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2019 (12) TMI 1229 - AT - Income TaxAddition on account of Unexplained paintings - Source of Investment made in the painting - HELD THAT - In the case before us, the view taken by the lower authorities has to fail on two grounds viz (i). that, the assessee had duly evidenced the source of investment made by him for purchase of the aforesaid two paintings; and (ii). that, even otherwise as the aforesaid paintings were purchased by the assessee on 17.06.2006 i.e in the period relevant to the immediately preceding year i.e A.Y 2007-08, therefore, it was impermissible on the part of the revenue to draw any adverse inferences in the hands of the assessee during the year under consideration viz. A.Y 2008-09. Be that as it may, as the revenue had failed to place on record any material which would irrefutably prove to the hilt that the investment in the aforesaid two paintings was made by the assessee during the year under consideration i.e A.Y 2008-09, therefore, the same on the said count also by no means could have been treated as an unexplained investment in his hands for the said year. Accordingly, in the backdrop of our aforesaid observations we are unable to persuade ourselves to subscribe to the view taken by the lower authorities. Resultantly, the order of the CIT(A) is set aside and the addition under Sec. 69 made by the A.O is vacated. - Decided in favour of assessee.
Issues Involved:
1. Addition on account of unexplained paintings: ? 34,00,000/- 2. Addition on account of unaccounted cash: ? 10,00,000/- Issue-wise Detailed Analysis: 1. Addition on account of unexplained paintings: ? 34,00,000/- The assessee, a director of ACG group of companies, was subjected to search and seizure proceedings on 17.04.2007. During these proceedings, 288 costly paintings were found, with the source of purchase for 71 paintings remaining unexplained. Two specific paintings, "Blue Boats" and "Card Players," valued at ? 34,00,000/-, were found at the business premises of the assessee and were deemed unexplained investments by the Assessing Officer (A.O). The assessee contended that these paintings were purchased decades before the block period and provided bills, vouchers, photographs, and magazines as evidence. However, the A.O found discrepancies in the evidence and made an addition of ? 34,00,000/- to the assessee's income. The assessee argued that the paintings were purchased using credit cards from Gallery: Daugava, Latvia, and provided supporting documentary evidence, including credit card statements and payment vouchers. The A.O and CIT(A) rejected this explanation, but the tribunal found the evidence sufficient to substantiate the purchase and source of investment. The tribunal concluded that the paintings were purchased in the period relevant to the immediately preceding year (A.Y 2007-08) and not in the year under consideration (A.Y 2008-09). Therefore, the addition of ? 34,00,000/- as unexplained investment was vacated, and the order of the CIT(A) was set aside. 2. Addition on account of unaccounted cash: ? 10,00,000/- During the search proceedings, cash amounting to ? 13,19,000/- was found at the residence of the assessee. The assessee failed to provide a plausible explanation for the source of this cash during the search. However, during assessment proceedings, the assessee claimed that ? 10,00,000/- of the cash was received from his brother for safe custody while he was on a foreign tour. The assessee provided a reconciliation statement and a confirmation from his brother, Ajit Singh, to support this claim. The A.O and CIT(A) rejected this explanation, considering it an afterthought. However, the tribunal found substantial force in the assessee's claim, noting that the simultaneous search at Ajit Singh's premises revealed a shortfall in cash, which corroborated the assessee's explanation. Additionally, the confirmation from Ajit Singh was not disproved by the revenue. The tribunal concluded that the lower authorities had arbitrarily held the amount of ? 10,00,000/- as unexplained income without dislodging the veracity of the assessee's claim. Therefore, the addition of ? 10,00,000/- was deleted, and the order of the CIT(A) was set aside to this extent. Conclusion: The tribunal allowed the appeal of the assessee, deleting the additions of ? 34,00,000/- for unexplained paintings and ? 10,00,000/- for unaccounted cash. The orders of the CIT(A) were set aside, and the additions made by the A.O were vacated.
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