Case: R. B. Seth Champalal Ram Swarup Vs. Commissioner of Income Tax, East Punjab, Ajmer and Delhi

3. The relevant facts out of which these questions arose were stated by the Tribunal in the statement of the case and are briefly as follows : The assessment year in question is3 and the relevant accounting year is Samvat year, corresponding to October 1941. The appellant, R. B. Seth Champa Lal Ram Swarup (hereinafter referred to as the assessee), was a joint Hindu family headed by the karta, Moti Lal. During the accounting year a sum of Rs. 3, 25, 000 was due to the assessee from one Shanthi Lal, who carried on business as proprietor of M/s. Amolakchand Mewaram. Shanti Lal is the younger brother of Moti Lal and had been taken in adoption by a cousin of Motilal. M/s. Amolakchand Mewaram had a current account with the assessee for a number of years in which there were large cash payments on either side. This account was also credited with sales of cotton and other goods made by the assessee on behalf of M. Amolakchand Mewaram, while the account was debited with speculation losses and differences paid by the assessee on M/s. Amolakchand Mewarams account. In Samvat year, the year ending November, 1931, advances made to M/s. Amolakchand Mewaram in this account rose up to Rs. 11 lakhs. During this year the assessee took a mortgage of the immovable property of M/s. Amolakchand Mewaram for Rs. 3 lakhs and credited the amount to the current account, the debit being given to a new account styled " Amolakchand Mewaram Mortgage account ". In the next accounting year the assessee took over the interest of M/s. Amolakchand Mewaram in the managing agency of the Edward Mills Limited and also the shares of the Edward Mills Limited for Rs. 4, 50, 000 for which also a credit was given in the current account. In the same year on November 3, 1932, the assessee also obtained apronotefrom M/s. Amolakchand Mewaram for Rs. 3, 25, 000 crediting the amount to the current account, the debit for which was given to a new account styled " Amolakchand Mewarampronoteaccount ". After these adjustments the current account was left with a debit balance of Rs. 25, 626. Thereafter, there were only petty transactions and adjustmentsAt the commencement of the Samvat year, there was a debit balance of Rs. 9, 017. The assessee purchased Amolakchand Mewarams card of the East India Cotton Association for a sum of Rs. 20, 000 resulting in a credit balance in favour of M/s Amolakchand Mewaram of Rs. 11, 253. Thereafter there was only one debit entry of Rs. 980 in Samvat year, and in the relevant accounting year the balance was to the credit of Amolakchand Mewaram in the sum of Rs. 10, 273. The two new accounts, Amolakchand Mewaram Mortgage account and Amolakchand Mewarampronoteaccount had been carried forward from year to year but no interest had been charged on these accounts. In the current account, interest had been charged up to the Samvat year) only and not thereafter      4. The assessee was adjudicated insolvent by the Bombay High Court in July, 1938. Thereafter, a scheme of composition was sanctioned by the same High Court and the adjudication order was annulled on April 15, 1941.      5. The facts relating to the second bad debt of Rs. 16, 005 were these. This amount was due from one Mansukh Lal Panthu Lal. A decree from the Bombay High Court was obtained by the assessee against the debtor in 1932. The decree was executable for 12 years, but as a matter of fact no effort was made to execute the decree and to recover this amount. On these facts, the Appellate Tribunal held that the money was not advanced to the firm Amolakchand Mewaram in the course ofg business. It further held that the debt of Rs. 3, 25, 000 became bad long ago. Regarding the bad debt of Rs. 16, 005 the Tribunal also held that the amount was not advanced in the course ofg business and that the debt had become bad prior to the year of account. The High Court answered all the three questions against the assessee and in favour of the department. The assessee having obtained special leave, the appeal is now before us

Reasoning: On a consideration of the evidence on the record it cannot be said that there was no material for the Tribunal to have come to the conclusion that the two debts had become bad prior to the year of account."The learned counsel for the assessee tried to argue that there was not sufficient material before the Tribunal for the findings arrived at. We pointed out to him that it was not open to him, on the question as framed, to go into the question whether the Tribunal should or should not have come to the findings it did. What we are concerned with is whether there is any material on which the Tribunal could arrive at the findings that the debts had become bad prior to the year of account in question. From a perusal of the findings of the Tribunal and the reasoning of the High Court it is quite clear that there was material for the Tribunal to have come to the conclusion that the two debts had become bad prior to the year of account.