. 343 2005 Income Tax Appeal No of 1 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 Income Tax Appeal No of 2 260 - , 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 7.2.2005, 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 Income Tax Appeal No of 3 . 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 14.2.1996, 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 ( ) { ( ) }. ( ) 21.2.1997 tax Appeals in short “CIT A ” The CIT A by order dated ( -2) 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 ( ), 22.1.1999 the CIT A again recorded the statement of the assessee on . 343 2005 Income Tax Appeal No of 4 . 3,50,000/- and treated the sum of Rs to be the income of the , 18.2.1999 ( -3). assessee vide fresh assessment order dated Annexure A ( ) 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 16.2.2000. of the assessee vide order dated 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 Income Tax Appeal No of 5 / 36 or bad debt u s or a loss of current assets or a loss of 31.3.1990 capital during the course of business as on . 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 10.9.2004, -1. said legal ground of appeal by order dated Annexure A - . 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 31.3.1990. these drafts to be bad debt in the year ending The appellant had not been able to produce any evidence to substantiate that the . 343 2005 Income Tax Appeal No of 6 22 . 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 Income Tax Appeal No of 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 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 Income Tax Appeal No of 8 22 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 Income Tax Appeal No of 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 . 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 Income Tax Appeal No of 10 , . 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