SATISH KUMAR vs. COMM. OF INCOME TAX

. 343 2005 of IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH --- -

. 343 2004 Income tax Appeal No of

: 25.8.2010 Date of decision

Satish Kumar --- Appellant Versus

Commissioner of Income Tax Panchkula --- Respondent --- : CORAM ’

.

HON BLE MR JUSTICE ADARSH KUMAR GOEL ’

.

HON BLE MR JUSTICE AJAY KUMAR MITTAL --- : Present . . . , Mr D K Goyal

. Advocate for the appellant .

, .

Mr Yogesh Putney Sr Standing Counsel

- . for the Revenue respondent ---

, . AJAY KUMAR MITTAL J

. 343 2005 of , 1961 This appeal under Section A of the Income tax Act (

)

for short “the Act’” has been filed by the assessee against the order 10.9.2004,

, dated passed by the Income Tax Appellate Tribunal

, (

)

. Chandigarh Bench “B” Chandigarh in short “the Tribunal” in ITA No 395/ /2000,

1990-91. CHANDI for the assessment year

This appeal was admitted on for determination of

: the following substantial question of law “

Whether under the facts and circumstances of the case the

Tribunal was justified in law by not allowing the deduction of . 3,50,000/-

28

Rs under Section as business loss or under 36

Section as bad debt against the said amount added as

69

income under Section which amount was neither

received back nor goods against that amount were received

. by the appellant ”

The facts necessary for disposal of the appeal are that ,

.15,000/-

. 24,000/- Satish Kumar assessee had been earning Rs to Rs

per year from the business of arranging trucks for carrying of coal to

the destination of the purchasing parties and also labour for loading

. 343 2005 of and unloading of the coal besides supervising that process It came to

the notice of the Department that the assessee had remitted three

demand drafts made from the State Bank of India to one Krishan

.

Kumar Sharma An enquiry was made from the assessee who initially

,

denied that he knew Krishan Kumar Sharma but later on when his

statement was recorded on he admitted that there was

. 3,50,000/-

remittance of Rs to Krishan Kumar Sharma of Barka Khana ( )

. Bihar and also stated that the money belonged to said Krishan Kumar

, ,

The assessing officer thus completed the original assessment at .3,80,500/-

,. Rs and made an addition for unexplained investment of Rs 3,50,000/-

.

for the purchase of drafts from the bank Being aggrieved

- thereby the assessee filed appeal before the Commissioner of Income ( ) {

( ) }.

( )

Annexure A set aside the addition made and remitted the matter

back to the assessing officer to examine de novo after affording proper

. and adequate opportunity to the assessee

,

The assessing officer in compliance to the directions of ( ),

. 343 2005 of . 3,50,000/-

and treated the sum of Rs to be the income of the ,

( ) The assessee preferred appeal before the CIT A and

,

( )

raised submissions with full might but the CIT A agreed with the

conclusion arrived at by the assessing officer and dismissed the appeal

The appellant still did not stay back and carried the matter

.

in further appeal before the Tribunal The submissions raised on behalf

of the assessee before the Tribunal also did not yield any result in

favour of the assessee and consequently the appeal was dismissed on 31.7.2003. The assessee thereafter moved a miscellaneous application

,

254(2)

before the Tribunal under Section of the Act pleading that the

. 4( )

Tribunal had ignored from consideration ground No b taken by him

.

: and did not adjudicate upon the same The said ground reads thus “4( ) ,

b That alternatively even if it is income of the appellant

,

on the date of maturity of the draft the assessee should

/ 28, have been allowed a deduction as a business loss u s

. 343 2005 of / 36

or bad debt u s or a loss of current assets or a loss of

. relevant to the year under appeal ”

-

The Tribunal on re consideration of the submissions made

on behalf of the assessee in the miscellaneous application rejected the

- .

We have heard learned counsel for the assessee appellant

,

The point for consideration in this case is whether the

assessee was entitled to claim deduction on account of business loss

28

36

. under Section or as bad debts under Section in respect of Rs 3,50,000/-

69

which was added to his income under Section of the Act

. owing to reason of having got prepared three bank drafts bearing Nos 847682, 847684 847684 9.3.1990, 13.3.1990 19.3.1990 and dated and . respectively

It is not in dispute that the demand drafts were prepared 9.3.1990, 13.3.1990 19.3.1990

on and whereas the assessee had claimed

had not been able to produce any evidence to substantiate that the

. 343 2005 of same had become bad debt on the said date within a span of days ,

Equally the assessee had failed to refer to any material on record to

show that he had incurred business loss on account of these demand

69

. drafts which were added to his income under Section of the Act

11

The relevant findings recorded by the Tribunal in para of its order are : as under “

We have heard both the parties and carefully considered

.

the material available on record One of the claims of the

assessee was that the amount given by way of draft was .

. bad debt This contention was without any evidence The

assessee could not produce any correspondence with Shri

Krishan Kumar Sharma in whose name drafts were 9.3.90, 13,3,90 19.3.90

.

, ,. purchased on and for Rs One lac Rs

. 1.50

.

One lac and Rs lac respectively The assessee also

could not produce any evidence that the amount utilized in

the purchase of those drafts was of any person other than .

, the assessee It is noticed that for purchasing the drafts

the Bank voucher was prepared by the assessee in his

. 343 2005 of handwriting and also the drafts were received by him and

nothing had been brought on record with evidence that the

investment in purchasing the drafts was made by any

, ,

person other than the assessee so the investment made

by the assessee was considered his income from his

undisclosed sources and was added by the Assessing

Officer to the income of the assessee in view of the

69 . . , 1961

provisions of Section of I T Act which deals with .

unexplained investment Since the assessee had not given

any explanation about the source of the investment and the

explanation offered by him was not satisfactory in the

, ,

opinion of the Assessing Officer

therefore addition was / 69 . . , 1961. made u s of I T Act As we have already noted

,

here in above that the assessee could not establish that

the amount in question became bad debt so the claim was

not sustainable because it was unbelievable that the

amount given as advance at the fag end of financial year on 9.3.90, 13.3.90 19.3.90

and would become bad within a span

. 343 2005 of 31.3.1990. ,

of less than days on Moreover the assessee

had not produced any evidence that the amount in ,

.

question in fact became bad debt

As regards to the

.

contention of the ld Counsel for the assessee that this

amount should be considered as business loss or the ,

capital loss it is noticed that the assessee nowhere stated

that the amount in question was used for the business

purpose rather it was stated that the assessee was not

having any business link with Shri Krishan Kumar Sharma

. in whose name the impugned drafts were purchased The

assessing officer made the addition on account of

undisclosed investment in the drafts and since the

assessee could not establish that the drafts in question

. were invested in the business so this claim of the Ld

Counsel for the assessee is also not acceptable that it was

business loss or a capital loss particularly when the

assessee himself had stated that he was not having the

. , business link with Shri Krishan Kumar Sharma

Therefore

. 343 2005 of the amount in question was given for the purpose other

than business purposes and since the assessee miserably

failed to prove the source of the investment in the drafts

. 3.50

amounting to Rs lacs the Assessing Officer rightly

. ( )

made the addition and ld CIT A was justified in confirming

.

the action of the Assessing Officer In view of the aforesaid

discussion and considering the entire facts of the present ,

case we do not see any merit in this ground of assessee’s .

,

appeal In that view of the matter we dismiss this appeal

. and accordingly the appeal of the assessee fails ”

-

Learned counsel for the assessee could not pin point any

perversity or illegality in the aforesaid finding of fact recorded by the

. Tribunal which may warrant interference by this Court

,

In view of the above we hold that the assessee was not

entitled to deduction either on account of bad debt or on account of

. 3,50,000/-

business loss to the tune of income of Rs added under 69

.

, Section of the Act The question of law as reproduced above is

. 343 2005 of ,

. thus answered against the assessee and in favour of the Revenue

.

The appeal is consequently dismissed (

) AJAY KUMAR MITTAL JUDGE (

) ADARSH KUMAR GOEL 25, 2010 August JUDGE * * rkmalik