M/S. REAL WORLD BUILDERS vs. THE ASSISTANT

2025:MHC:233 T.C.A.No.1212 of 2015 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 23.01.2025 CORAM : THE HONOURABLE DR.JUSTICE ANITA SUMANTH and THE HONOURABLE MR.JUSTICE G. ARUL MURUGAN T.C.A.No.1212 of 2015 M/s. Real World Builders P Ltd., C/o TV Rao Associates, Sree Ram Sruthi, Flat No. C-1, Block B, New No. 37, Rajeshwari Street, Mehta Nagar, Chennai – 600 029. .. Appellant vs The Assistant Commissioner of Income Tax, (OSD), Corporate Range 5, Chennai. .. Respondent Prayer : Appeal filed under Section 260A of the Income-Tax Act, 1961 against the order passed by the Income-Tax Appellate Tribunal, Chennai, Bench 'A' in ITA No. 344/Mds/2015 dated 08.05.2015. For Appellant : Mr.Ashokapathy for M/s. Pass Associates For Respondent : Mrs.V.Pushpa Senior Standing Counsel JUDGMENT (Delivered by Dr. ANITA SUMANTH.,J) We have heard Mr.Ashokapathy, learned counsel for the assessee / appellant and Mrs.V.Pushpa, learned Senior Standing Counsel for the Income-Tax Department/respondent. 2. The assessee challenges the rejection of an appeal filed 1/5 https://www.mhc.tn.gov.in/judis T.C.A.No.1212 of 2015 before the Income-Tax Appellate Tribunal ('ITAT/Tribunal') in respect of Assessment Year (AY) 2009 – 10. 3. The substantial questions of law that have been admitted on 04.01.2016 are as follows:- “1) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in confirming the addition of Rs.64,41,942/- sustained by the learned Commissioner of Income Tax (A-V) (i/c) despite the fact that the appellant had discharged its burden and established the identity of the creditor, creditworthiness and genuineness? 2) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in confirming the addition of Rs.64,41,942/- when the department had not discharged its onus to show why the cash credit should not be accepted and why the same should be treated as income of the appellant? 3) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in confirming the addition of Rs.64,41,942/- when the department did not have sufficient and adequate material to treat the same under the head unexplained cash credit?” 4. The assessment was framed by an order dated 26.12.2011 in terms of the provisions of the Income-Tax Act, 1961 (in short, 'Act'), where a sum of Rs.11,80,42,972/- was disallowed under Section 68, since the assessing officer was of the view that the cash credits had not passed the trifecta of tests as follows:- “1) Identity of the creditor 2) Creditworthiness of the Creditor 3) Genuineness of the transaction” 5. In appeal, the Commissioner of Income-Tax (Appeals) by order dated 08.09.2014 held that the assessee had discharged the onus 2/5 https://www.mhc.tn.gov.in/judis T.C.A.No.1212 of 2015 placed on it and allowed the ground relating to cash credits substantially, sustaining the addition only to the extent of Rs.64,41,942/-. 6. As against the same, the Revenue did not file a further appeal before the Tribunal and it was only the assessee who went on appeal. 7. There are categoric findings of fact by the Tribunal to the effect that there was no material available on record to substantiate the claim of the creditors to the extent of Rs.64,41,942/- barring the identity of the creditor, who was the Director of the Company. The Tribunal notes, as do the lower authorities that, neither the genuineness of the transaction nor the creditworthiness of the creditor has been established. 8. The relevant portion of the order of the Tribunal is extracted below:- “5. We have considered the rival submissions on either side and also perused the material available on record. The assessee has shown credit of Rs.11,80,42,972/- in the balance sheet as on 31.3.2009. The assessee claimed before the lower authorities that the amount was received from Shri Matheem, Director of the company in foreign currency. The assessee has filed the revised balance sheet

claiming

the

loan

amount

of Rs.11,94,16,351/- due to exchange rate fluctuation. The Assessing Officer disallowed the entire claim of Rs.11,94,16,351/-. However, the CIT (A) found that the assessee has established that it received a sum of Rs.11,29,74,409/-. The CIT (A) further found that there was no material available on record to substantiate the claim to the extent of Rs.64,41,942/-. Admittedly, these are unsecured credit said to be received from Mr.Matheen, Director of the company. For the purpose of proving unsecured credit, the assessee has to establish the identity of the creditor, creditworthiness of the creditor and genuineness of the transaction. In this 3/5 https://www.mhc.tn.gov.in/judis T.C.A.No.1212 of 2015 case, though the identity of the creditor is established, the genuineness of the transaction and creditworthiness of the creditor to the extent of Rs.64,41,942/- was not established. No material was filed before this Tribunal to establish the transaction to the extent of Rs.64,41,942/-. Therefore, this Tribunal is of the considered opinion that the CIT (A) has rightly disallowed Rs.64,41,942/-. This Tribunal do not find any infirmity in the order of the CIT (A). The same is confirmed. 6. In the result, the appeal of the assessee stands dismissed.” 9. The position remains status quo before us and hence we do not see any reason to intervene in the order of the Tribunal or reverse the findings of fact that have been rendered. 10. In light of the aforesaid discussion, the substantial questions of law are answered against the assessee and in favour of the Revenue. 11. This Tax Case (Appeal) is dismissed. No costs. [A.S.M., J] [G.A.M., J]

23.01.2025 Index:Yes Neutral Citation:Yes ssm To The Assistant Commissioner of Income Tax, (OSD), Corporate Range 5, Chennai. 4/5 https://www.mhc.tn.gov.in/judis T.C.A.No.1212 of 2015 DR. ANITA SUMANTH.,J. and G. ARUL MURUGAN.,J. ssm T.C.A.No.1212 of 2015 23.01.2025 5/5 https://www.mhc.tn.gov.in/judis