2016 (6) TMI 424 - AT - Income Tax

Addition u/s 69 as undisclosed investment in immovable property - CIT(A) deleted the addition - Held that - It is clear from the order of CIT(A) that the assessee never made any investments in the purchase of immovable property worth ₹ 44 crores in Mumbai. The assessee only created only mortgage over an immovable property for a sum of ₹ 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 ₹ 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 - Decided against revenue

Summary

Issues:
- Whether the addition of ?44,00,00,000 under section 69 as undisclosed investment in immovable property is justified.

Analysis:
1. The Revenue appealed against the order of the CIT(A) relating to AY 2008-09, challenging the deletion of the addition of ?44,00,00,000 under section 69 as undisclosed investment in immovable property. The AO found that the assessee had purchased immovable property based on AIR information but no such investments were reflected in the balance sheet, leading to the addition.

2. The Assessee, a company engaged in manufacturing and trading, clarified before CIT(A) that no property was purchased for ?44 crores but an English mortgage was created to avail a loan from Deutche Bank AG. Evidence was submitted showing the mortgage creation and repayment, contradicting the AO's conclusion. CIT(A) admitted the additional evidence and concluded that no investment in immovable property was made, deleting the addition.

3. The Tribunal upheld CIT(A)'s decision, noting that the assessee only created a mortgage for ?44 crores, not purchased property. The Form No.8 for the mortgage was filed, corroborating the transaction date. The information from AIR was deemed insufficient to prove the investment, and in the absence of concrete evidence, the addition made by the AO was rightly deleted by CIT(A).

4. The Tribunal emphasized that the details from AIR were merely a starting point for inquiry and not conclusive evidence. Since no substantial proof of investment was presented, the deletion of the addition by CIT(A) was upheld. The appeal of the Revenue was dismissed, confirming the order of CIT(A).