TaxTMI 
TaxTMI 
2013 (3) TMI 100
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.... Assessing Officer treating the sale of alleged personal effects as "Income From Undisclosed Sources" (2) Whether ITAT was correct in law in holding that the evidence filed by the assessee was believable and therefore, onus was shifted to the Revenue to prove that the item sold were not personal effects of the assessee? (3) Whether item sold by the assessee were „personal effects‟ so as to fall within the ambit of exclusionary clause of Section 2(14) of the Act, which defines „capital asset‟." The facts need not be repeated and therefore the narration of facts given in the order dated 10.05.2011 would suffice for our purposes. The facts as narrated in the said order are as under :- "3. In the return filed by the assessee for the assessment year 2002-03 he declared income of Rs.31,71,656/-. The Assessing Officer noticed that in the bank account of the assessee there is a deposit aggregating to Rs.39.47 lakhs, which according to the assessee was the amount released by him from the sale of certain "personal effects". According to him, the sums released from the aforesaid sale were exempt under Section 2(14) of the Income Tax Act. The assessee had ex....
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....fact been able to discharge the onus from sufficient material produced by him on record that he had in fact sold the aforesaid items and released the amount of Rs. 39.47 lakhs on sale thereof. In this manner he arrived at a finding that the sale proceeds were exempted under Section 2(14) of the Act and not exigible to tax. The ITAT has affirmed the order of the CIT(A) vide impugned judgment dated 17th October, 2008 thereby dismissing the appeal of the Revenue. However, the order of the ITAT is only on second aspect, namely, the genuineness of items sold and the money released. Since the order of the ITAT was silent on the first issue, namely, whether the items sold was personal effects entitled to exemption under Section 2(14) of the Act or not, the Revenue moved an application under Section 254(2) of the Act alleging that this aspect was not decided though it was raised. The Tribunal has dismissed this application vide order dated 17th July, 2009 stating that no ground was raised that some articles were personal effects or capital assets." 2. Thereafter, this Court in the said order dated 10.05.2011 had noted that insofar as the question of genuineness of the sales by the asses....
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....f the exclusionary clause of section 2(14) of the Income Tax Act, 1961, which defines „capital asset‟?" 5. We have heard the learned counsel for the parties at length. The position that emerges is that a substantial part of these articles had been received by the assessee through inheritance either from his father, who, in turn had inherited them from his father, or through inheritance from his uncle. There is also evidence of the fact that some of these articles had been gifted to the assessee by his aunt by virtue of a gift deed which is also on record. We also note that the assessee had given an affidavit to the assessing officer which was to the following effect:- "AFFIDAVIT I, Faiz Murtaza Ali, S/o late Justice Murtaza Fazi Ali, R/o 112, Uday Park, New Delhi - 110049 do hereby solemnly affirm on oath as under : 1. That I have inherited immovable property from my Aunt, Late Mrs. Sayeeda Mehdi Imam vide her registered Will dated 9th Sept. 1999. 2. That I have been gifted various antique items, furniture, carpets, paintings, watches, decorative items etc. as personal effects by my aunt Smt. Sayeeda Mehdi Imam on 05.02.1999. 3. That I have....
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....ition of „capital asset‟ under the 1922 Act wherein capital asset was defined in Section 2(4-A). The expression "personal effects" was defined as „movable property (including wearing apparel, jewellery and furniture) held for personal use by the assessee or any member of his family dependent on him‟. The Supreme Court considered the expression "personal use" and while doing so, observed that only those effects could legitimately be said to be personal which pertain to the assessee‟s person and an intimate connection between the effects and the person of the assessee must be shown to exist to render them to be regarded as personal effects. It is clear that the Supreme Court held that only those articles are to be included in the definition of „personal effects‟ which are intimately and commonly used by the assessee. 8. Keeping this in mind, we have to examine whether, in facts of the present case, the articles in question could be regarded as personal effects. The only evidence that is forthcoming is the affidavit of the assessee where he has indicated that the said articles were for his personal use. He has also indicated that these arti....