TaxTMI 
TaxTMI 
2025 (10) TMI 1016
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....s of M/s Synergy Art Foundation Ltd. along with the premises of the assessee. Consequently notice under section 153A of the Act was issued for AY 2002-03 to 2007-08. The assessee in response filed the return under section 153A of the Act and the assessment was completed on 30.11.2009 under section 153A r.w.s. 143(3) of the Act making various additions. The details of the income returned and the income assessed are as tabulated below: Assessment Year Returned Income (Rs.) Assessed Income (Rs.) 2002-03 2,25,169/ 7,65,170/- 2003-04 3,62,065/- 20,74,570/- 2004-05 4,96,751/- 7,96,750/- 2005-06 4,04,042/- 7,54,040/- 2006-07 14,26,833/- 18,26,830/- 2007-08 22,19,815/- 1,02,42,370/- 3. On further appeal the CIT(A) confirmed the addition/disallowances made by the AO against which the assessee went on further appeal before the Tribunal. The Tribunal passed a combined order on 31.07.2012 for AY 2002-03 to 2007-08 and 2008-09 restoring the issue of additions on account of low drawing back to the AO to consider the details, evidences and the electricity and the telephone bills to decide the issue afresh. The Tribunal also restore....
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....d. AR submitted that the assessee is unmarried and lives alone without any dependent. The ld. AR further submitted that the assessee is travelling most of the time of the year for Art Exhibitions, Art purchase etc. during which time the expenses are taken care of by M/s Synergy Art Foundation Ltd. The ld. AR also submitted that the other sundry expenses are driver's salary, petrol, maintenance etc. are borne by M/s Synergy Art Foundation Ltd. and the assessee uses to Credit Cards for buying day to day requirements towards grocery etc. The ld. AR argued that the assessee has tabulated the details of expenses incurred through Credit Card, Cheque etc. before the lower authorities and the same has not been considered. The ld. AR further argued that the AO in the second round has confirmed the additions made in earlier year stating that the assessee has failed to produce electricity or telephone bills ignoring the fact that the assessee has given the breakup of expenses incurred towards personal expenses. The ld. AR also raised the legal contention that the addition towards personal expenses is not based on any incriminating material found during the course of search but is merely f....
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.... has not furnished the electricity and telephone bills as directed by the Tribunal and that personal expenses as mentioned in the credit card statement pertain to travel and hotel expenses. The AO further held that the expenses incurred through cheque are not supported by bills etc. The CIT(A) has confirmed the addition based on his predecessor's order in the first round of appellate proceedings. On perusal of the details of credit card statement submitted by the assessee (page 313 to 348 of paper book) we notice that the annual credit card expenses of the assessee was in the range of Rs. 2,00,000 to Rs. 6,00,000 between AY 2002-03 to AY 2007-08 and the assessee out of the total spend has carved out what is paid by her and what is born by the company. We further notice that the assessee travelled frequently during these period which is evidenced by the purchase air tickets through credit card. Though there may be merit in the contention of the revenue that the assessee has not submitted any bills/evidences for the personal expenses, the details which are part of records as tabulated above cannot be completely ignored. The fact that the assessee is single and travels often for t....
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.... treated the said amount as unexplained under section 69 for AY 2008-09 and during appellate proceedings in second round the CIT(A) deleted the addition made by the AO accepting the submissions of the assessee. During AY 2007-08 the assessee has sold 11 paintings earning a Long Term Capital Gain (LTCG) of Rs. 46,15,000/- and 3 paintings to earn a STCG of Rs. 16,50,000/-. Accordingly the assessee declared the total Capital Gain of Rs. 62,65,000/- while filing the return of income for AY 2007-08 (page 391 of PB). The AO in the second round of assessment proceedings called on the assessee to submit the details of source of acquisition of the paintings sold. The assessee submitted that out of the total paintings sold 11 paintings are out of her personal collection collected during the period 1983 to 1990 and since considerable time has passed could not provide proper details. The assessee further submitted that the balance paintings were acquired during the previous year relevant to AY 2006-07 and the gain is accordingly is declared as STCG. The assessee in substantiation of purchase and sale furnished the list of parties from whom purchase are made, the bank statement reflecting the p....
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....ts made. In view of the above, the sum of Rs. 60,15,000/- being unexplained increase in capital account on account of alleged sales of paintings is added to the total income." 11. On further appeal the CIT(A) confirmed the addition without recording any factual findings. 12. The ld. AR submitted that the lower authorities have completely jumbled the various categories of paintings found during the course of search and sold by the assessee before the date of search. The ld. AR further submitted that the assessee during the FY relevant to AY 2006-07 has purchased 33 paintings for a total consideration of Rs. 29,08,337/- and the purchases is done through proper banking channel (page 264 to 274 of PB). The ld. AR also submitted that out of these 33 paintings the assessee sold 3 paintings during the FY relevant to AY 2007-8 resulting in STCG of Rs. 16,50,000/-. The ld. AR in this regard drew our attention to the return of income filed for AY 2007-08 where the STCG has been declared by the assessee after paying the tax on the same (Page 1 to 6 of Paper book). The ld. AR submitted that the assessee also sold 11 paintings during the AY 2007-08 earning a LTCG of Rs. 46,15,000....
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....ent for the same acknowledgement number (ii) The receipt of sale consideration is not supported by credits in the bank statement (iii) The claim that the assessee has collected the paintings from 1983 to 1990 is not substantiated properly and claim of purchase during AY 2006-07 is not supported by documents 15. With regard to the allegation in (i) above we notice that the assessee vide acknowledgement number 0720000316 dated 23.11.2006 has filed the return of income for AY 2006-07 declaring a total income of Rs. 14,26,833 (page 391 of paper book). The contention of the AO is that the said acknowledgement number as per records is reflecting against a different assessee and that assessee is making a false statement. However on perusal of the records with manual noting (page 392 of paper book) we notice that acknowledgement number 0720000315 and acknowledgement number 0720000316 are showing the name of the assessee as Mr. Chedda Haresh Nagii with the same PAN of AABPC6476H for AY 2006-07 where two different total income is reflected. It is also relevant to note that the AO in the order under section 153A r.w.s.143(3) r.w.s.254 passed for AY 2006-07 has acknowledge....
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....turn of income in response to notice under section 153A has removed the LTCG & STCG offered to tax in the original return of income. The reason as stated by the assessee is that the definition of capital asset as per section 2(14) included paintings with effect from 01.04.2018 i.e. AY 2008-09 only. The revenue while concluding the assessment under section 153A r.w.s.143(3) r.w.s.254 did not contend the removal by the assessee in the return filed by the assessee but treated the same as undisclosed for the reasons stated herein above. Therefore in our considered view it is not the case of the revenue whether the gain arising out of sale of paintings is taxable or not and accordingly we direct the AO to delete the addition made towards sale of paintings as undisclosed income under section 68 of the Act. 21. The AO while completing the assessment for AY 2003-04 has made an addition towards alleged hawala transaction entered into by the assessee to the tune of Rs. 14,65,500/-. During the course of hearing the ld. AR submitted that the ground raised against the said addition made by the AO is not pressed for the reason that the assessee is contending the impugned issue before the Hon&....