Tanujaben A.Relia, Ahmedabad vs Department Of Income Tax

ी एन0एस0 सैनी, लेखा सद य एवं ी कुल भारत, या यक सद य के सम BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER आयकर अपील सं./ ITA No. 1518/Ahd/2010 With CO No.202/Ahd/2010 नधारण वष/Assessment Year: 2007-08

ITO, Ward-13(4) Smt.Tanujaben A. Relia Ahmedabad. Vs Archer House Opp: Gujarat Tennis Academy Ashram Road, Ahmedabad.

PAN : AFEPR 4210 E

अपीलाथ / (Appellant) यथ / (Respondent)

Revenue by : Shri Nimesh Yadav, Sr.DR Assessee(s) by : Shri S.N. Divetia

सन ु वाई क तार ख/ Dateof Hearing : 19/01/2015 घोषणा क तार ख / Date of Pronouncement: 23/01/2015

आदे श/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 assessee against the order of the Commissioner of Income-Tax (Appeals)-XXI, Ahmedabad dated 8.2.2010.

2. The Revenue has taken the following grounds of the 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 of unexplained investment in painting.

2. It is the claim of the assessee that the said painting 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 provisions 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. Therefore, 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 observed that in the profit & loss account filed with the return of income, the assesse has shown Rs.25.00 lakhs under the head "sale of painting". However, no income under the head "Capital Gain" is shown by the assessee. The AO issued show cause notice to the assessee. In reply to the same, the assessee vide letter dated 9.11.2009 submitted as under:

"To the best of my knowledge, he has given paintings as gift to may persons. He has given paintings to Lucky Tea Stall, Opp:

City Colllege, Lal Darwaja where he used to have a cup of tea. Thus, he has giving paintings as gift to known or unknown persons, while in our case he is most respective person and stayed and enjoyed our hospitality."

Since the AO did not find the explanation of the assessee acceptable, he held that though the assessee has contended that the paintings from Shri MF Hussain was received as gift before 2000, this is without any evidence. The paintings has been sold during the year under consideration for Rs.25 lakhs, and therefore, the realizable value of the gift is taxable in this year itself, and added Rs.25 lakhs to the income of the assessee, as unexplained investment in paintings.

4. On appeal, the CIT(A) deleted the addition by observing as under:

"I have gone through the asst. order passed by AO and the written submission filed by the appellant. I have also considered 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 paintings by way of gift from Shri M.F. Hussain. The appellant has substantiated this claim by producing circumstantial evidence, since Shri Hussain is not in ITA No.1518/Ahd/2010 With CO 3

position to appear in person before AO. The appellant 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 with the appellant and her husband or at her residence etc. The appellant has also produced paper book submitted in the case of her husband Shri Anil Relia before CIT(A)-XI,Ahmedabad in appeal against assessmentfor A.Y. 2006-07. from which the following material is relevant.

Sr. Particulars I Event Page no. 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 showing photograph 91 & 141 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 states how the appellant met Shri Hussain

3. Sketch of the appellant himself made by Shri M. F. Hussain on 97 07.09.97 at Ahmedabad.

4. Painting given to the appellant & his wife Smt. Tanuja on 23.09.97 98

5. Painting given to the appellant on his birthday by Shri M. F. Hussain 99 on 06.02.2002 at Barista café.

6. Painting given to the appellant & his wife Smt. Tanuja on 05.10.2001 100

7. Painting given to the appellant & his wife Smt. Tanuja on 22.03.06 on 101 the Menu card of a restaurant at Dubai.

8. Painting given to the appellant quoting some words on his 'dhoban 102 bai' on 25.03.2005.

9. Painting given to the appellant & his wife Smt. Tanuja on 12.12.97at 103 'Thaiking Restaurant' at Hyderabad.

10. Painting given to the appellant & his wife Smt. Tanuja on 30.12.95 104 showing Mr. Hussain himself.

11 Painting given on birthday on 23.09.01 105 12 The photograph of the appellant with Hussains horses & mother series 138 published in Simply Gujarati magazine in Oct, 08.

ITA No.1518/Ahd/2010 With CO 4 13 News paper report from Ahmedabad Times dtd. 19. 08.2000 giving 140 details about Gaja Gamini and appellant's contribution.

14 News paper report from the 'Asian Age' dtd.13.11.01 showing Hussain at 143 Appellant's residence.

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 produce a C.D containing more than 200 photographs with Shri M.F.Husain, which will definitely establish the cordial relationship with the assessee. This fact is not denied by the undersigned for the reason that the same was clearly established by the assessee by way of a C.D. containing various photographs with Shri M.F.Husain.

The assessee vide her letter dated 7.12.2009 has once again reiterated her cordial relationship with Shri M.F. Husain by furnishing a copy of letter addressed to Anil ( i.e husband of the assessee ) and Tanuja ( i.e the assessee) signed by Shri M.F.Husain on 10.10.2001 at Ahmedabad, which reads as under:-

"ANIL AND TANUJ

OUR RELATIONSHIP IS MORE THAN 10 YEARS OLD AND IT IS 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 GIFTED YOU AND YOUR FAMILY. I MUST SAY THAT YOU HAVE ACTED VARIOUS ROLE IN MY CREATIVITY. MY DREAM OF MAKING FILM "GAJAGAMINI"

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 Gufa in early 1990 at Ahmedabad and it resulted in a deep friendship based on mutual admiration and interest in art. Her husband was also associated with Mr. Hussain during Madhuri Dixit face and did the graphics 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 Cinema through paintings which later on was translated in screen version as "Gajagamini". The appellant has also placed on record a photograph showing the painting given as a gift by Shri Hussain to Lucky Tea Stall, Lal Darwaja, Anmedabad in support of his contention that Shri Hussain used to give his paintings to the friends and admirers. The appellant has produced as many as 255 print outs of the photograps showing appellant and her ITA No.1518/Ahd/2010 With CO 5

husband with Shri Hussain while he was at her residence or working on the paintings etc. Under the circumstances, it is reasonable to conclude that Shri Hussain had very homely and cordial relations 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 of income under which the sale proceeds of the paintings would be chargeable to tax, i.e. either as business income or capital gain. It is noticed that the issue relating to gift of paintings has not been raised by AO in this assessment, though the appellant in order to claim that the paintings were personal effects has raised contention in this regard. Therefore, the reliance by AO on the assessment order for A.Y. 06-07 in case of appellant's husband is not justified to that extent. Even the contention raised 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 the paintings were acquired during the year in question is also not acceptable. In view of the explanation offered by the appellant regarding gift accepted on the basis of circumstantial evidence. The appellant has also produced various photographs showing even dates mentioned against it. Even a reasonable inference could also be drawn that all such paintings 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 been 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 this year. The addition of Rs.25 lakhs made by AO is hereby deleted.

5. After hearing submissions of the DR and AR and perusing the orders of the lower authorities and material available 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 show that, in fact, Rs.25.00 lakhs was invested by the assessee during the year under consideration for acquiring the paintings in question, and as per the provisions of section 69 of the Act, the onus was on the Department. We, therefore, do not find any good reason to interfere 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 paintings held by the assessee were "personal effect" u/s.2(14) of the Act and hence not "capital asset". The profit on sale thereof was not liable to capital gains."

2. The ld.CIT(A) has erred in holding that the paintings sold were not "personal effect" u/s.2(14) of the Act, and 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 effect 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 pointed out by the assessee from the above order of the CIT(A), therefore, 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 23rd day of January, 2015 at Ahmedabad.

Sd/- Sd/- (KUL BHARAT) ( N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 23 /01/2015

आदे श क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आयु त / Concerned CIT

4. आयकर आयु त(अपील) / The CIT(A)-III, Ahmedabad

5. वभागीय त न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

ु ार/ BY ORDER, आदे शानस

TRUE COPY

उप/सहायक पंजीकार (Dy./Asstt.Registrar)