During the time of the Buddha (perhaps around 580 B.C.E) when Buddha Shakyamuni was meditating in the forest, there were two rich and powerful kings of Magadh called King Bimbisara, and King Utrayana. These two kings ruled over two different regions of India. King Bimbisara was one of the patron disciples of Buddha Shakyamuni. King Utrayana lived with his family and ministers. These two kings had an amicable relationship and would send each other gifts all the time. They loved to compete with each other to see who could buy the other the most precious gift. One time, King Utrayanasent bought King Bimbisara a magical suit of armor, shinning like gold, which would protect him from any poison, fire or weapon.
King Bimbisara was astonished and delighted, but was unable to think of anything he could give in return that could exceed this gift, so he went to consult his minister. His minister advised him to commission a portrait of Buddha Shakyamuni and explained that this gift could not be excelled as it would benefit his friend not only in this life time, but for his future life times also.
So King Bimbisra invited the best artist in his region to portray Lord Buddha’s image, but when the artist tried to sketch the likeness of the great sage he was dazzled by the splendor and radiance of the Buddha’s body, so he could not look at him directly. The Buddha therefore suggested that he copy from the reflection of his body that he cast into a pool of water. The artist sat on the banks of the pond and sketched his drawing based on his reflection. They put this artwork with many other offerings that where brought to King Utryana on a magnificent elephant.
As soon as the king read the name Buddha Shakyamuni on the accompanying letter, he was overwhelmed by a strong feeling of devotion and the hairs on this body arose on end. He received the Thangka with great respect and placed it on a gold throne where he made many offerings to it. From the reverence King Utryana had for the image of the Buddha he went on to become a great practitioner.
To this day, the tradition of drawing the image of the Buddha Shakyamuni hasn't changed since he was first depicted sitting by the pond for King Bimbisra’s artists.
(Source, “Path to Liberation”, Tsering Art School Manual, by Konchong Lhadrepa)