JAYA PATEL, MUMBAI V. ASST CIT CEN CIR 42, MUMBAI

ITA 3750/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3716 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 03-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 26-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI
• Assessee Lawyers: VISHAL SALGIA
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI BEFORE SHRI R.C.SHARMA (AM) AND SHRI RAM LAL NEGI (JM ) ITA NO. 3750/MUM/2014 ASSESSMENT YEAR: 2007-08 S M T. JAYA PATEL . KANCHANJUNGA, GROUND FLOOR, 72, PEDDAR ROAD, MUMBAI- 400026. PAN: AGSPP5745M VS. THE ACIT, CENTRAL CIRCLE 42, MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. VISHAL SALGIA RESPONDENT BY : SHRI. ALOK JOHRI DATE OF HEARING: 2 8/04/2016 DATE OF PRONOUNCEMENT: 29/04/20 16 O R D E R PER RAM LAL NEGI, JM THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST ORDER DATED 05/03/2014 PASSED BY THE LD. CIT(A)-38, MUMBAI, FOR THE ASST. YEAR 2007-08. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN LAW AND IN FACTS IN UPHOLDING THE ORDER PASSED BY THE ASSES SING OFFICER U/S 271(1)(C) OF THE ACT, WHEREBY PENALTY OF RS. 8,74,33,100/- WAS L EVIED U/S 271(1)(C) OF THE ACT. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT ITAT HAS RESTORED THE GROUND OF APPEAL PERTAINING T O ADDITION OF RS. 25,54,60,000/-IN QUANTUM APPEAL OF THE ASSESSEE, TO THE FILE OF THE AO FOR 2 ITA NO. 3750/MUM/2014 ASSESSMENT YEAR: 2007-08 FRESH ADJUDICATION. THE LD. COUNSEL ALSO PLACED ON RECORD THE COPY OF ORDER DATED 08/08/2014 PASSED BY THE CO-ORDINATE BENCH IN ASSESSEES QUANTUM APPEAL ITA NO. 2324/M/2011 FOR ASSESSMENT YEAR 2007 -2008. 4. WE HAVE GONE THROUGH THE MATERIAL PLACED BEFORE US INCLUDING THE ORDER OF THE CO-ORDINATE BENCH PASSED IN QUANTUM APPEAL IN T HE LIGHT OF THE SUBMISSIONS MADE BY THE ASSESSEE. WE HAVE NOTICED T HAT THE LD. CIT(A) HAS CONFIRMED PENALTY ON RS. 25,54,60,000/- CALCULATED BY AO AS THE TOTAL VALUE OF PAINTINGS IN QUESTION AND ON RS. 1,08,000/-(FOREIGN CURRENCY WORTH 1,08,000/- FOUND DURING THE SEARCH), HOWEVER, DELETED PENALTY IMPOSED ON ADDITION OF RS. 2,16,500/- MADE ON ACCOUNT OF LOW WITHDRAWALS. THE ITAT MUMBAI HAS ALLOWED THE GROUND OF APPEAL PERTAINING TO CONFIRMA TION OF ADDITION OF RS. 25,54,60,000/- FOR STATISTICAL PURPOSES. THE ITAT H AS RESTORED BACK THE SAID ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION HOLD ING AS UNDER:- 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. THE UNDISPUTED FACTS OF THE CASE ARE THA T DURING THE COURSE OF ACTION U/S.132(1)OF THE ACT AT THE RESIDENTIAL P REMISES OF THE ASSESSEE 275 PAINTINGS WERE FOUND, THAT VALUATION O F THE PAINTING WAS DONE BY TWO VALUERS, THAT THE ASSESSEE WAS PROV IDED WITH THE INVENTORY OF THE PAINTINGS AND THE VALUE ESTIMATED BY THE VALUERS, THAT J J SCHOOL OF ARTS TEAM AND ASHISH NAGPAL HAD VALUED THE PAINTINGS AT DIFFERENT PRICES ,THAT VALUERS OF J J SCHOOL WERE OF THE OPINION THAT CERTAIN PAINTINGS COULD NOT BE VALUED AS SAME WERE OF NOT RENOWNED ARTISTS, THAT THE ASSESSEE HAD NOT SOL D ANY PAINTING, THAT IN 1975 SHE HAD MADE SOME DISCLOSURE, THAT THE AO HAD ADMITTED THAT AT LEAST 19 PAINTINGS WERE POSSESSED BY HER AT THE TIME OF BIRTHDAY CELEBRATION OF HER FATHER, THAT SH E HAD PRODUCED SOME BILLS/DOCUMENTS ABOUT SOME OF THE PAINTINGS, T HAT SHE HAD OBJECTED THAT ONE OF THE PAINTINGS WAS FAKE AND HAS FILED AN AFFIDAVIT 3 ITA NO. 3750/MUM/2014 ASSESSMENT YEAR: 2007-08 11 ITA NO. 2324 MUM 2011 JAYA P.PATEL IN THIS REGAR D, THAT THE AO MADE AN ADDITION OF RS.25.54 CRORES TO THE INCOME O F THE ASSESSEE, THAT WHILE ADOPTING THE VALUE HE HAD TAKEN THE HIGH ER RANGE OR HIGHER VALUATION. IN OUR OPINION, THERE WAS NO JUST IFICATION TO ADOPT THE MARKET VALUE I.E. VALUE OF THE PAINTING ON THE DATE OF SEARCH, FOR DETERMINING THE INVESTMENT MADE BY THE ASSESSEE.AO HAS NOT GIVEN ANY REASON AS TO HOW HE HAD ARRIVED AT THE CONCLUSI ON THAT INVESTMENT IN ALL THE PAINTINGS WAS MADE DURING THE YEAR UNDER CONSIDERATION. WE ARE NOT AWARE AS WHETHER ANY MATE RIAL IN THIS REGARD WAS FOUND DURING THE SEARCH OR NOT. AT LEAST THE AO HAS NOT INCORPORATED SUCH MATERIAL IN HIS ORDER. SECONDLY, THE ASSESSEE HAD CLAIMED THAT ONE OF THE PAINTINGS (SN.240) WAS FAKE AND ONE OF THE VALUERS HAD NOT VALUED IT WHEREAS THE OTHER VALUER HAD VALUED IT AT RS.95 LAKHS. WE FIND THAT AO AND THE FAA HAS NOT DE ALT THE ISSUE. WHETHER THE PAINTING WAS FAKE OR NOT SHOULD HAVE BE EN REFERRED TO THIRD VALUER. ALLEGED MORPHING OF PICTURES COULD EA SILY BE DETECTED WITH SCIENTIFIC INVESTIGATION. THEREFORE, WITHOUT A NY BASE TO HOLD OR TO SUGGEST THAT THERE WAS MORPHING OF PICTURES IS NOT PROPER. WE FIND THAT THE AO HAD ACCEPTED THE AUTHENTICITY OF THE AL BUM PRODUCED BY THE ASSESSEE TO A CERTAIN EXTENT I.E. FOR 19 PAINTI NGS. BUT, FOR REJECTING THE CLAIM MADE BY THE ASSESSEE FOR OTHER PAINTINGS IN FORM OF OTHER EVIDENCES, NO REASON HAS BEEN GIVEN. IN THESE CIRCU MSTANCES, WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE, MAT TER SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION. HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE A SSESSEE. 5. IN VIEW OF THE ORDER PASSED BY THE CO-ORDINATE B ENCH OF ITAT, MUMBAI IN QUANTUM APPEAL OF THE ASSESSEE, THE AMOUNT OF PENAL TY IS REQUIRED TO BE DETERMINED AFRESH AFTER ADJUDICATING THE ISSUE REGA RDING CONFIRMATION OF ADDITION OF RS 25,54,60,000/- MADE UNDER SECTION 69 OF THE ACT AS PER 4 ITA NO. 3750/MUM/2014 ASSESSMENT YEAR: 2007-08 DIRECTION ISSUED BY THE ITAT IN QUANTUM APPEAL. WE, THEREFORE, RESTORE THE IMPUGNED ORDER TO THE FILE OF AO FOR DECIDING THE Q UANTUM OF PENALTY AFRESH AFTER ADJUDICATING THE ISSUE IN TERMS OF ORDER DAT ED 08.08.2014 PASSED BY THE ITAT. SINCE, THE ASSESSEE HAS NOT CHALLENGED THE PE NALTY WITH REFERENCE TO ADDITION ON FOREIGN CURRENCY RECOVERED, WE CONFIRM THE PENALTY SO IMPOSED THEREON BY THE AO. 6. IN THE RESULT APPEAL OF THE ASSESSEE FOR A.Y. 2 007-08 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COUR T 29 TH APRIL, 2016. SD/- SD/- ( R.C.SHARMA ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 29/04/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA