1955 (9) TMI 64 - HC - Income Tax

Summary

Issues Involved:
1. Whether there was sufficient evidence to conclude that Rs. 7,829 was income from undisclosed sources.
2. Whether the Income-tax Appellate Tribunal was justified in adding Rs. 7,829 to the assessee's total income without definitively finding that the amount came from a taxable source.
3. Whether there was sufficient evidence to conclude that the claim of Rs. 6,360 as a bad debt was time-barred.

Issue-wise Detailed Analysis:

1. Whether there was sufficient evidence to conclude that Rs. 7,829 was income from undisclosed sources:

The assessee, an undivided Hindu family, claimed that the amount of Rs. 7,829 was brought into the business from past earnings in a money-lending business that had been closed. The Tribunal rejected this explanation based on several reasons: no home chest account was maintained, no previous finding confirmed the source amounted to Rs. 50,000, the previous acceptance of the claim did not bind the current assessment, and the assessee failed to produce account books of the old money-lending business. The Tribunal found that the explanation was not credible and concluded that the amount was income from undisclosed sources. The High Court upheld this finding, stating that the Tribunal's reasoning was based on material on record and did not give rise to a question of law. The Court emphasized that the assessee's failure to produce relevant documents weakened their claim.

2. Whether the Income-tax Appellate Tribunal was justified in adding Rs. 7,829 to the assessee's total income without definitively finding that the amount came from a taxable source:

The assessee argued that the Department was not justified in regarding the sum of Rs. 7,829 as income merely because the explanation of the source was disbelieved. The High Court referred to previous decisions, which established that if the assessee fails to prove the source and nature of the impugned amounts, the Income-tax Officer can infer that the receipts are of an income nature. The Court noted that the burden of proving that a disputed item is not the assessee's income lies on the assessee, not the Department. The Court found no reason to depart from this view and concluded that the Tribunal rightly refused to state the case on this point.

3. Whether there was sufficient evidence to conclude that the claim of Rs. 6,360 as a bad debt was time-barred:

The assessee claimed a deduction of Rs. 6,360 on the ground that it became a bad debt during the accounting year in question. The Tribunal did not accept this claim, noting that the last recovery was made on 14th February 1947, and no suit was filed for recovery of the balance. The Tribunal observed that the debt had become bad to the knowledge of the assessee by the end of Samvat 2004. The High Court upheld this finding, stating that the conclusion that the debt did not become bad in the accounting year in question was not vitiated by the remark that it had become barred by time in Samvat 2004. The Court emphasized that the burden of proving that a debt has become bad lies on the assessee and that the assessee must satisfy the Income-tax Officer that it became irrecoverable in the year of account. The Court concluded that no question of law arose on this point.

Conclusion:

The High Court dismissed the application, finding that the Tribunal's conclusions were based on material on record and did not give rise to any questions of law. The Court emphasized that the burden of proof in such cases lies on the assessee and upheld the Tribunal's findings on both the issues of undisclosed income and bad debt. The application was dismissed with costs, and counsel's fee was set at Rs. 75.