM THE SALE CONSIDERATION OF PROPERTY NO. A-205, NEW FRIENDS COLONY, NEW DELHI WHICH WAS SOLD IN THE FY 2009-10. IT WAS FURTHER EXPLAINED BY ASSESSEE THAT CAPITAL GAIN TAX WAS PAID BY ASSESSEE IN AY 2010-11 IN RESPECT OF THIS TRANSACTION. CONSIDERING THE REPLY OF ASSESSEE, AO ASKED TO FURNISH COMPLETE NAME, ADDRESS, PAN AND ASSESSME NT PARTICULARS OF THE BUYER OF THE PROPERTY, ALONG WITH CONFIRMATION OF THE BUYER AND ALSO ASKED TO FURNISH COMPLETE ADDRESS OF THE BROKER THR OUGH WHOM THE DEAL WAS FINALIZED. HOWEVER, ASSESSEE FAILED TO EXPLAIN THE SAME, THE AO, THEREFORE, HELD THAT SOURCE OF THE ABOVE CASH DEPOS ITS OF RS. I.T.A.NO.3249/DEL/2016 4 2,82,87,000/- REMAINED UNEXPLAINED, WHICH WAS TREAT ED AS INCOME OF ASSESSEE FROM UNDISCLOSED SOURCES AND ADDED TO THE INCOME OF THE ASSESSEE. 3.4 IT WAS FURTHER NOTED BY THE AO IN RESPECT OF TH E ABOVE BANK ACCOUNT NO. XXXXX6844 THAT ASSESSEE MADE CASH DEPOS ITS IN THIS BANK ACCOUNT. IT WAS NOTED BY THE AO FROM SUBMISSIONS O F THE ASSESSEE THAT ASSESSEE HAD BOOKED/PURCHASED THREE APARTMENTS OF M /S EMAAR MGF CONSTRUCTION PVT. LTD. TOWARDS WHICH ASSESSEE WAS MAKING PAYMENT FOR PURCHASE OF THE ABOVE THREE FLATS LOCATED AT COMMON WEALTH GAMES VILLAGE, NEW DELHI. THE AO ASKED THE ASSESSEE TO E XPLAIN WITH DOCUMENTARY EVIDENCE THE SOURCE OF OTHER DEPOSITS O F RS. 1,63,87,867/- AND WAS ALSO REQUIRED TO FURNISH THE DETAILS OF SAL E/PURCHASE OF INVESTMENTS. THE AO ASKED THE ASSESSEE TO FURNISH COPY OF LEDGER ACCOUNT AS APPEARING IN THE BOOKS OF ACCOUNT OF THE ENTITY IN RESPECT OF WHICH TRADING ACCOUNT WAS DRAWN AND WAS FURTHER ASK ED TO PRODUCE ANY OTHER EVIDENCE/CONFIRMATION FROM THE RESPECTIVE ENT ITY TO SUBSTANTIATE THE OTHER TRANSACTIONS. THE AO NOTED THAT ASSESSEE HAS NOT FILED THE COMPLETE DETAILS, THEREFORE, CONSIDERING THE SUBMIS SION OF THE ASSESSEE AND DETAILS FILED, AO HELD THAT OUT OF THE TOTAL DE POSITS OF RS. 1,63,87,867/-, ASSESSEE FAILED TO EXPLAIN THE SOURC E OF THE DEPOSITS OF RS. 98,01,587/- WHICH WAS ADDED TO THE INCOME OF THE AS SESSEE AS INCOME FROM UNDISCLOSED SOURCES. I.T.A.NO.3249/DEL/2016 5 3.5 IN RESPECT OF BANK ACCOUNT NO. XXXXX6289 IN THE NAME OF ASSESSEE MAINTAINED WITH STANDARD CHARTERED BANK, NEW FRIEND S COLONY, THERE WAS CASH DEPOSIT OF RS. 95,76,576/-. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF THE ABOVE DEPOSITS WITH DOCUMENTARY E VIDENCES. THE AO CONSIDERING THE EXPLANATION OF THE ASSESSEE AND EVI DENCES ON RECORD CONSIDERED DEPOSIT TO TUNE OF RS. 6,61,576/- OUT OF THE ABOVE DEPOSIT AS UNEXPLAINED WHICH WAS ADDED TO THE INCOME OF THE AS SESSEE. 3.6 IN RESPECT OF BANK ACCOUNT NO. XXXXXX3688 MAINT AINED WITH STANDARD CHARTED BANK, DEHRADUN IN THE NAME OF ASSE SSEE, THERE WAS CASH AND OTHER DEPOSITS OF RS. 45,89,620/-. ASSESS EE WAS ASKED TO EXPLAIN THE SOURCE OF THE ABOVE DEPOSIT. CONSEQUEN T UPON CONSIDERING THE SUBMISSIONS AND EVIDENCES PRODUCED BEFORE AO, I T WAS HELD BY AO THAT AN AMOUNT OF RS. 1,39,117/- REMAINED UNEXPLAIN ED OUT OF THE ABOVE DEPOSITS. THEREFORE, AMOUNT OF RS. 1,39,117/- WAS TREATED AS UNEXPLAINED DEPOSITS FROM UNDISCLOSED SOURCES WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE. 4. THUS, THE AO CONSIDERED TAXABLE INCOME OF ASSESS EE AT RS. 4,30,97,190/- BY TAKING THE ABOVE ADDITIONS. 5. THE ASSESSEE CHALLENGED THE ABOVE ADDITIONS BEFO RE LD. CIT(A) AND DETAILED SUBMISSIONS OF THE ASSESSEE WERE FILED. T HE ASSESSEE ALSO FILED AN APPLICATION UNDER RULE 46A OF IT RULES FOR ADMIS SION OF THE ADDITIONAL EVIDENCES. THE SAME WERE FORWARDED BY THE LD. CIT( A) TO THE AO FOR FILING THE REMAND REPORT. THE AO SUBMITTED THE REM AND REPORT DATED I.T.A.NO.3249/DEL/2016 6 20.10.2014 WHICH IS REPRODUCED IN THE APPELLATE ORD ER IN WHICH THE AO HAS BRIEFLY STATED THAT COUNSEL FOR ASSESSEE WAS RE QUESTED TO PRODUCE ALL THE FOUR PERSONS NAMELY MOHD. LAIQ AHMED, SHRI ISHR AFIL, SHRI PARVEEN GOYAL & SHRI RAKESH WHO HAVE PURCHASED PAINTING FRO M ASSESSEE FOR RECORDING THEIR STATEMENTS AND WAS ALSO ASKED THAT ALL THE FOUR PERSONS WILL BRING THEM THE COPY OF THE ITR, AUDITED COPY O F THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET. IN RESPONSE TO THIS SHR I NIKHIL BANSAL, CA OF SHRI MOHD. LAIQ AHMED AND SHRI ISHRAFIL APPEARED AN D FILED POWER OF ATTORNEY AND COPY OF ITR OF AY 2011-12 UNDER APPEAL , COPY OF THE BANK ACCOUNTS STATEMENT, AFFIDAVIT AND PAN CARD. HE HAS SUBMITTED THAT AS THE PARTIES ARE TRAVELLING, THEY ARE NOT ABLE TO AP PEAR IN PERSON. FOR SHRI PARVEEN GOYAL & SHRI RAKESH, SHRI NITIN BANSAL, CA APPEARED AND FILED POWER OF ATTORNEY AND ALSO FILED COPY OF THE BANK A CCOUNT STATEMENT, AFFIDAVIT AND PAN CARD. HE HAS ALSO STATED THAT SI NCE PARTIES ARE TRAVELLING, THEY ARE NOT ABLE TO APPEAR IN PERSON. THE AO ALSO NOTED THAT COPIES OF THE BANK ACCOUNT OPENING FORM AND NAME OF THE PERSON TO OPERATE THE BANK ACCOUNTS WERE ALSO CALLED U/S 131( 6) OF THE IT ACT. BUT NO INFORMATION HAS BEEN RECEIVED. THE BANK MANAGER HAS INTIMATED THAT SAID BANK ACCOUNTS ARE CLOSED AND, AS SUCH, UNABLE TO FURNISH SUCH INFORMATION. THE AO ALSO SUBMITTED PARA-WISE COMME NTS ON MERITS AND NOTED THAT ASSESSEE HAS NOT SUBMITTED ANY EXTRA PRO OF AND ALSO STATED IN THE REMAND REPORT THE ONLY PROOF SUBMITTED BY ASSES SEE IS REGARDING ADDITION MADE OF RS. 98,01,587/-. OUT OF THIS ALSO RS. 8 LAKHS FOR WHICH I.T.A.NO.3249/DEL/2016 7 ASSESSEE HAS FILED CONFIRMATION OF SHRI SARBESHWAR KHAL IS NOT ACCEPTED AS THE ASSESSEE HAS FAILED TO SUBMIT COPY OF THE ACCOU NT OF THIS PARTY. 6. THE LD. CIT(A) PROVIDED THE COPY OF THE REMAND R EPORT TO THE COUNSEL FOR ASSESSEE. THE COUNSEL FOR ASSESSEE FIL ED THE COMMENTS TO THE REMAND REPORT WHICH IS REPRODUCED IN THE APPELL ATE ORDER. THE ASSESSEE IN THE COMMENTS AGAINST REMAND REPORT SUBM ITTED THAT AS REGARDS ADDITION OF RS. 98,01,587/- AO HAS ACCEPTED CORRECTNESS OF HIS CLAIM AND THERE IS ALSO NO BASIS TO MAKE ANY ADDITI ON OF RS. 8 LAKHS. IN RESPECT OF ADDITION OF RS. 65,000/-, IT WAS SUBMITT ED THAT THESE ARE TWO CREDITS OF RS. 25,000/- AND RS. 40,000/- WHICH WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES WHICH WERE RECOVERY OF THE OL D OUTSTANDING DUES. OTHER SUBMISSIONS WERE ALSO FILED TO EXPLAIN THAT T HERE WAS NO BASIS TO MAKE ANY ADDITION ON MERITS. IN RESPECT OF ADDITIO N OF RS. 2,82,87,000/-, IT WAS SUBMITTED THAT THESE DEPOSITS ARE RELATING T O SALE PROCEEDS OF OLD PAINTINGS AND ALL THE SUPPORTING DOCUMENTS IN RESPE CT OF OWNERSHIP OF THE PAINTINGS, CONFIRMATION OF THE PARTIES AND DOCUMENT ARY EVIDENCES ARE FILED. ALL THE FOUR PERSONS NAMELY; MOHD. LAIQ AHM ED, SHRI ISHRAFIL, SHRI PARVEEN GOYAL & SHRI RAKESH, THEIR COUNSELS APPEARE D BEFORE AO ALONG WITH THEIR COPY OF ITR, BANK STATEMENTS, AFFIDAVIT AND PAN NUMBER AND CONFIRMED PURCHASE OF THE PAINTINGS FROM THE ASSESS EE. SINCE PARTIES WERE TRAVELLING, THEREFORE, THEY COULD NOT APPEAR B EFORE AO. THE ASSESSEE, THEREFORE, CONTENDED SINCE COPY OF ITR OF TWO PERSONS WERE FILED BUT THESE ARE THE FOLLOWING UNDISPUTED FACTS: I.T.A.NO.3249/DEL/2016 8 I. THERE IS NO DISPUTE THAT THESE DEPOSITS ARE RELATI NG TO SALE PROCEEDS OF PAINTINGS. II. FACT OF OWNERSHIP OF PAINTINGS WHICH WERE SOLD TO T HE FOUR PARTIES IS NOT IN DISPUTE AS SAME IS CORROBORATED F ROM ORDER U/S 132(5) DATED 13/10/1993, PLACED IN THE PAPER BOOK A T PAGE 33- 39. III. THE FACT OF SALE OF THESE PAINTINGS IS SUPPORTED FR OM CONFIRMATION OF THE PARTIES, THEIR AFFIDAVITS AND A LSO CORROBORATED FROM BANK STATEMENTS AND PERMANENT ACC OUNT NUMBER OF PURCHASERS. IV. ALL THE FOUR PARTIES ARE REGULAR INCOME TAX ASSESSE ES AND DULY FURNISHED CONFIRMATION IN SUPPORT OF PURCHASE OF PA INTINGS. FURTHER, IN RESPONSE TO NOTICE U/S 133(6) OF THE IN COME TAX ACT, 1961 DURING REMAND PROCEEDINGS, CHARTERED ACCOUNTAN T OF THE PARTIES ALSO APPEARED AND CONFIRMED THE FACT OF PUR CHASE OF PAINTINGS AS PER DETAILS GIVEN IN THE CONFIRMATION AND AFFIDAVIT. V. THE SOURCE OF SALE CONSIDERATION IS NOT IN DISPUTE AS SAME IS CORROBORATED FROM BANK STATEMENTS OF THE PARTIES AN D ASSESSING OFFICER HAS NOT MADE ANY ADVERSE COMMENTS. VI. FURTHER, AUTHENTICITY OF THE BANK ACCOUNT WAS DULY VERIFIED FROM RESPECTIVE BANK. 7. THE ASSESSEE FURTHER EXPLAINED THAT THERE WERE N O DISPUTE WITH REGARD TO GENUINENESS AND EXISTENCE OF BANK ACCOUNT S OF THE PURCHASERS OF THE PAINTING AND PARTIES ARE PERMANENT ASSESSEES AND HAVE PAN NUMBER, THEREFORE, AO COULD HAVE VERIFIED THE IDENT ITY AND GENUINENESS FROM THEIR ASSESSMENT RECORDS OR COULD HAVE VERIFIE D THE INFORMATION THROUGH THEIR RESPECTIVE AOS. THE ASSESSEE, THEREF ORE, DISCHARGED THE ONUS REGARDING OWNERSHIP AND SALE OF PAINTINGS WHIC H IS SUPPORTED BY DOCUMENTARY EVIDENCES. THE AO DID NOT BRING ANY EV IDENCE ON RECORD TO DISPUTE THE CORRECTNESS OF THE CLAIM OF THE ASSESSE E. THE AO HAS NOT REBUTTED THE EXPLANATION OF THE ASSESSEE. 8. IT MAY BE NOTED HERE THAT LD. CIT(A) CONSIDERING THE DETAILED EXPLANATION OF THE ASSESSEE AND MATERIAL ON RECORD, REMAND REPORT OF THE I.T.A.NO.3249/DEL/2016 9 AO AND REJOINDER OF THE ASSESSEE FOUND THAT NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD BY THE AO AT THE APPELLATE STAGE. THE AO HAS DRAWN ADVERSE INFERENCE MERELY ON THE BASIS OF CASH DEPOS ITS. THE LD. CIT(A) ADMITTED THE ADDITIONAL EVIDENCES FILED BY ASSESSEE AND DELETED THE SUBSTANTIAL ADDITION ON MERITS. THE LD. CIT(A) WHI LE DELETING THE SUBSTANTIAL ADDITION HELD THAT THE AO FAILED TO CON TROVERT WITH EVIDENCE THAT THE AMOUNT DEPOSITED IN CASH IN THE BANK ACCOU NTS OF THE ASSESSEE WAS NOT RECEIVED FROM SALE OF PAINTINGS. UNLESS AO CONTROVERT THE CONTENTS OF AFFIDAVITS FILED BY ASSESSEE BEFORE HIM IN THE REMAND PROCEEDINGS, SAME CANNOT BE IGNORED. THE LD. CIT(A ), HOWEVER, CONFIRMED THE ADDITION OF RS. 1,73,27,000/- IN RESP ECT OF THE SALE OF PAINTINGS TO SHRI PARVEEN GOYAL AND SHRI RAKESH. T HE RELEVANT FINDINGS OF THE LD. CIT(A) IN THIS REGARD IN PARAS 4.5.13 TO 4. 6.13 ARE REPRODUCED AS UNDER: 4.5.13 THE MOOT QUESTION INVOLVED WITH REGARD TO ADDITION OF RS. 2,82,87,000/- MADE BY THE AO IS CON CERNED, IT IS PERTINENT TO MENTION HERE THAT AO HAD MADE THE A DDITION FOR WANT OF DOCUMENTARY EVIDENCE IN RESPECT OF SALE OF PROPERTY BUT THE SAME COULD NOT BE PROVIDED TO HIM. HOWEVER, SUBSEQUENT TO THE COMPLETION OF ASSESSMENT PROCEEDINGS, IT WAS CLAIMED BY THE ASSESSEE THAT TH E ABOVE AMOUNT DEPOSITED IN THE BANK ACCOUNT MAINTAINED WIT H STANDARD CHARTERED BANK, NEW FRIENDS COLONY, NEW DE LHI RELATES TO CONSIDERATION RECEIVED BY HIM FROM SALE OF PAINTINGS WHICH WERE PERSONAL ASSET AND USED FOR IN VESTMENT IN RESIDENTIAL HOUSE. AS FAR AS POSSESSION OF PAIN TINGS IN QUESTION IS CONCERNED, THE FACT IS VERIFIABLE FROM DOCUMENTARY EVIDENCE PROVIDED BY THE APPELLANT DURI NG THE COURSE OF APPELLATE PROCEEDINGS. ASSESSEE HAS PROV IDED A COPY OF ORDER U/S 132(5) OF THE IT ACT, 1961 DATED 16.06.1993 SUBSEQUENT TO SEARCH OPERATION CONDUCTED AT THE RES IDENCE OF THE ASSESSEE ON 17.11.1993, WHICH CLEARLY ESTABL ISHED THAT I.T.A.NO.3249/DEL/2016 10 SEVERAL PAINTINGS OF RENOWNED ARTISTS WERE SEIZED B Y THE DEPARTMENT. THE ABOVE ORDER ALSO ESTABLISH THE FAC T THAT ON 16.06.1993 PAINTINGS AND WORKS OF ARTS WERE VALUED BY SH. ANISH FAROOQI, DIRECTOR, NATIONAL MODERN ART, NEW D ELHI AND IN ALL 75 PAINTINGS AND 9 PIECES OF WORKS OF ARTS W ERE VALUED AT RS. 25,89,000/-. FURTHER FROM THE ABOVE ORDER, THE NAMES OF PAINTERS ALSO ESTABLISHED WHICH INCLUDE PAINTING S MADE BY SH. RAMACHANDRAN, SH. LAXMAN PAI, SH. SATISH GUJRAL , SH. K. KHOSA, SH. MANJEET BAWA AND TANJORE PAINTINGS MADE BY UNKNOWN ARTISTS, GLASS PAINTINGS AND PAINTINGS OF O THER MISCELLANEOUS ARTISTS. FURTHER PERUSAL OF ABOVE OR DER U/S 132(5) INDICATES THAT AN ADDITION OF RS. 22,09,000/ - WAS MADE IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED IN VESTMENT IN PAINTINGS AND WORKS OF ART. THESE FACTS AND CIR CUMSTANCES OF THE CASE ESTABLISH THE FACT THAT THE POSSESSION OF THE PAINTINGS WITH THE ASSESSEE CANNOT BE DENIED. IN T HE COMPUTATION OF CAPITAL GAIN ON SALE OF PAINTINGS, A SSESSEE HAS SHOWN THE SALE OF 84 PAINTINGS WORTH RS. 2,99,35,00 0/- AGAINST WHICH PURCHASE COST OF PAINTING HAS BEEN CL AIMED AS PER PANCHNAMA DATED 16.06.1993 AT RS. 25,89,000/- A ND AFTER INDEXING THE PURCHASE COST HAS BEEN TAKEN AT RS. 75 ,44,176/-. FURTHER, IT IS WORTH MENTIONING HERE THAT AO VIDE L ETTER NO. 54 DT. 26.02.2015 HE WAS SPECIFICALLY ASKED TO GIVE HIS COMMENTS ON THE ABOVE CLAIM OF ASSESSEE BUT WHILE SUBMITTING HIS REMAND REPORT, AO FAILED TO FURNISH ANY REPLY ON THE ABOVE ISSUE CONTROVERTING THE AVAILABILITY O F PAINTINGS WITH THE ASSESSEE WHICH HAVE BEEN CLAIMED TO HAVE S OLD BY THE ASSESSEE DURING THE PERIOD RELEVANT TO ASSESSME NT UNDER CONSIDERATION. IT IS ALSO A FACT THAT ASSESSEE HAS FILED AN AFFIDAVIT DT. 11.05.2015 WHEREIN HE CONFIRMED THAT AMOUNT DEPOSITED IN CASH IN THE BANK ACCOUNT IN QUESTION R ELATES TO SALE OF PAINTINGS OWNED BY HIM IN EARLIER YEARS AND HE HAS NOT SOLD ANY PROPERTY DURING THE YEAR UNDER CONSIDE RATION. HOWEVER, AO FAILED TO CONTROVERT THE AFFIDAVIT FILE D BY THE ASSESSEE BEFORE HIM IN THE REMAND PROCEEDINGS. IN THE ABOVE BACKDROP, I AM OF THE CONSIDERED VIEW THAT AO FAILE D TO BRING ON RECORD ANY ADVERSE FINDING WITH REGARD TO THE CL AIM OF THE ASSESSEE MADE BEFORE HIM SUBSEQUENT TO THE COMPLETI ON OF THE ASSESSMENT PROCEEDINGS AND DURING THE APPELLATE PROCEEDINGS BEFORE MY LD. PREDECESSOR AND ME THAT A SSESSEE HAS NOT OWNED/SOLD THE PAINTINGS. HENCE, CONSIDERI NG THE DOCUMENTARY EVIDENCES FILED BY THE LD. AR DURING TH E APPELLATE PROCEEDINGS WITH REGARD TO THE POSSESSION OF THE PAINTINGS, CONFIRMATIONS FILED BY THE PARTIES WHO H AVE PURCHASED THE PAINTINGS FROM THE ASSESSEE, THE CLAI M OF THE I.T.A.NO.3249/DEL/2016 11 ASSESSEE CANNOT BE DENIED THAT HE WAS HAVING POSSES SION OF PAINTINGS, WHICH WERE SOLD BY HIM. 4.6.12 IN THE REMAND REPORTS, IT HAS BEEN SUBMITTED THAT COUNSEL OF MR. LAIQ AHMED AND MR. ISHRAFIL FIL ED COPIES OF INCOME TAX RETURN. WITH RESPECT TO SH. PARVEEN GOYAL AND SH. RAKESH, IT HAS SUBMITTED THAT COUNSEL FOR T HE ASSESSEE FILED ONLY COPY OF BANK STATEMENT AND PAN CARD ONLY. AS PER LETTER DATED 10.10.2014 WRITTEN TO TH E ASSESSEE BY THE ASSESSING OFFICER TO EXPLAIN THE SALE OF OLD PAINTINGS IN CASH, HE DIRECTED THE ASSESSEE TO FILE COPY OF I TRS OF ALL THE FOUR PERSONS NAMELY-MOHD. LAIQ AHMED, MR. ISHRA FIL, MR. PARVEEN GOYAL AND MR. RAKESH, BUT IN SPITE OF OPPOR TUNITY PROVIDED TO THE ASSESSEE, COPIES OF INCOME TAX RETU RNS (TO DEMONSTRATE TAX STATUS & CAPACITY) WERE NOT FILED B Y THE ASSESSEE IN RESPECT OF MR. PARVEEN GOYAL AND MR. RA KESH. CONSIDERING THIS FACT, I DISALLOW THE CLAIM OF THE LD. AR OF THE ASSESSEE THAT MR. PARVEEN GOYAL HAS PURCHASED P AINTINGS FROM THE ASSESSEE OF RS. 1,52,80,000/- AND MR. RAKE SH PURCHASED PAINTINGS WORTH RS. 36,95,000/- FROM THE ASSESSEE. 4.6.13 HOWEVER, LD. AR HAS FILED COPIES OF ITR FOR AY 2011-12 IN RESPECT OF MOHD. LAIQ AHMED (EXISTING A/ C NO. 290691381240911) AND MR. ISHRAFIL (EXISTING A/C NO. 234186311140711), THE CLAIM OF THE AR IS ACCEPTED. FURTHER, LD. AR HAS ALSO FILED THE CONFIRMATION, AFFIDAVIT A ND BANK DETAILS IN RESPECT OF THE ABOVE NAMED TWO PERSONS. PERUSAL OF BANK DETAILS OF THESE PERSONS CLEARLY INDICATES SUBSTANTIAL DEPOSIT AND WITHDRAWALS WHICH FURTHER JUSTIFY THEIR CAPACITY TO PURCHASE THE PAINTINGS IN QUESTION DETAILS OF WH ICH HAVE ALSO BEEN FURNISHED. RESULTANTLY OUT OF THE TOTAL ADDITION OF RS. 2,82,87,000/-, APPELLANT GETS RELIEF IN RESPECT OF PURCHASE OF PAINTINGS BY MOHD. LAIQ AHMED OF RS. 76,35,000/- AND BY MR. ISHRAFIL OF RS. 33,25,000/-, TOTALING TO A SUM OF RS. 1,09,60,000/-, AND BALANCE AMOUNT OF R S. 1,73,27,000/- IS TREATED AS UNEXPLAINED. 8.1 THE LD. CIT(A) ALSO DIRECTED THE AO TO ALLOW TH E EXEMPTION U/S 54F AFTER TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE THAT PART OF CAPITAL GAIN WAS INVESTED AFTER CLOSE OF THE YEA R AND AFTER THE DUE DATE OF FILING OF THE RETURN BUT DIRECTED TO EXCLUD E IN RELATION TO THE ABOVE TWO PERSONS. THE AO WAS ALSO DIRECTED TO PAS S ON THE NECESSARY I.T.A.NO.3249/DEL/2016 12 INFORMATION TO THE CONCERNED AOS OF THE ABOVE FOUR PERSONS WHO HAVE CONFIRMED THAT THEY HAVE PURCHASED PAINTINGS FROM T HE ASSESSEE. 9. IT MAY ALSO BE NOTED HERE THAT AS AGAINST DELETI ON OF THE SUBSTANTIAL ADDITION BY THE LD. CIT(A), REVENUE PRE FERRED APPEAL BEFORE ITAT C BENCH IN ITA NO. 3390/DEL/2016 WHICH HAVE BEEN DISMISSED VIDE ORDER DATED 14.10.2019 ON ACCOUNT OF LOW TAX EFFECT . THE ASSESSEE IS IN APPEAL ON THE AFORESAID GROUNDS FOR MAINTAINING THE ADDITION OF RS. 1,73,27,000/- IN RESPECT OF SALE OF PAINTINGS TO SH RI PARVEEN GOYAL & SHRI RAKESH. 10. LD. COUNSEL FOR ASSESSEE REITERATED THE SUBMISS IONS MADE BEFORE AUTHORITIES BELOW. HE HAS SUBMITTED THAT ON THE ID ENTICAL REASONS AND IDENTICAL EVIDENCES ON RECORD LD. CIT(A) DELETED TH E SIMILAR ADDITION TO THE EXTENT OF RS. 1,09,60,000/- IN RESPECT OF SALE OF PAINTINGS TO MOHD. LAIQ AHMED AND SHRI ISHRAFIL AND DEPARTMENTAL APPEA L HAS BEEN DISMISSED IN THEIR CASES VIDE ORDER DATED 14.10.2019. COPY O F THE ORDER OF THE TRIBUNAL IS PLACED ON RECORD. HE HAS, THEREFORE, S UBMITTED THAT THERE WAS NO JUSTIFICATION FOR LD. CIT(A) TO MAINTAIN THE ADDITION OF SIMILAR NATURE IN RESPECT OF THE OTHER TWO PURCHASERS SHRI PARVEEN GOYAL (RS. 1,52,80,000/-) AND SHRI RAKESH (RS. 36,95,000/-) TO TALING TO RS. 1,89,75,000/-. HE HAS SUBMITTED THAT THOUGH THE AM OUNT OF SALE CONSIDERATION IS RS. 1,89,75,000/- BUT LD. CIT(A) M AINTAINED THE ADDITION OF RS.1,73,27,000/- ONLY WHICH ITSELF IS WHOLLY UNJ USTIFIED. THE INITIAL ONUS UPON THE ASSESSEE HAS BEEN DISCHARGED. THE OW NERSHIP OF THE I.T.A.NO.3249/DEL/2016 13 PAINTINGS WITH ASSESSEE ARE NOT IN DISPUTE. IT IS A CASE OF SALE OF PAINTINGS AND NOT CASH CREDIT OR RECEIPT OF SHARE CAPITAL. T HEREFORE, ADDITION SHOULD NOT HAVE BEEN MADE BY THE AUTHORITIES BELOW. HE HAS SUBMITTED THAT SINCE PAN OF THESE TWO PERSONS WERE ALSO FILED . THEREFORE, THIS FACT COULD HAVE BEEN VERIFIED FROM THE ASSESSMENT RECORD S OF BOTH THE PERSONS INSTEAD OF CONFIRMING THE ADDITION FOR NOT FILING T HE COPY OF THE ITR. THE NON-FILING OF COPY OF ITR IS NO GROUND TO DISBELIEV E THE EXPLANATION OF THE ASSESSEE. HE HAS RELIED UPON THE JUDGMENT OF THE S UPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORATION PVT. LTD. 159 IT R 78 IN WHICH IT WAS HELD AS UNDER: IN THIS CASE THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE THE INC OME TAX ASESSEES. THEIR INDEX NUMBER WAS IN THE FILE OF TH E REVENUE. THE REVENUE, APART FROM ISSUING NOTICES U NDER SECTION 131 AT THE INSTANCE OF THE ASSESSEE, DID NO T PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE TH E SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO F IND OUT WHETHER THEY WERE CREDIT-WORTHY OR WERE SUCH WHO CO ULD ADVANCE THE ALLEGED LOANS. THERE WAS NO EFFORT MAD E TO PURSUE THE SO-CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT DO ANY FURTHE R. IN THE PREMISES, IF THE TRIBUNAL CAME TO THE CONCLUSION TH AT THE ASSESSEE HAD DISCHARGED THE BURDEN THAT LAY ON HIM, THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREAS ONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSIO N WAS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH COULD ARISE. 10.1 HE HAS SUBMITTED THAT ADDITION MAY BE DELETED AND AO MAY BE DIRECTED TO ACCEPT CLAIM OF EXEMPTION U/S 54F AS PE R LAW ALSO. 11. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER S OF THE AUTHORITIES BELOW AND SUBMITTED THAT INITIALLY ASSESSEE EXPLAIN ED THE SOURCE OF CASH I.T.A.NO.3249/DEL/2016 14 DEPOSITS TO BE SALE OF ASSET BUT LATER ON EXPLAINED IT IS A CASE OF SALE OF PAINTINGS. THEREFORE, APPEAL OF THE ASSESSEE MAY B E DISMISSED. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PER USED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT ASS ESSEE FILED ADDITIONAL EVIDENCES AT THE APPELLATE STAGE ON WHICH REMAND RE PORT FROM THE AO WAS CALLED FOR. THE LD. CIT(A) ALSO CONSIDERED REJ OINDER OF THE ASSESSEE AND ULTIMATELY ADMITTED THE ADDITIONAL EVIDENCES FI LED BY ASSESSEE AT APPELLATE STAGE. THE LD. CIT(A) DELETED THE SUBSTA NTIAL ADDITION AGAINST WHICH REVENUE PREFERRED AN APPEAL BEFORE THE TRIBUN AL BUT IT WAS DISMISSED ON ACCOUNT OF LOW TAX EFFECT VIDE ORDER D ATED 14.10.2019. THUS, THERE ARE FOLLOWING UNDISPUTED FACTS AVAILABL E ON RECORD: - 1) THE DEPOSITS RELATED TO SALE PROCEEDS OF PAINTINGS; 2) THE FACT OF OWNERSHIP OF PAINTINGS WITH ASSESSEE WH ICH WERE SOLD TO FOUR PERSONS IS NOT IN DISPUTE, WHICH FACT IS AL SO VERIFIABLE FROM COPY OF THE ORDER U/S 132(5) OF THE IT ACT WHICH WE RE FOUND DURING THE COURSE OF SEARCH OPERATION AT THE RESIDENCE OF THE ASSESSEE; 3) THE ASSESSEE PROVED THE FACT OF SALE OF THESE PAINT INGS TO THE FOUR PERSONS WHICH IS SUPPORTED BY THE CONFIRMATIONS OF THE PARTIES, THEIR AFFIDAVITS AND BANK STATEMENTS AND COPY OF TH E PAN NUMBER OF THE PURCHASERS AND IN TWO CASES COPY OF THE ITR IS FILED; 4) IT IS NOT IN DISPUTE THAT ALL THE FOUR PARTIES WHO HAVE PURCHASED PAINTINGS FROM THE ASSESSEE ARE REGULAR INCOME TAX ASSESSEE AND DULY FILED CONFIRMATIONS IN SUPPORT OF PURCHASE OF THE PAINTINGS. I.T.A.NO.3249/DEL/2016 15 THE COUNSEL FOR PURCHASERS ALSO APPEARED BEFORE AO AND CONFIRMED THE FACT OF PURCHASE OF PAINTINGS. 5) THE SOURCE OF SALE CONSIDERATION IS NOT IN DISPUTE WHICH IS CORROBORATED BY BANK STATEMENTS OF ALL THE FOUR PAR TIES AND THEIR BANK ACCOUNTS ARE DULY VERIFIABLE AND COULD NOT BE DISPUTED. 12.1 THUS, IT IS PROVED ON RECORD THAT ASSESSEE SOL D THE PAINTINGS HELD BY HIM TO THE FOUR PARTIES AND AO DID NOT BRING ANY EV IDENCE ON RECORD TO CONTROVERT THE AVAILABILITY OF THE PAINTINGS WITH T HE ASSESSEE WHICH HAVE BEEN SOLD BY ASSESSEE TO THE ABOVE FOUR PARTIES IN ASSESSMENT YEAR UNDER APPEAL. THE LD. CIT(A) ACCEPTED THE SIMILAR EVIDEN CES FOR ACCEPTING SALE OF PAINTINGS TO MOHD. LAIQ AHMED AND SHRI ISHRAFIL BUT IN RESPECT OF SHRI PARVEEN GOYAL AND SHRI RAKESH THE CLAIM IS NOT ACCE PTED BECAUSE COPY OF THEIR ITR IS NOT FILED. THE LD. CIT(A) IN HIS FIND INGS HAS DIRECTED THE AO TO PASS ON NECESSARY INFORMATION TO THE CONCERNED A OS OF THE ABOVE FOUR PERSONS WHO HAVE CONFIRMED THAT THEY HAVE PURCHASED PAINTINGS FROM THE ASSESSEE. THUS, THE LD. CIT(A) ACCEPTED THAT FOUR PARTIES HAVE CONFIRMED PURCHASE OF PAINTINGS FROM THE ASSESSEE. WHEN LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO AT APPELLATE STAGE AND AL SO DIRECTED TO PASS ON INFORMATION OF SALE OF PAINTINGS TO THE CONCERNE D AO, LD. CIT(A) COULD HAVE DIRECTED THE AO OR THE CONCERNED AOS OF THE PU RCHASER TO VERIFY THE COPY OF THE ITR IN THE CASES OF TWO PURCHASERS SHRI PARVEEN GOYAL AND SHRI RAKESH BUT NO STEPS HAVE BEEN TAKEN IN THIS RE GARD DESPITE BOTH ARE EXISTING ASSESSEES OF THE INCOME TAX DEPARTMENT. T HE DECISION OF THE I.T.A.NO.3249/DEL/2016 16 HONBLE SUPREME COURT IN THE CASE OF ORISSA CORPORA TION PVT. LTD. (SUPRA) WOULD SQUARELY APPLY IN FAVOUR OF THE ASSESSEE. TH IS WAS THE SOLE REASON THAT NO COPY OF THE ITR IS FILED HAS TAKEN THE LD. CIT(A) TO CONFIRM PART ADDITION. SUCH REASON CANNOT BE SUSTAINED IN LAW. FURTHER, THE TOTAL SALE CONSIDERATION IN RESPECT OF THE TWO PARTIES IS OF R S. 1,89,75,000/- ON ACCOUNT OF RECEIPT OF CASH AGAINST SALE OF PAINTING S BUT THE LD. CIT(A) MAINTAINED ADDITION OF RS. 1,73,27,000/- ONLY. IT WOULD SHOW THAT EVEN FOR THE DIFFERENTIAL AMOUNT LD. CIT(A) HAS ACCEPTED THAT ASSESSEE SOLD THE PAINTINGS GENUINELY TO THESE TWO PARTIES. THER EFORE, ON THE SAME SET OF DOCUMENTARY EVIDENCES WHEN LD. CIT(A) DELETED TH E SUBSTANTIAL ADDITION IN RESPECT OF TWO PARTIES FOR SALE OF PAIN TINGS TO THEM, THERE WERE NO JUSTIFIABLE REASON FOR LD. CIT(A) TO SUSTAI N PART ADDITION AGAINST THE ASSESSEE. THE DOCUMENTARY EVIDENCES BROUGHT ON RECORD AND EXAMINED BY THE AO AT APPELLATE STAGE AND NOT CONTR OVERTED BY THE AO WOULD LEAD TO THE CONCLUSION THAT ASSESSEE RECEIVED THE IMPUGNED AMOUNT ON ACCOUNT OF SALE OF PAINTINGS FROM THE ABO VE TWO PURCHASERS AND THE EVIDENCES BROUGHT ON RECORD HAVE NOT BEEN C ONTROVERTED BY THE AO THROUGH ANY EVIDENCE OR MATERIAL ON RECORD. THE REFORE, FOR SALE OF PAINTINGS BY ASSESSEE, STRICTLY THE PROVISIONS OF S ECTION 68 MAY NOT APPLY IN THE CASE OF THE ASSESSEE. THE ONUS UPON ASSESSE E TO EXPLAIN THE SOURCE OF THE CASH DEPOSIT IN THE BANK ACCOUNT IS D ULY DISCHARGED AND, AS SUCH, THERE WAS NO JUSTIFICATION TO MAKE OR SUSTAIN EVEN PART ADDITION AGAINST THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSS ION, WE SET ASIDE THE I.T.A.NO.3249/DEL/2016 17 ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ENTI RE ADDITION. AO IS ALSO DIRECTED TO GRANT BENEFIT OF SECTION 54F TO THE ASS ESSEE ON ACCOUNT OF DELETION OF THIS ADDITION AS PER LAW. 13. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 02/12/2020. SD/- SD/- (ANIL CHATURVEDI) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 ND DECEMBER, 2020 * KAVITA ARORA, SR. P.S. COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A) / ITAT (DR)/GUARD FILE OF ITAT. BY ORDER ASSISTANT REGISTRAR, ITAT: DELHI BENCHES-DELHI