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2013 (9) TMI 562 - AT - Income TaxUnexplained investment u/s 69 - Sale and purchase of paintings - Personal effect - Purchases shown as stock in trade - Held that:- assessee is a connoisseur of art. The object of art is not only the pride possession but it also satiates the aesthetic quench for the art of the connoisseur. It gives joy to the possessor which is different from the pride of possession. The expression 'personal effect' as per the Black's Law Dictionary means articles associated with person, as property having more or less intimate relation to person of possessor - The apex court in the case of H. H. Maharaja Rana Hemant Singhji v. CIT [1976 (2) TMI 1 - SUPREME Court] has said that an intimate connection between the effects and the person of the assessee must be shown to exist to render them 'personal effects' within the meaning of that expression used in clause (ii) of the exceptions in section 2(4A) of the Indian Income-tax Act, 1922. We make it clear that these holdings of paintings cannot be considered as personal effects. It is also on record that the assessee was holding these paintings in a packed condition and is preserving them according to the norms required and is not displaying them at his house. These aspects were admitted in the course of arguments. Therefore, these paintings cannot be held as personal effects. To that extent the assessee's contentions are rejected. - Decided against the assessee. Whether the transaction is in the nature of "adventure in the nature of trade" so as to consider it as business or as an "investment" by the assessee. - For deciding whether trade or investment, it is to be examined afresh in the light of past conduct of the assessee and necessary details/evidences, including the running account in Synergy Art Foundation. Additions u/s 69 - While accepting that the amount of Rs. 5 lakhs was made subsequent to the search and seizure proceedings, the Commissioner of Income-tax (Appeals) surprisingly confirmed the same as an afterthought to explain the discrepancies detected. - Held that:- There is no dispute with reference to the cost of the painting and also no dispute with reference to the payment over 2 years. The Assessing Officer has already accepted the payment of Rs. 15 lakhs which was stated to have been paid by way of cheques and subsequently Rs. 9 lakhs was paid in three instalments of Rs. 4 lakhs and Rs. 2.5 lakhs each and were evidenced by the statements of ICICI Bank. In the light of the facts above, no amount can be considered as unexplained investment, unless there is confirmation from the other party that the amounts were paid in cash other than what was stated by the assessee. - Decided in favour of assessee.
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