TMI Blog2012 (7) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... and no reason or evidence to disbelief the content thereof - that the paintings were received as gifts during the course of search, no documents have been found to indicate that the painting were received otherwise - no dispute regarding the value of the painting which has already been disclosed by the assessee in her return of income filed in response to notice u/s. 153A - in favour of assessee. Addition on account of commission on sale of painting - CIT(A)deleted the additions - Held that:- As assessee has not denied the fact that the sale of paintings to the tune of Rs. 42,12,595/- was effected through her, hand written page on the letter head of Artist seized at the time of search clearly shows that the assessee was getting commission @ 4% of the value of each art work transacted. Under the circumstances CIT(A) has erred in deleting the addition in this regard merely on the basis of the confirmation from Shakshi Art Gallery, that no commission was paid by them - in favour of Revenue. - ITA NO. 1726/Del/2011 - - - Dated:- 22-6-2012 - SHRI SHAMIM YAHYA, AND SHRI C.M. GARG, JJ. Assessee by: Sh. O.P. Sapra, Adv. Department by: S h. RIS Gill, Sr. D.R. ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the search was conducted at the residence of the assessee on 17-18/4/2007 and cash was found in possession of the assessee. The period falls in previous years 2007-08 relevant to assessment year 2008-09. Thus the addition on the said account in this year is totally unlawful and unreasonable. The same, if at all to be made, was to be made in assessment year 2008-09. It was further submitted that the assessee s father in law Shri SN Puri declared on oath that he gave a sum of Rs. 75,000/- to his son and daughter in law for safe custody and the money was lying with them. It was further submitted that the assessee s father-in-law is a senior citizen above 90 years of age; he served various companies at different posts for over 60 years; Mr. Ravi Puri and his wife, the assessee are only son and daughter in law of Mr. SN Puri. It was further contended that saving of Rs. 75,000/-, after such a long service at various top positions in various companies is quite natural. Considering the submissions, Ld. CIT(A) observed that contention of the assessee that cash was found at the time of search on 17-18/4/2007 the addition could have been made in assessment year 2008-09 only also is qui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on our part. Accordingly, we uphold the same. 7. Apropos addition of Rs. 3,00,88,566/-. On this issue AO noted that during the search certain paintings were found from the residence of the assessee and the same was inventorised for determining the actual value of the same. Out of the total paintings, 26 paintings were said to have been received by the assessee as gifts from different persons. The assessee was not in position to furnish any gift deed with respect to the paintings which she said to have received as gift. The total amount of the gift was determined at Rs. 9,20,000/-. AO proceeded to value the paintings as under:- S.No. Painting Value as given by the assessee (in Rs.) Market value (in Rs.) Basis (1) (2) (3) (4) (5) 1 Arpita Singh 8,000/- 25,000/ Note 1 2 Dhrub Mistry 55,000/- 55,000/- Note 2 3 Gopal Gosh 500/- 30,300/- Note 1 4 Gopal Gosh 500/- 30,300/ Note 1 5 Gopal Gosh 600/- 30,300/- Note 1 6 Harsh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Rs. 5,00,000/- and Rs. 4,00,000/-. If the average of the two is taken then the value of each of the paintings shall be Rs. 4,50,000/-. Note 4 : During the course of search five cheques were found from the residence of the assessee showing the value of each painting. The values of each paintings were as under : Rs. 30 lacs, 25 lacs, 12.5 lacs, 10 lacs, Rs. 7,12,595/-. The average of all the above paintings shall be taken at the value of each painting of Late Sh. Manjit Bawa. In other words, the value of each painting of Late Sh. Manjit Bawa is taken as Rs. 16,92,520/-. Note 5 : The value of the sculptor has been taken from the statement of the assessee recorded during the search in which she has said to have purchased a similar kind of art for Emami Foundation for Rs. 60,00,000/-. However, the letter submitted during the assessment proceedings from Emami Foundation shows the value at Rs. 65,00,000/-. Hence, the value for the purpose of assessment has been taken as Rs. 65 lacs. 7.1 AO further noted that assessee has shown an amount of Rs. 2 lacs during the year in her balance sheet as investment made in sculpture of Himmat Saha. AO observed that after giving credit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings as the issue regarding painting or their value was not raised by the AO. However, the same were produced as additional evidences at the time of appellate proceedings. These were sent to the AO for his comments. Ld. CIT(A) further observed that AO stated that he had no reason to differ with the stand taken by the then AO for making these additions in the original assessment order. However, the AO has not commented on the authenticity of the gift declarations submitted as additional evidence. Ld. CIT(A) further proceeded to accept the above declaration of gift and accordingly he deleted the addition made by the AO in this regard. 9. We have heard the rival contentions in light of the material produced and precedent relied upon. We find that the valuation has done by the AO, who is not an expert in this regard. In this regard, the contention of the assessee is cogent enough that AO should engage expert in this regard to make the valuation of these paintings. Furthermore, the declaration of gifts were not originally produced before the AO as it has been claimed that the item of paintings and their value was not raised by the AO. The same were produced as additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has produced a copy of August, 2002 issue of magazine The Society Interior which shows the house of the assessee and those art works on walls of the house. Assessee also submitted before the Ld. CIT(A) a CD containing documentary film titled Meeting Manjeet released in December, 2002 which shows those art works of Manjeet Bawa are fitted on the walls of her house. These go to confirm that those items were owned by the assessee much before the release of the magazine as a period of more than 18 months is taken to complete the documentary for going to censor board. In view of the above discussion, the paintings received as gift from Manjeet Bawa appearing in item no. 10 to 21 cannot be construed as purchases made outside the books of accounts and added as undisclosed income during the year. The paintings appearing in item no. 6 has been stated to have been received from Mr. S. Harsha Vardhan during the course of appellate proceedings which was duly forwarded to the AO for his comments. The AO has not adversely commented on the authenticity of the said confirmation and even at the time of search no incriminating document has been found to prove that the said painting was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. On the basis of the said letter he assumed that the assessee is engaged in sale/purchase of paintings on commission basis and the minimum amount the assessee gets as commission is 4%. AO has further stated that during the search at the residence of the assessee unsigned acknowledgement of cheques from Bhawna Bawa D/o Sh. Manjeet Bawa issued in his favour by Geeta Mehra, Director Sakshi Gallery, Mumbai were found. The total amount of those cheques comes to Rs. 42,12,595/- and commission income @ 4% is Rs. 1,68,504/-. 11. Before the ld. CIT(A) assessee submitted that the said documents is a business letter between Himmat Shah and the assessee for business for Singapore Art Fund and is just a draft. Ld. CIT(A) observed that there is no basis to draw the conclusion that the assessee charged commission for the said transaction between Sakshi Gallery and Mr. Manjeet Bawa. He further observed that no document was found during the search which could support the contention of the AO that commission was received by the assessee from Sakshi Gallery. A confirmation that no commission was paid has been obtained from Sakshi Gallery and filed. In the remand report, the AO stated that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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