TMI Blog2012 (12) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... corroborative evidence like gift certificate issued by the mother of daughter-in-law and photographs of marriages shown before the investigation unit. Issue decides in favour of assessee Addition on account of art work and painting - Unexplained investment – Search and seizure u/s 132(1) - Valuation of art work and painting - AO noted that some of the art works could not be explained properly by the assessee with regard to the source of acquisition – Held that:- There could be possibility that the assessee may have acquired certain painting at a very low cost either from a flea market or from abroad or by way of gift from friend or relative for which such a high valuation cannot be taken. Issue of unexplained investment in art works / painting is restored to the file of the AO for denovo adjudication. Issue remand back to AO - ITA No.5867 & 5868/Mum./2009 - - - Dated:- 9-9-2012 - B. Ramakotaiah and Amit Shukla, JJ. Appellant Rep by: Mr. Rakesh Joshi Respondent Rep by: Mr. Satbir Singh ORDER Per: Amit Shukla: The present appeals preferred by the above named assessees, are directed against separate impugned orders of even date 21st August 2009, passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was required to reconcile gold / diamond jewellery and various other articles found at the time of search. In response, the assessee furnished reconciliation of various jewelleries acquired from time to time and articles purchased. A gift confirmation letter was also filed from the mother of Minal (w/o of Dinesh and daughter in law of Padma). Insofar as reconciliation of gold jewellery was concerned, the Assessing Officer was satisfied that the assessee was able to produce the details of purchase and, therefore, he accepted the investment made in the gold jewelleries. However, with regard to the diamond jewelleries aggregating to Rs. 80,62,432, in the case of Padma and diamond jewellery of Rs. 34,58,255 in the case of Dinesh, (which also included jewellery belonging to Minal), the assessees were required to prove the source of these diamond jewelleries. The assessee submitted that most of these items have been purchased by way of cheque and has been recorded in the books of account. Certain jewelleries have been received by way of gift at the time of marriage or by the mother of Minal. Reconciliation of such jewelleries and details of cheque payments with the name of j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar as the possession of aforesaid 11 items of diamond jewellery worth Rs. 4,63,750 is concerned, it is not disputed that - (i) No wealth tax returns have been furnished by the appellant or by appellant s family members. (ii) No valuation report indicating any of the aforesaid 11 items of diamond jewellery neither in the name of the appellant nor in the name of any family member. (iii) No purchase bills, whatsoever produced in support of the aforesaid diamond jewellery. (iv) No gift deed produced to explain the possession of the aforesaid diamond jewellery. (v) The appellant failed to explain the nature, mode and source of acquisition of the aforesaid 11 items of diamond jewellery found from his Nepean Sea Road, Mumbai, residential premises and bank locker no.780, United Bank of India, Peddar Road Branch, Mumbai. Having regard to the facts and circumstances of the case, the unexplained investment in the acquisition of the aforesaid 11 items of diamond jewellery worth Rs. 4,63,750 is chargeable to tax under section 69A of the Act for the following reasons: 7. Thereafter, he proceeded to analyse various decisions with regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from where he pointed out that the withdrawals for the financial year 2006-07 itself was at Rs. 80,19,717, and the amount invested in jewelleries and apparels where a at Rs. 51,08,207. Similar withdrawal and investment in jewellery have been there in the earlier years as well as in the subsequent years. From this, he submitted that none of the additions which have been made by the Assessing Officer on this score, can be sustained. Regarding art works and paintings, he submitted that both the assesses were themselves very talented painters and most of the paintings have been purchased through cheques. Some of the painting have been received through gift or have been purchased much before the period covered under the search under section 153A, for paltry sums. By way of example, he submitted that one of the sketches by Mr. M.F. Hussain, was received by Padma, at the time of lunch with him in London wherein he made a sketch with ink on a napkin paper and gifted to the assessee. This has been valued at Rs. 2,50,000, whereas the assessee had no cost of acquisition. Similarly, in the case of Dinesh, he submitted that there were certain paintings which have been bought from China for a ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable on record. The first issue relates to addition on account of unexplained investment in diamond jewelleries. In case of Padma, aggregate diamond jewellery of Rs. 82,60,432, was found at the residence and from the bank locker. At the time of search, the assessee had stated on oath that in most of the cases, copies of purchase bills were available, along with details of payments and some of them were received by way of gift on the occasion of her marriage and marriage of her son. She also showed the photographs of the marriage of her son and daughter to show that most of the jewelleries were acquired in the earlier years. This specific averments was given in the statement of oath on administered on 10th May 2007, which, for the sake of ready reference, is reproduced herein below:- Q.no.4 Do you have any further evidence to place on record with regard to the jewellery kept under P.O. at your residence as per P.O. dtd. 7.5.07? Ans. I am producing copies of bills along with bank payment details with regard to the purchase of jewellery by me over the last few years. As regards item nos.10(a), 10(b) and 10(c). The same was given as gift to me by my sister Dr. Shila Verghe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the wording of the valuer appointed as above. It is the general practice of the jwellers to write this kind of description at the time of purchase. No item is in excess of the value as given by the valuer and the cheque and the value are matching as per the price paid. After taking into consideration all these facts put before you the entire diamond Jewellery would stand explained. Several of these evidences are not acceptable to you. Hence I have, no objection at this point in time in the seizure of the said diamond jewellery, However, it maybe imperative to note that none of these items are forming my undisclosed investments nor is my acceptance for the seizure an assertion of the same being an undisclosed investment. 13. From the above answers given by the assessee at the time of search, it is seen that the assessee had given the explanation with regard to all the another jewelleries found at the time of search along with the evidences and details as were available. Further, in support of this explanation, valuation report dated 31st March 1990, given by Approved Valuer wherein detail description with regard to quantity in carats and gross weight in grams were furnished bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per sources without which it would be assumed that it would be an unexplained investment. For this proposition, he has relied on the various case laws and provisions of The Indian Evidence Act, 1872. In our opinion, there was no occasion for the Commissioner (Appeals) to go into such a theoretical concepts laid down by various High Courts / Supreme Court, he should have confined himself to the findings given by the Assessing Officer and the contentions of the assessee about the evidence and explanation furnished in support of jewellery found. His conclusion drawn in Para-2.3.2, as reproduced above, is factually incorrect, which is evident from the fact that the assessee had furnished not only the valuation report, purchase bill, gift certificate but has also tried to explain the nature, mode and source of acquisition of various items of diamond jewellery found. All his observations are negatived by the material placed before us in the form of paper book which was also available before the Assessing Officer and the Commissioner (Appeals). 15. Now coming to the conclusion drawn by the Assessing Officer, we find that in the chart given in the assessment order, he has referred that m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mond jewelleries, is hereby deleted. Likewise, in case of Deepak also, the same reasoning will apply and, accordingly, in case of Deepak also, no addition on account of unexplained investment on account of diamond jewellery can be made. Thus, ground no.1, relating to unexplained investment in the diamond jewellery in both the appeals stands allowed. 16. Now coming to the issue of unexplained investment in art work and paintings. During the course of search and seizure action, the assessee and her son Deepak were found in possession of several art works and paintings. In fact, both of them are themselves an artist. During the course of assessment proceedings, the Assessing Officer noted that some of the art works could not be explained properly by the assessee with regard to the source of acquisition. Accordingly, he has made the addition, after giving detailed summary on various pieces of art work / paintings, to which the assessee could not explain the same properly by adducing any evidence. Assessee s contentions has been that these art works / paintings were either gifted to them or were purchased for a paltry sum from various places. Looking to the over all huge withdrawals m ..... 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