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TMI Blog2025 (4) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 2008-09. The impugned order is the common order passed by the learned ITAT in ITA No. 6798/Del/2013, which was preferred by the Assessee, as well as ITA No. 1130/Del/2014 which was preferred by the Revenue against an order dated 11.11.2013 passed by the Commissioner of Income Tax (Appeals)-IV, New Delhi [CIT(A)]. Whilst the learned ITAT partly allowed the Assessee's appeal, the Revenue's appeal was dismissed. The Revenue has not preferred any appeal against the impugned order to the extent that its appeal was dismissed; the present appeal is confined to the impugned order passed in respect of the Assessee's appeal. QUESTION OF LAW 2. The present appeal was admitted on the following question of law on 20.02.2025: "A. Whether in facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 lacs 3 F N Souza 10" x 9" 10 lacs 4 Manjit Bawa 10" x 10" 30 lacs 5 Jogen Chowdhary 5" x 5" 10 lacs 6 Arpana Caur 8" x 10" 10 lacs TOTAL 1 crore" 7. The Assessee claimed that the said works of art were his personal collections and not the inventory of the firm. He also claimed that the said works of art -except the painting by Ms Caur which was gifted to his mother - were gifted to him by the respective artists. In support of his contention, the Assessee had also produced letters signed by the said artists except in respect of a sketch by Sh. Manjit Bawa, who had expired. In respect of the art of work gifted by Mr. Manjit Bawa, the information could not be provided as he has since expired. The fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced the addition to a sum of Rs. 58,00,100/- as under: "S.No. Artist Size Amount (Rs) 1. Shibu Natesan 40" x 60" 12,00,000 2. Bhupen Kakar 10" x 9" 10,00,000 3. F N Souza 10" x 9" 10,00,000 4. Manjit Bawa 10" x 10" 12,00,000 5. Jogen Choudhary 5" x 5" 6,00,000 6. Arpana Caur 8" x 10" 8,00,100 Total 58,00,100" 13. As noted above, the Assessee appealed the said decision before the learned ITAT. The learned ITAT did not interfere with the said decision. The learned ITAT reasoned that the artists in question have no business interest with the Assessee and therefore the question of gifting of paintings to the Assessee is out of question. The learned ITAT proceeded on the basis that the relationshi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot found its judgment on conjectures, surmises or speculation. Between the claims of the public revenue and of the tax payers, the Tribunal must maintain a judicial balance. The order passed by the Tribunal without recording any reasons in support of the estimate of unaccounted income cannot, therefore, be sustained. 16. We also consider it apposite to refer to the oft quoted judgement of the Supreme Court in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income Tax, West Bengal : (1954) 26 ITR 775 and take note of the following observations, which although made in a different context, do set out the principle that it is impermissible for the Income Tax Authorities to base their decision purely on guess work: "9...As regards the second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the deceased artist. The said letters confirmed that all the works in question, except one, were gifted to the Assessee and the work by Ms Arpana Caur was gifted to the Assessee's mother. 20. It is also material to note that the description on some of the works of art also clearly indicate that the same were gifted. 21. The sketch made by Mr. Manjit Bawa clearly mentions below his signature that it was "To Rohit/Rahul". Clearly if the said sketch was to be included as an inventory for sale, the same would not have carried any such notation on the face of the work. This has been completely disregarded by the concerned authorities. 22. It is also material to note that the work of art by Sh. Jogen Choudhary is a Diwali Card of a size ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessee and that they are the friends and acquaintances of the Assessee; there is also no reason to doubt the genuineness of the transactions. 30. Any addition to the income of the Assessee is required to be based on cogent material and not on mere surmises and conjectures. It is also material to record that Assessee is a constituent partner of a firm that is engaged in running an art gallery. This also clearly establishes that the Assessee would be acquainted with the artists in question. There is no reason to suspect that they have not given their personal works of art as gifts to the Assessee. 31. In Omar Salay Mohd. Sait v. Commissioner of Income Tax, Madras : (1959) 37 ITR 151, the Supreme Court observed as under: "33. ....On no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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