Income Tax Appeal No v. Commissioner of Income Tax

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 under Section 28 or as bad debts under Section 36 in respect of Rs . 3,50,000/- which was added to his income under Section 69 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 respectively . It is not in dispute that the demand drafts were prepared

9.3.1990, 13.3.1990

19.3.1990 whereas the assessee had claimed these drafts to be bad debt in the year ending

31.3.1990. The appellant had not been able to produce any evidence to substantiate that the Income Tax Appeal No . 343 2005 6 same had become bad debt on the said date within a span of 22 . 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 drafts which were added to his income under Section 69 of the Act . The relevant findings recorded by the Tribunal in para 11 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 purchased on

9.3.90, 13,3,90

19.3.90 for Rs One lac Rs , ,. . One lac and Rs . 1.50 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 Income Tax Appeal No . 343 2005 7 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 provisions of Section 69 of I T Act . . , 1961 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 , made u s / 69 of I T Act . . , 1961. 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 amount given as advance at the fag end of financial year on

9.3.90, 13.3.90

19.3.90 would become bad within a span Income Tax Appeal No . 343 2005 8 of less than 22 days on

31.3.1990. Moreover , the assessee had not produced any evidence that the amount 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 , 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 , . Income Tax Appeal No . 343 2005 9 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 amounting to Rs . 3.50 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 business loss to the tune of income of Rs . 3,50,000/- added under Section 69 of the Act . The question of law as reproduced above is , Income Tax Appeal No . 343 2005 10 thus answered against the assessee and in favour of the Revenue . , The appeal is consequently dismissed . ( AJAY KUMAR MITTAL ) JUDGE August 25, 2010 rkmalik * * ( ADARSH KUMAR GOEL ) JUDGE