Income Tax Appeal v. Bheru Lal Bohara

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR -------------------------------------------------------- INCOME TAX APPEAL No. 64 of 2004 V/S BHERU LAL BOHARA Mr. KK BISSA, for the appellant Mr. ARUN BHANSALI, for the respondent Date of Order : 5.3.2008 HON'BLE SHRI N P GUPTA,J. HON'BLE SHRI DEO NARAYAN THANVI,J. ORDER ----- This appeal by the Revenue, seeks to challengethe order of the learned Tribunal dt. 26.3.2004, relatingto block period 87-88 to 97-98. This appeal was admitted vide order dt. 7.11.2005, by framing two substantial questions of law:- “1. Whether on the facts and in thecircumstances of the case, the Tribunal had anymaterial to hold that the assessee was havingthe opening capital as on 1.4.86 at Rs. 60 lacsin money lending business? 2. Whether the Tribunal was justified inallowing the claim of the assessee fordeduction on account of bad debts at Rs.4,04,525/- without finding that the conditionsunder Sec. 36(2A) (I) of the Income Tax Act,1961 has been established so as to warrantallowance of bad debts?” We have heard learned counsel for the parties,and have gone through the judgment of the learnedTribunal, being Annexure-5. The first question has beendealt with by the learned Tribunal in para 14 onwards ofthe impugned judgment. The learned Tribunal consideredthe fund flow statement, during the block period. Then,the conclusions have been given in para-14.7 onwards, anda look thereat shows, that it has noticed, that it wouldbe clear from the orders of the tax authorities, that thebusiness of the assessee’s family was money lending, andthis fact was proved from the certificate of the GramPanchayat, Kelwa, certifying that about 40 books ofaccounts, relating to money lending, have been destroyed,as they were eaten by termites. Then, it has also beenfound, that father of the assessee was holding thelicense of money lending business, which was later ontransferred in the name of the assessee, after the deathof the father, and that, these facts have not been deniedat any stage. Then it has been found, that the statementsrecorded by the assessing officer clearly establish, thatthe assessee was engaged in money lending business, andwas charging interest @ 12 per cent in earlier years, andthereafter @ 15 to 18%, in subsequent years. Though theseaffidavits have been rejected by the assessing officer,but they have been believed by the learned Tribunal.Likewise it was found, that assessee had undisclosed income from marble business, and in the assessment year1997-98 the accepted income from marble business was atRs. 130762/-, which does show, that the assessee was notengaged in marble business only, rather his major portionof the income was coming from another business, whichcannot be other than the money lending. Then, for thepurpose of arriving at the opening balance, it wasnoticed, that the assessee had separated from his fatherin 1963, and received assets of money lending business atRs. 3.05 lacks, along with cash/stock of Rs. 50,000/-. Inthis regard there was a settlement deed, which has notbeen doubted. The other cash balance has beendisbelieved, and the learned Tribunal found, that theassessee continued with the debtors of Rs. 3.50 lacks, inthe money lending business since 1963, as is evident fromthe settlement deed. Then by calculating rate of interestthat was being charged, a detailed chart has been workedout, as to how the capital went on being increased. Then,from out of that, after deducting personal, and nonbusiness expenditure, the figure of Rs. 60 lacks havebeen arrived at, to be the opening balance as on 1.4.86. In our view, on the face of this, it cannot besaid, that the learned Tribunal did not have anymaterial, to hold, that the assessee was having theopening capital of Rs. 60 lacks, as on 1.4.86, rather thecapital available in 1963 is continuing to be in money In our view, on the face of this, it cannot besaid, that the learned Tribunal did not have anymaterial, to hold, that the assessee was having theopening capital of Rs. 60 lacks, as on 1.4.86, rather thecapital available in 1963 is continuing to be in money lending business, and looking to the interest beingcharged by him, having been duly proved by evidence(oral), which has been believed by the learned Tribunal,and then, on mathematical calculations, the above figurehas been arrived at. In our view, thus there wassufficient material available with the learned Tribunal,to arrive at the above figure of opening capital of Rs.60 lacks as on 1.4.86. Once it is found, that there was material, andthere was some basis for making calculations by thelearned Tribunal, then the findings remain pure findingof fact, not capable of being interfered with, in ourappellate jurisdiction, under Section 260A. Thus, thisquestion is required to be, and is, answered against theRevenue. Coming to the question no. 2; This aspect hasbeen considered by the learned Tribunal, from para-15onwards, and in para-15.3 finding has been given, thatthe assessee had not led clinching evidence, that the baddebts amounting to Rs. 6 lacs were true, but then,consideration of 10% debtors, as bad debts, was found tobe justified. Regarding Section 36, it was found to benot applicable, because it was not a case of regularassessment, based on books of accounts, but a case ofblock assessment, relating to undisclosed income. In our view, even after going through theprovisions of Section 36, even as a whole, we are of theview, that in the circumstances, Section 36 could notcome against the assessee, for the purpose, for which itis sought to be invoked. Thus, the question no. 2 is alsorequired to be, and is, answered against the Revenue. In view of the above discussion, we do not findany merit in the appeal. The same is, therefore,dismissed. ( DEO NARAYAN THANVI ), J.( N.P.GUPTA ), J. /sushil/