ASSISTANT COMMISSIONER OF INCOME TAX - CIRCLE-4(2)(1), MUMBAI vs. KBJ DEVELOPERS PRIVATE LIMITED, MUMBAI

In the instant case, the Assessee had shown loss of Rs. (-) 9,03,171/- by filing its return of income for the assessment year under consideration on dated 25/09/2012, which was initially processed by the CPC u/sec. 143(1) of the Act and subsequently, selected for scrutiny under CASS. Accordingly, statutory notices dated 09/08/2013 u/sec. 143(2) and 07/08/2014 and 30/09/2014 u/s 142 (1) of the Act, along with questionnaire were issued to the Assessee, whereby, Assessee was asked to furnish the required details for completion of assessment proceedings.

In response to the statutory notices issued, the Assessee from time to time attended the assessment proceedings and filed certain details.

The Assessing Officer (AO) thus on perusing the details filed by the Assessee, observed “that the Assessee is engaged in the business of construction and from the accounts and tax audited report of the Assessee, it appears that the Assessee had taken unsecured loan

The Assessee, in response to the said queries, vide letter dated 20/03/2015 filed loan confirmations of unsecured loans. On perusing the same, it was noticed by the AO that the Assessee has filed the list of various parties from whom the Assessee had received unsecured loans and on verification of the submissions qua unsecured loans, the AO noticed that Assessee has given the details of Rs. 35,82,84,958/- only, thus, there is a difference of Rs. 1,30,40,000/- in both the amounts of Rs. 37,13,24,958/- as shown in the accounts and tax audited report and Rs. 35,82,84,958/- as per the details given by the Assessee. Consequently, the AO made the addition of Rs. 1,30,40,000/- on this count and added back to the income of the Assessee.

The AO further observed that on perusal of the submissions of the Assessee, it is noticed that Assessee has not given address of the following parties: -

The AO further, on the basis of the submissions given by the Assessee, sent notices u/sec. 133(6) of the Act to various parties out of which, notices sent to two parties namely (i) Pilot Constructions Pvt. Ltd. (Rs. 7,00,00,000) and (ii) Mumbadevi Bullion (Rs. 14,48,20,650) returned unserved with the postal remarks ‘left/ not known’ and therefore the AO on this reason, show caused the Assessee, who though submitted the details regarding the above said parties, but the same were not found acceptable by the AO, who ultimately made the addition of Rs. 21,48,20,650/- and added back to the total income of the Assessee.

The AO further considered the loan confirmations of unsecured loans provided by the Assessee vide letter dated 20/03/2015 and noticed that Assessee has filed confirmation letters in respect of few parties but without supporting documents, such as, ledger account, copy of return of income, balance sheet, profit and loss account etc. In absence of these supporting documents, genuineness and creditworthiness of the parties could not be verified. The AO further observed that despite of affording several opportunities to the Assessee, it has neither filed any supporting documents nor cogent explanation, in respect of the following parties: - Sr. No. Name of the party Amount (in Rs.) 1 Aksha Realty Ltd. 47,308 2 B. Chandan 11,00,000 3 Dev Jewels 10,26,85,000 4 Dinesh Parmar 10,00,000 5 Girdhai Jain Sanghvi 23,44,000 6 G.J. Jalshinghani 10,00,000 7 Javed Raza Shroff 55,00,000 8 Kalawati P. Kothari 21,00,000 9 Mukesh Mehta 5,00,000 10 Sancheti and Sons 2,50,000

1 The AO, therefore, on the aforesaid reason and by observing that “when the assessee receives any loans, primary onus is on the assessee to establish the genuineness of the same. The assessee in the instant case has not even been able to file confirmations from the parties which have lent loan” and “failed to discharge the onus of proof that lay on it to establish the genuineness and creditworthiness of unsecured loans”, finally treated the amount of Rs. 35,14,90,958/- in total, as unexplained cash credit taxable u/sec. 68 of the Act.

The AO also by perusing the AIR information also noticed that Assessee has sold a property i.e. Plot No. 564, sub-urban scheme No.3, Chembur, admeasuring 418 sq.ft. for Rs. 1,92,86,000/-, but has not disclosed the said transaction in ITR. Therefore, the AO collected the information from the office of Joint Sub-