DCIT vs M/S Dunlop India Ltd, Kolkata | ITAT Kolkata 2016

Income Tax Appellate Tribunal, BENCH ‘B’ KOLKATA

Before: Hon’ble Shri N.V.Vasudevan, JM & Shri M.Balaganesh, AM ]

This is an appeal by the Revenue against the order dated 23.01 2013 of CIT(A) XXXII, Kolkata, relating to AY 2008-09. 2. Ground of appeal raised by the Revenue reads as follows :- “That under the facts and circumstances of the case, the Ld. CIT(A)-XXXII, Kolkata, has erred in law as well as in facts in deleting the addition of Rs.44,00,00,000/- u/s 69 as undisclosed investment in immovable property.”

3. The Assessee is a company. It is engaged in the manufacture and trading in tyres and tubes and rubber products. In the course of assessment proceedings for A.Y.2008- 09, the AO noticed that from AIR (Annual Information Report) that assessee had purchased immovable property on 12.07.2007 at a price of Rs.44 crores. This information emanated from the information uploaded by the Joint Sub-Registrar-III, Mumbai. The AO further found that no such investments were reflected in the balance sheet of the assessee. The AO confronted the assessee with regard to the aforesaid facts. The AO also addressed a letter to the Joint Sub-registrar-III, Mumbai dated 20.12.2010 requisitioning the relevant details. The AO passed order of assessment on 31.12.2010. Till such time no information came from Joint Sub-registrar, Mumbai City-III. In the circumstances AO concluded that the assessee made an undisclosed ITA No.709/Kol/2013-M/s. Dunlop India Ltd. A.Y.2008-09 investment of Rs.44 crores in the immovable property. Accordingly a sum of Rs. 44 crores was added u/s 69 of the Act to the total income of the assessee.

4. Before the CIT(A) the assessee submitted it could not produce evidence before the AO regarding the AIR information regarding investment of properties. The Assessee pointed out that it had no such investments and made enquiries about the source of information received by the AO and its authenticity. The Assessee pointed out that it made efforts to get the details from the office of Joint Sub Registrar but could not succeed by 31.12.2010 when the assessment was completed but continued efforts and endeavours to obtain reply of Assessee’s letter. The Joint Registrar Mumbai vide their letter dt. 4th September, 2011 sent full text of the transaction which was carried out by the Assessee. A certified copy of the registered document and copy of certified copy of resolution dt. 12th May, 2007 of the Assessee was filed. The said information filed by the Assessee before CIT(A) revealed that there had been no purchase or sale of any property of Rs.44 crores but the Assessee had created an English mortgage over property of the Assessee to avail loan facility of Rs.44 crore from Deutche bank AG by filing Form No.8 with Deed of Mortgage with Deutche bank AG for availing Loan facility of Rs.44 crores. The aforesaid loan of Rs.44 Crores for which mortgage of Company’s property was created in favour of Deutche Bank AG as above was paid back and satisfaction of charge for Rs.44 crores was filed under Form No.17 under SRN A32598385 dt. 26.02.2008 and certificate of Memorandum of Satisfaction of Mortgage/Charge u/s 140 of the Companies Act, 1956 was also issued by Registrar of Companies, West Bengal.”

5. The aforesaid evidence was confronted to the AO by the CIT(A) and after getting the remand report from the AO on the additional evidence filed by the assessee CIT(A) admitted the additional evidence under Rule 46A. Thereafter CIT(A) held as follows :- “I have duly considered the assessment order, submission of the AIR, additional evidences filed by the appellant and remand report of the AO and its rejoinder filed by the AIR. I found that the A.O. mentioned in the Assessment Order and on going through the I.T.S details in respect of assessee company, it was found that, it had purchased an immovable property on 12/7/2007 at a price of Rs. 44 crore as uploaded by Joint Sub- Registrar Municipality CITY-3. The appellant stated that during the year the assessee ITA No.709/Kol/2013-M/s. Dunlop India Ltd. A.Y.2008-09

company did not purchase any property so the A.O wrote a letter to the concern authority for verification but the A.O did not received any information from the above mentioned authority up to the passing of the order and he made the addition of Rs.44,00,0001- as undisclosed investment in the said property. Now in the appellate proceedings, the A/R filed the documents which was registered on 12/07/2007 in the office of Joint Sub-Registrar Bombay-3. The copy of the said document was sent to the A.O for remand report. The A.O send the remand report as under :- “In this connection, this is to bring to your kind notice that the then A. O. during the course of hearing sent a letter to the Joint Sub-Registrar Mumbai-3, requesting him to confirm purchase of immovable property at a price of Rs. 44 crores as uploaded by the Joint Registrar Mumbai, in its website. However, till date no reply has been received to prove it otherwise. Under the circumstance, it would not be appropriate to differ with the view taken by the A. 0 t the time of scrutiny assessment in this regard. This is for your' kind information and necessary action.” The Assessing Officer did not speak any single word on the documents filed by the A/R regarding the English Mortgage of the property. It proves that he is accepting the said documents. The A/R in the rejoinder of remand report as well as submission in the assessment proceedings, also stated that the company did not. purchase any immovable property during the F.Y 2:007-08. This is a document of English Mortgage which was registered on 12/07/2007. Hence there is no question to arise of the unexplained investment in immovable property. Considering the above facts and findings, I am of the view that the appellant did not made any transaction of immovable property during the year. The Assessing Officer did not brought the correct fact purchased any immovable property but the company made the English Mortgage Deed so the question of unexplained investment does not arise. Considering the above findings and facts of the case I am of the view that the addition of Rs.44,00:00,000/- is unwarranted, unjustified and unlawful. Hence, I delete the addition of Rs.44,00,00,000/- made by the Assessing Officer. The ground is allowed.”

Aggrieved by the order of the CIT(A) revenue is in appeal before the Tribunal. The learned DR relied on the order of AO. Despite service of notice none appeared on behalf of the assessee. In the circumstances we proceeded to decide the appeal on the basis of material on record and submissions of the learned DR.

We have considered the material on record and the order of CIT(A). We are of the view that the order of CIT(A) does not call for any interference. It is clear from the order of CIT(A) that the assessee never made any investments in the purchase of ITA No.709/Kol/2013-M/s. Dunlop India Ltd. A.Y.2008-09 immovable property worth Rs.44 crores in Mumbai. The assessee only created only mortgage over an immovable property for a sum of rs.44 Crores to avail credit facilities from Deutche bank. The necessary Form No.8 was filed by the assessee in the Ministry of Corporate Affairs on 14.07.2007. Incidentally the mortgage was also created on 14.07.2007. In the light of the aforesaid document and in the absence of any other reliable evidence to show that the assessee made any investment of Rs.44 Crores in purchase of a property, we are of the view that addition made by the AO was rightly deleted by CIT(A). We may also add that the I.T.S. or (AIR information) details received by the AO was only an information which could be the basis for starting an enquiry against the assessee. These details cannot be conclusive against the assessee. For the reasons given above we confirm the order of CIT(A) and dismiss the appeal of the revenue 8. In the result the appeal of the revenue is dismissed. Order pronounced in the Court on 11.05.2016.

Sd/- Sd/- [M.Balaganesh ] [ N.V.Vasudevan ] Accountant Member Judicial Member Dated : 11.05.2016. [RG PS] Copy of the order forwarded to: 1.M/s. Dunlop India Ltd., Flat No.1, 5th Floor, Front Side, 9, Syed Amir Ali Avenue, Kolkata-700017. 2. D.C.I.T., Circle-7, Kolkata. 3. CIT(A)-XXXII, Kolkata 4. CIT-III, Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata. True Copy By order,

D.C.I.T CIR - 7,KOLKATA., KOLKATA vs. M/S DUNLOP INDIA LTD, KOLKATA