Shridevi Park Private Limited, CHENNAI v. ACIT Company Circle VI(4), CHENNAI

ITA 1933/CHNY/2018 | 2003-2004
Pronouncement Date: 25-11-2019 | Result: Allowed

Appeal Details

RSA Number 193321714 RSA 2018
Assessee PAN AAJCS1161J
Bench Chennai
Appeal Number ITA 1933/CHNY/2018
Duration Of Justice 1 year(s) 5 month(s) 11 day(s)
Appellant Shridevi Park Private Limited, CHENNAI
Respondent ACIT Company Circle VI(4), CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 25-11-2019
Last Hearing Date 25-11-2019
First Hearing Date 25-11-2019
Assessment Year 2003-2004
Appeal Filed On 14-06-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI $ % .. ' ) * BEFORE SHRI RAMIT KOCHAR ACCOUNTANT MEMBER AND SHRI DUVVURU R.L.REDDY JUDICIAL MEMBER ITA NO.1933/CHNY/2018 )+ + /ASSESSMENT YEAR: 2003-04 M/S.SHRIDEVI PARK PVT. LTD. NO.1 HANUMANTHA ROAD T.NAGAR CHENNAI-600 017. V . THE ASST. COMMISSIONER OF INCOME TAX COMPANY CIRCLE-VI(4) CHENNAI. [PAN: AAJCS1 161J ] ( . /APPELLANT) ( /0. /RESPONDENT) . 1 / APPELLANT BY : MR.G.SURYA NARAYANAN ADV. /0. 1 /RESPONDENT BY : MR. GURU BASHYAM ADDL. CIT 1 /DATE OF HEARING : 25.11.2019 1 /DATE OF PRONOUNCEMENT : 25 .11.2019 / O R D E R PER RAMIT KOCHAR ACCOUNTANT MEMBER : THIS APPEAL FILED BY ASSESSEE IS DIRECTED AGAINST APPELLATE ORDER DATED 27.02.2018 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-15 CHENNAI (HEREINAFTER CALLED THE CIT( A)) IN ITA NO.484/2013-14/CIT(A)-15 FOR ASSESSMENT YEAR (AY) 2 003-04 THE APPELLATE PROCEEDINGS BEFORE LEARNED CIT(A) HAD ARI SEN FROM ASSESSMENT ORDER DATED 24.12.2007 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S.143(3) READ WITH SECTION 147 OF THE INCOME-TAX ACT 1961 (HEREINAFTER CALLED THE ACT). ITA NO.1933/CHNY/2018 :- 2 -: 2. THE GROUNDS OF APPEAL RAISED BY ASSESSEE IN MEM O OF APPEAL FILED WITH INCOME-TAX APPELLATE TRIBUNAL CHENNAI (HEREIN AFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (A PPEALS) IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IS HIGHLY ILLEGAL IMPROPER AGAI NST THE FACTS AND CIRCUMSTANCES OF THE CASE AGAINST THE MATERIAL EVIDENCE ON RECORD PERVERSE A ND LIABLE TO BE SET ASIDE. 2. THE AUTHORITIES BELOW FAILED TO CONSIDER THAT RS .14 82 488/- REPRESENTING THE SHARE APPLICATION MONEY HAD BEEN ACCOUNTED FOR AND THE PR OPER PROOF AS TO RETURN OF ALLOTMENT IN FORM 2 AND ANNUAL RETURN FILED WITH THE REGISTRAR O F COMPANIES WERE ENCLOSED WITH THE APPEAL GROUNDS AND PRODUCED BEFORE THE ASSESSING AU THORITY AND BOTH OF THEM FAILED TO CONSIDER THE SAME BY HOLDING THAT NO MATERIAL EVIDE NCE WAS PRODUCED FOR THE SAID PURPOSE IS HIGHLY PERVERSE AND WITHOUT CONSIDERING THE MATE RIAL DOCUMENT IS HIGHLY ILLEGAL AND LIABLE TO BE SET ASIDE. 3. THE APPELLATE AUTHORITY FAILED TO NOTE THAT FOR NO FAULT OF THE APPELLANT THAT APPEAL WAS KEPT PENDING FOR 10 YEARS AND ALL OF A SUDDEN IN A HASTE AND WITHOUT OFFERING A PERSONA! HEARING WOULD SHOW THAT THE APPEAL HAS NOT BEEN DEC IDED IN ACCORDANCE WITH LAW AND THE ORDER IS LIABLE TO BE SET ASIDE. 4. THE ASSESSING OFFICER AS WELL AS APPELLATE AUTHOR ITY FAILED TO NOTE THAT ONLY THE INITIAL ONUS THAT WILL BE ON THE APPELLANT TO PROVE THAT IT IS PROPERLY DONE AND THEREFORE THE BURDEN IS PROVED BY PRODUCTION OF APPROPRIATE DOCUMENT TH E AUTHORITIES SHALL ACCEPT AND PASS SUITABLE ORDERS IN ACCORDANCE WITH LAW AND THE FAIL URE OF THE AUTHORITIES. IN THE PRESENT CASE TO CONSIDER THE FACTS AND MATERIAL EVIDENCE IN PROP ER PERSPECTIVE HAS RENDERED ITS FINDING PERVERSE AND LIABLE TO BE SET ASIDE. 5. THE AUTHORITIES BELOW FAILED TO CONSIDER THAT U NSECURED LOANS IS DIFFERENT FROM CASH CREDIT. CASH CREDIT IS GIVEN ON THE BASIS OF SECURI TY UNSECURED LOAN BY ITSELF MEAN THAT THE LOAN IS NOT SECURED. IN THE PRESENT CASE THE LOAN A S WELL AS THE REPAYMENT HAS BEEN PROPERLY ACCOUNTED; THE CREDITOR HAS ALSO ACCOUNTED FOR THE SAID LOAN AND REPAYMENT IN THEIR ACCOUNTS AND IT IS ALSO ACCEPTED BY THEIR DEP ARTMENT. HENCE BOTH THE AUTHORITIES ARE WRONG IN CONCLUDING THAT THE SAID AMOUNTS WILL COME UNDER SECTION 68 IS HIGHLY IMPROPER AND LIABLE TO BE SET ASIDE. 6. THE ORDER OF AUTHORITIES ARE LIABLE TO BE SET AS IDE ON SUCH FURTHER GROUNDS AS MAY BE RAISED AT THE TIME OF HEARING AND/OR ON SUCH FURTHER GROUNDS AS THIS HON'BLE TRIBUNAL MAY DEEM FIT AND PROPER ON THE FACTS AND CIRCUMSTANCES OF THIS CASE AND RENDER JUSTICE. 7. IT IS THEREFORE PRAYED THAT THE ORDER OF THE COM MISSIONER OF INCOME TAX APPEALS (15) IN ITA NO. 484/2013 - 14/ CIT (A) - 15 IN CONFIRMING THE ORDER OF ASSESSMENT FOR THE YEAR 2003 - 04 DATED 24/12/2007 IS LIABLE TO BE SET ASIDE. 3 BRIEFLY STATED FACTS OF CASE ARE THAT THE ASSESSE E IS ENGAGED IN BUSINESS OF BOARDING & LODGING AND RUNNING BARS. THE ASSESS EE HAS CLAIMED TO HAVE RECEIVED CERTAIN LOANS SHARE APPLICATION MONE Y SOME OF WHICH WERE RECEIVED IN CASH ALSO. THE AO INVOKED PROVISI ONS OF SEC.69D OF THE ITA NO.1933/CHNY/2018 :- 3 -: 1961 ACT AND BROUGHT TO TAX FOLLOWING UNSECURED LO ANS AMOUNTING TO ` 25 44 388/- WHICH ARE APPEARING IN ASSESSEES BALAN CE SHEET DETAILS OF WHICH ARE AS UNDER: NAME OF LENDER AMOUNT LENT (CASH) SMT.BALAGOWRI V RS.2 00 000 SHRI GANESH V.S. RS.2 50 000 GMEC RS. 61 900 SHRI BALASUBRAMANIAN P.M. (DIRECTOR) RS.2 50 000 SHRI GURUDAS P.M. (BROTHER OF SHRI P.M.BALASUBRAMANIAN) RS. 2 32 488 SHRI RAJKUMAR A RS.7 50 000 SMT. SARASWATHI GURUDAS (WIFE OF SHRI GURUDAS) RS.2 50 000 SHRI SRINANDH RS.2 00 000 SHRI VELUSAMY P. RS.3 50 000 TOTAL RS.25 44 388 AS PER AO THE AFORESAID LOANS WERE HAND LOANS AND ASSESSEE HAD FAILED TO SHOW PROMISSORY NOTES IN SUPPORT OF AFORESTATED LOANS AND HENCE THESE CASH LOANS WERE DEEMED TO BE INCOME OF THE ASSESSEE BY AO VIDE ASSESSMENT ORDER DATED 24.12.2017 PASSED BY AO U/S 143(3) READ WITH SECTION 147 OF THE 1961 ACT 4. BEING AGGRIEVED BY AN ASSESSMENT FRAMED BY AO THE ASSESSE FILED FIRST APPEAL WITH LEARNED CIT(A) WHO WAS PLEASED TO DISMISS APPEAL OF THE ASSESSEE VIDE APPELLATE ORDER DATED 27.02.2018 PA SSED BY LEARNED CIT(A) BY HOLDING AS UNDER: 4.3. CIT(A)'S REMARKS AND DECISION : I HAVE CAREFULLY GONE THROUGH THE OBSERVATION OF TH E AO IN THE ASSESSMENT ORDER AS MENTIONED ABOVE UNDER PARA 4.1 AND THE APPELLANT'S SUBMISSION BEFORE THE CIT(A) UNDER PARA 4.2. 4.3.1. AFTER PERUSING THE LEDGER FOLIOS FOR LOAN AC COUNT AND BUILDING CONSTRUCTION THE AO NOTICED RECEIPT OF CASH FROM SRHI P.M.GURUDAS TOWAR DS SHARE APPLICATION MONEY AND ON SIMILAR LINES THERE WAS CASH RECEIPT FROM SHRI P.M. BALASUBRAMANIAN SHRI A.RAJKUMAR AND MS.SARASWATHI GURDAS ON DIFFERENT DATES. SINCE NO EXPLANATION WAS OFFERED FOR RECEIPT OF CASH THE AO INITIATED PENALTY PROCEEDINGS U/S 271D F OR VIOLATION OF SECTION 269SS. ON ITA NO.1933/CHNY/2018 :- 4 -: PAGE2 PARAGRAPH 4 THE AO HAS TABULATED THE AMOUNTS RECEIVED BY THE APPELLANT COMPANY IN CASH TOTALING RS.25 44 388/-. BY INVOKING SECTIO N 69D THE AO HAS CONCLUDED THAT THOSE CASH RECEIPTS ARE. UNEXPLAINED AMOUNTS BORROWED ON A HUNDI BEFORE THE CIT(A) THE APPELLANT SUBMITTED THAT OUT OF TOTAL CREDITS ONLY RS.15 44 388/- WAS RECEIVED IN CASH AS FOLLOWS - RS.14 82 488/- TOWARDS SHARE APPLICATION MONEY AND RS.61 900/- TOWARDS UNSECURED LOANS AND THE BALANCE AMOUNT OF RS.10 LA KHS WAS RECEIVED BY CHEQUE. THE APPELLANT HAS CONTENDED BEFORE THE CIT(A) THAT SINCE THE AFORESAID AMOUNT WAS REPAID BY CHEQUE PROVISION OF SECTION 69D WILL NOT BE APPLIC ABLE. IN SHARE APPLICATION MONEY OF RS. 14 82 488 AND UNSECURED LOAN OF RS.10 61 900/- THE APPELLANT RELIED ON THE DECISION IN THE CASE OF UMA POLYMERS PVT. LTD. AND CERTAIN OTHER DE CISIONS STATING THAT THE AO'S ADDITION WAS UNWARRANTED. 4.3.2. I HAVE CONSIDERED BOTH THE POINTS OF VIEW. A LTHOUGH SEVERAL OPPORTUNITIES WERE GIVEN TO THE APPELLANT UNDER PARA 3.1 THE APPELLANT COUL D NOT SUBMIT ANY DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CLAIM. SINCE THIS APPEAL IS PENDI NG FOR MORE THAN TEN YEARS I AM CONSTRAINED TO DISPOSE OF THIS APPEAL BASED ON MATE RIAL AVAILABLE ON RECORD. 4.3.3. COMING TO THE APPELLANT'S CONTENTION THAT TH IS SHARE APPLICATION' MONEY RECEIVED IN CASH OF RS.14 82 488/- SHOULD NOT BE ASSESSED U/S 69 D. IT IS PERTINENT TO MENTION THAT THE APPELLANT DID NOT SUBMIT ANY PARTICULAR RELATED TO THIS CLAIM. IN SPITE OF SEVERAL OPPORTUNITIES GIVEN THE APPELLANT COULD NOT GIVE A NY DOCUMENTARY EVIDENCE WITH REGARD TO SHARE APPLICATION SHARE ALLOTMENT OR INTIMATION T O THE ROC. SINCE THE APPELLANT HAS NOT DISCHARGED ITS PRIMARY ONUS OF PROVING THE IDENTITY GENUINENESS AND CAPACITY OF THE PERSONS WHO HAVE CLAIMED TO HAVE GIVEN MONEY TO THE APPELLANT IN CASH TOWARDS SHARE APPLICATION MONEY I AM OF THE CONSIDERED OPINION T HAT THE APPELLANT'S CLAIM IS DEVOID OF MERIT AND THEREFORE REJECTED. EVEN IF THE APPELLAN T'S CLAIM THAT IT IS TOWARDS SHARE APPLICATION MONEY IS SUPPORTED BY DOCUMENT IT SHOU LD BE ASSESSED AS 'UNEXPLAINED CASH CREDIT' U/S 68 AS THE APPELLANT HAS FAILED TO DISCHA RGE ITS PRIMARY ONUS AS MENTIONED ABOVE. THEREFORE THE AO'S ADDITION OF SHARE APPLICATION MO NEY OF RS.14.82.488/- IS CONFIRMED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT. 4.3.4. NOW COMING TO THE APPELLANT'S SUBMISSION THA T ONLY RS.10 61 900/- WAS RECEIVED AS UNSECURED LOANS. IN THIS REGARD THE APPELLANT'S CO NTENTION THAT RS.10 LAKHS WAS REPAID BY CHEQUE IN SUBSEQUENT YEAR DOES NOT ABSOLVE THE APPE LLANT OF ITS PRIMARY ONUS OF PROVING THE IDENTITY GENUINENESS AND CAPACITY OF THE LENDE R AT THE TIME OF RECEIPT IN THIS AY. SINCE THE APPELLANT HAS NOT CONTROVERTED THE AO'S OBSERVAT ION THAT THE APPELLANT RECEIVED UNSECURED LOAN IN CASH I CONCUR WITH THE AO'S ADDIT ION TO THE EXTENT OF RS. 10 61.900/- U/S 69D. AS PER SECTION 69D A CASH LOAN RECEIVED SHALL BE DEEMED TO BE INCOME OF THE PERSON BORROWING UNLESS IT IS PROVED THAT THE SAID AMOUNT IS THE INCOME OF ANY OTHER PERSON. HERE THE APPELLANT HAS NOT SUBMITTED ANY MATERIAL EVIDEN CE TO DEMONSTRATE THAT THE AMOUNT BORROWED WAS OUT OF ACCOUNTED INCOME OF THE PERSON WHO ADVANCED THE LOAN. 4.3.5. I HAVE PERUSED THE CASE LAWS RELIED ON BY TH E APPELLANT AND I DO NOT FIND THEM APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE AP PELLANT'S CASE. ON THE ISSUE OF UNEXPLAINED SHARE APPLICATION MONEY AND UNEXPLAINED CASH CREDIT I HAVE PERUSED THE FOLLOWING DECISIONS IN FAVOUR OF REVENUE. A. PROVISION APPLIES TO ALL CREDIT ENTRIES :IN THE CASES WHERE CREDIT ENTRY HAS BEEN MADE IN THE BOOKS OF THE ASSESSEE THE AMBIT OF SECTION 68 IS WIDE AND INCLUSIVE. PROVISION APPLIES TO ALL CREDIT ENTRIES. THE LANGUAGE OF SECTION 68 S HOWS THAT IT IS GENERAL IN NATURE AND APPLIES TO ALL CREDIT ENTRIES IN WHOMSOEVER NAME TH EY MAY STAND THAT IS WHETHER IN THE NAME OF THE ASSESSEE OR A THIRD PARTY AS HELD IN TH E CASE OF GUMANI RAM SIRI RAM V. CIT [1975] 98 ITR 337 (PUNJ. & HAR.). B. THE PROVISION APPLIES TO NONCOMMERCIAL LOANS AS WELL AND IT WAS PRECISELY THE SAME AS HELD BY THE HON. CALCUTTA HIGH COURT IN THE CASE OF C. KANT & CO. V.CIT [19801 126 ITR 63 (CAL.). OBSERVING THAT SECTION 68 DOES NOT MAKE ANY DISTINCTION BETWEEN COMMERCIAL AND NON-COMMERCIAL LOANS. C. FURTHER IN THE CASE OF KAMAL MOTORS V. CIT [200 3] 131 TAXMAN 155 (RAJ.). IT WAS HELD THAT THE RESPONSIBILITY IS ON THE ASSESSEE TO DISCH ARGE THE ONUS THAT THE CASH CREDITOR IS A MAN OF MEANS TO ALLOW THE CASH CREDIT. THE BURDEN T O PROVE THE SOURCE OF RECEIPT IS IN RESPECT OF EACH ENTRY AS HELD IN THE CASE OF CIT V. R.S. RATHORE [1995] 212 ITR 390 (RAJ.) ITA NO.1933/CHNY/2018 :- 5 -: THAT WHILE EXPLAINING THE VARIOUS CREDITS AND INVES TMENTS IT IS POSSIBLE THAT THE ASSESSEE MAY BE SUCCESSFUL IN EXPLAINING SOME OF THEM BUT T HAT DOES NOT BY ITSELF MEAN THAT THE ENTIRE INVESTMENTS HAS TO BE CONSIDERED AS EXPLAINE D. IT IS EACH AND INDIVIDUAL ENTRY ON WHICH THE MIND HAS TO BE APPLIED BY THE TAXING AUTH ORITY WHEN AN EXPLANATION IS OFFERED BY THE ASSESSEE. ON THE ISSUE OF BURDEN OF PROOF A VERY SPECIFIC AND ILLUSTRIOUS DECISION WAS FROM THE HON. CALCUTTA HIGH COURT IN CIT VS. PRECIS ION FINANCE PVT. LTD. (1994) 208 ITR 465 (CA 1) WHERE IN IT WAS LAID DOWN THAT THE ASSESSEE I S EXPECTED TO ESTABLISH: - 1. IDENTITY OF HIS CREDITORS; 2. CAPACITY OF CREDITORS TO ADVANCE MONEY; AND 3. GENUINENESS OF TRANSACTION. IN FACT THE PRINCIPLE OF ONUS THAT THE ASSESSEE I S REQUIRED TO ESTABLISH THE IDENTITY PROVE THE GENUINENESS OF THE TRANSACTION AND ESTABLISH TH E CREDITWORTHINESS OF THE DONOR HAS BEEN REITERATED EVEN IN A RECENT DECISION OF HON. D ELHI HIGH COURT IN THE CASE OF CIT VS. OASIS HOSPITALITIES PVT. LTD. 333 ITR 119 (DELHI)(20 1 1). IN THIS CASE IT WAS HELD BY THE HON. COURT THAT 'THE INITIAL ONUS IS UPON THE ASSES SEE TO ESTABLISH THREE THINGS NECESSARY TO OBVIATE THE MISCHIEF OF SECTION 68. THOSE ARE: (I) I DENTITY OF THE INVESTORS; (II) THEIR CREDITWORTHINESS/INVESTMENTS; AND (III) GENUINENESS O F THE TRANSACTION. ONLY WHEN THESE THREE INGREDIENTS ARE ESTABLISHED PRIMA FACIE THE DEPARTMENT IS REQUIRED TO UNDERTAKE FURTHER EXERCISE.' E. ONUS OF PROOF : PRIMA FACIE ONUS IS ALWAYS ON THE ASSESSEE TO PRO VE THE CASH CREDIT ENTRY FOUND IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IN L AND MARK CASES LIKE KALE KHAN MOHAMMAD HANIF V CIT [1963] 50 ITR 1 (SC) ROSHAN DI HATTI V CIT [1977] 107 ITR (SC) IT HAS BEEN HELD THAT THE LAW IS WELL SETTLED THAT THE ONUS OF PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE I S ON HIM. WHERE THE NATURE AND SOURCE THEREOF CANNOT BE EXPLAINED SATISFACTORILY IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS THE INCOME OF THE ASSESSEE AND NO FURTHER BURDEN IS ON THE REVENUE TO SHOW THAT THE INCOME IS FROM ANY PARTICULAR SOURCE. IT MAY ALSO B E POINTED OUT THAT THE BURDEN OF PROOF IS FLUID FOR THE PURPOSES OF SECTION 68. ONCE ASSESSEE HAS SUBMITTED BASIC DOCUMENTS RELATING TO IDENTITY GENUINENESS OF TRANSACTION AND CREDITW ORTHINESS THEN AO MUST DO SOME INQUIRY TO CALL FOR MORE DETAILS TO INVOKE SECTION 68.' 4.3.6. IN VIEW OF THE ABOVE REMARKS AND THE DECISI ONS RELIED ON I HAVE COME TO THE CONCLUSION THAT THE APPELLANT COULD NOT CONTROVERT THE AO'S OBSERVATION THAT THE APPELLANT COULD NOT DISCHARGE ITS PRIMARY ONUS OF EXPLAINING THE ACCOUNTED SOURCE OF ITS BOOKS OF ACCOUNTS TO THE EXTENT OF RS.65 44 388. ACCORDINGLY THE AO'S ADDITION IS CONFIRMED AND THE APPELLANT'S GROUNDS ARE DISMISSED. 5. IN THE RESULT THE APPEAL IS DISMISSED. 5. BEING AGGRIEVED BY AN APPELLATE ORDER PASSED BY LEARNED CIT(A) THE ASSESSEE HAS NOW FILED AN APPEAL BEFORE TRIBUNAL AN D HAS RAISED SEVERAL GROUNDS OF APPEAL IN MEMO OF APPEAL FILED WITH TRIB UNAL ASSAILING APPELLATE ORDER PASSED BY LEARNED CIT(A). AT OUTSET THE LD .COUNSEL FOR THE ASSESSEE PRAYED THAT THE MATTER MAY BE SET ASIDE AN D RESTORED TO THE FILE OF THE AO FOR FRESH ADJUDICATION AS AUTHORITIES BEL OW HAVE NOT PROVIDED ASSESSEE WITH PROPER AND ADEQUATE OPPORTUNITY OF BE ING HEARD TO ITA NO.1933/CHNY/2018 :- 6 -: ASSESSEE. THE LEARNED COUNSEL FOR ASSESSEE SUBMITTE D THAT LEARNED CIT(A) HAS PASSED APPELLATE ORDER AFTER 10 YEARS OF FILING OF APPEAL BY ASSESSEE WITH LEARNED CIT(A) . OUR ATTENTION WAS DRAWN TO PA RA 3 OF LEARNED CIT(A) ORDER WHEREIN IT IS STATED THAT ASSESSEE FILED APPE AL WITH LEARNED CIT(A) ON 28.1.2008 AND LEARNED CIT(A) POSTED APPEAL FOR FIRS T HEARING ON 16.02.2016 AND THEN ON 27.12.2017 AND 01.02.2018. I T WAS SUBMITTED THAT ASSESSEE APPEARED ON 27.12.2017 AND THEN HE CO ULD NOT APPEAR ON 01.02.2018 AND THEN THE APPEAL WAS ADJUDICATED BY L EARNED CIT(A). IT WAS SUBMITTED THAT IT WAS DEPARTMENT WHICH KEPT APP EAL PENDING FOR TEN YEARS. THUS IN NUT-SHELL IT WAS PRAYED THAT PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD WAS NOT GIVEN TO ASSESSE E BY AUTHORITIES BELOW AND PRAYERS WERE MADE TO SET ASIDE ORDERS OF AUTHOR ITIES BELOW AND RESTORE THE MATTER TO FILE OF AO FOR FRESH ADJUDICA TION ON MERITS IN ACCORDANCE WITH LAW. OUR ATTENTION WAS ALSO DRAWN T O GROUND NUMBER 3 WHEREIN SPECIFIC GROUND TO THAT EFFECT WAS TAKEN BY ASSESSEE IN APPEAL FILED WITH TRIBUNAL. IT WAS SUBMITTED THAT BOTH TH E AUTHORITIES BELOW ERRED IN CONCLUDING THAT THESE LOANS WERE OBTAINED IN CAS H AND THAT THESE LOANS WERE BORROWED AGAINST HUNDIS. THE ASSESSEE HAS FILE D LIST OF PERSONS WHO HAD ADVANCED LOANS TO ASSESSEE ALONG WITH CHEQUE/DD NOS AND PRAYERS WERE MADE TO SET ASIDE MATTER/ISSUES TO FILE OF AO FOR NECESSARY VERIFICATIONS AND ENQUIRIES AS MAY DEEM FIT BY THE AO. IT IS CLAIMED THAT THESE DETAILS WERE ALL PLACED BEFORE AUTHORITIES BE LOW BUT AUTHORITIES BELOW FAILED TO TOOK COGNIZANCE OF THESE DETAILS. IT IS A LSO CLAIMED THAT SOME OF LOANS WERE EVEN REPAID BY ACCOUNT PAYEE CHEQUE ALON G WITH INTEREST ITA NO.1933/CHNY/2018 :- 7 -: WHICH HAS NOT BEEN CONSIDERED BY AUTHORITIES BELOW. IT IS SUBMITTED THAT WITH RESPECT TO SHARE APPLICATION MONEYS RECEIVED THE SHARES STOOD ALLOTTED TO THE PERSONS ADVANCING SHARE APPLICATION MONEY. THE ASSESSEE HAS FILED AN AFFIDAVIT OF SHRI P.M.GURUDAS MANAGI NG DIRECTOR OF THE COMPANY ALONG WITH FORM NO. 2 LIST OF SHAREHOLDER S AND ANNUAL RETURN OF THE ASSESSEE COMPANY FILED WITH REGISTRAR OF COMPAN IES MCA AND PRAYERS ARE MADE THAT THE MATTER/ISSUES MAY BE RESTORED TO FILE OF THE AO FOR MAKING NECESSARY ENQUIRIES AND VERIFICATION AND FRE SH ADJUDICATION . THE LD.DR ON THE OTHER HAND SUBMITTED THAT HE HAD NO OB JECTION IF MATTER IS RESTORED TO FILE OF THE AO FOR FRESH ADJUDICATION. HOWEVER IT WAS SUBMITTED BY LEARNED DR THAT 10 YEARS HAVE PASSED A ND THE ASSESSEE IS ADOPTING DELAY TACTICS TO PROTRACT LITIGATION AND P RAYED THAT ONUS IS ON THE ASSESSEE TO PROVE THAT THESE ARE GENUINE LOANS/DEPO SITS WHICH SATISFIES MANDATE OF SECTIONS 68 & 69D OF THE ACT. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE OBSERVED THAT ASSESSEE IS ENGAGED I N BUSINESS OF BOARDING & LODGING AND RUNNING BARS. THE ASSESSEE HAS RECEIVED CERTAIN LOANS/DEPOSITS/SHARE APPLICATION MONEY DURING YEAR UNDER CONSIDERATION AGGREGATING TO ` 25 44 388/- FROM VARIOUS PERSONS AS DETAILED BELO W:- NAME OF LENDER AMOUNT LENT (CASH) SMT.BALAGOWRI V RS.2 00 000 SHRI GANESH V.S. RS.2 50 000 GMEC RS. 61 900 SHRI BALASUBRAMANIAN P.M. (DIRECTOR) RS.2 50 000 SHRI GURUDAS P.M. (BROTHER OF SHRI P.M.BALASUBRAMANIAN) RS. 2 32 488 SHRI RAJKUMAR A RS.7 50 000 SMT. SARASWATHI GURUDAS (WIFE OF SHRI GURUDAS) RS.2 50 000 ITA NO.1933/CHNY/2018 :- 8 -: SHRI SRINANDH RS.2 00 000 SHRI VELUSAMY P. RS.3 50 000 TOTAL RS.25 44 388 THE AO HAD MADE ADDITIONS OF THE AFORESAID AMOUNTS MAINLY ON GROUNDS THAT THESE ARE HAND LOANS RECEIVED IN CASH WHICH AR E IN THE NATURE OF HUNDI LOANS AND THE ASSESSEE HAS NOT PRODUCED PROMI SSORY NOTES WHICH LED TO INFRINGEMENT OF SECTION 69D OF THE 1961 ACT AND ASSESSEE FAILED TO DISCHARGE ONUS WHICH LAY ON IT UNDER PROVISIONS OF THE 1961 ACT. EVEN SHARE APPLICATION MONEY WAS HELD TO BE RECEIVED IN CASH AND IT WAS HELD THAT ASSESSEE FAILED TO DISCHARGE ITS ONUS WHICH LA Y UNDER THE 1961 ACT WHICH LED TO ADDITIONS BEING MADE BY THE AO. THE LE ARNED CIT(A) CONFIRMED THE ADDITIONS MADE BY THE AO. THE ASSESSE E HAS SUBMITTED BEFORE US THAT MAJORITY OF THESE LOANS WERE NOT REC EIVED IN CASH AND NONE OF THESE LOANS WERE HUNDI LOAN. IT IS CLAIMED THAT THESE LOANS WERE RECEIVED THROUGH BANKING CHANNEL AND DETAILS ARE SO UGHT TO BE PLACED BEFORE THE BENCH GIVING DETAILS OF CHEQUE/DD NUMB ER OF AMOUNTS RECEIVED FROM VARIOUS PERSON. IT IS ALSO CLAIMED TH AT REPAYMENTS WERE MADE ALONG WITH INTEREST TO THESE LENDERS THROUGH A CCOUNT PAYEE CHEQUES. IT IS ALSO CLAIMED THE SHARES OF ASSESSEE COMPANY WERE ALLOTTED TO PERSONS WHO ADVANCED SHARE APPLICATION MONEY AND AFFIDAVIT IS PLACED ON RECORD OF MANAGING DIRECTOR OF THE ASSESSEE COMP ANY ALONG WITH FORM NO. 2 AND ANNUAL RETURNS FILED BY ASSESSEE COMPANY WITH REGISTRAR OF COMPANIES MINISTRY OF CORPORATE AFFAIRS. THUS IN NUT-SHELL IT IS MADE OUT THAT INJUSTICE IS DONE TO ASSESSEE AND BONE OF CONT ENTIONS MADE OUT BY ITA NO.1933/CHNY/2018 :- 9 -: ASSESSEE WERE NOT APPRECIATED BY AUTHORITIES BELOW IN RIGHT PERSPECTIVE DESPITE ALL MATERIAL PLACED BY IT BEFORE AUTHORITIE S BELOW. IT IS ALSO MADE OUT THAT APPEAL OF THE ASSESSEE WAS KEPT PENDING BY LEARNED CIT(A) FOR A PERIOD OF ALMOST 10 YEARS AND EFFECTIVE OPPORTUNITY WAS NOT ACCORDED BY LEARNED CIT(A) WHILE DISPOSING THE APPEAL BY LEARNE D CIT(A). OUR ATTENTION WAS DRAWN TO PARA 3 OF LEARNED CIT(A) ORD ER . PRAYERS AREMADE TO SET ASIDE THE ISSUES IN ITS APPEAL TO THE FILE O F THE AO FOR FRESH ADJUDICATION ON MERITS IN ACCORDANCE WITH LAW. WE F IND MERIT IN THE CONTENTIONS OF ASSESSEE AND WE ARE OF THE CONSIDERE D VIEW THAT ISSUES IN THIS APPEAL NEED TO BE RESTORED TO FILE OF AO FOR F RAMING DENOVO ASSESSMENT ON MERITS IN ACCORDANCE WITH LAW. WE MAK E IT CLEAR THAT THESE AMOUNTS STOOD CREDITED IN BOOKS OF ACCOUNTS OF THE ASSESSEE AND PRIMARY ONUS IS ON ASSESSEE TO PROVE IDENTITY OF THE CREDIT ORS CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS T HROUGH COGENT AND CREDIBLE EVIDENCES. IN CASE THE ASSESSEE DID NOT CO OPERATE IN SET-ASIDE PROCEEDINGS THE AO SHALL BE AT LIBERTY TO ADJUDICA TE THE ISSUE ON MERITS IN ACCORDANCE WITH LAW BASED ON MATERIAL ON RECORD. T HE AO IS DIRECTED TO ADMIT EVIDENCES/EXPLANATIONS FILED BY THE ASSESSEE IN ITS DEFENSE DURING SET ASIDE PROCEEDINGS. NEEDLESS TO SAY THAT AO SHAL L GIVE PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LA W IN DENOVO ASSESSMENT PROCEEDINGS . WE ORDER ACCORDINGLY. ITA NO.1933/CHNY/2018 :- 10 -: 7. IN THE RESULT THE APPEAL FILED BY ASSESSEE IN I TA NO.1933/CHNY/2018 FOR AY: 2003-04 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 25 TH DAY OF NOVEMBER 2019 IN CHENNAI. SD/- SD/- ( $ % . . ' ) ( DUVVURU R.L.REDDY ) ) /JUDICIAL MEMBER ( ) ( RAMIT KOCHAR ) /ACCOUNTANT MEMBER /CHENNAI 5 /DATED: 25 TH NOVEMBER 2019. TLN 1 /)6 76 /COPY TO: 1. . /APPELLANT 4. 8 /CIT 2. /0. /RESPONDENT 5. 6 /)) /DR 3. 8 ( ) /CIT(A) 6. + /GF