- (1.) THIS appeal by the revenue, seeks to challenge the order of the learned Tribunal dated 26 -3 -2004, relating to block period 1987 -88 to 1997 -98.
(2.) THIS appeal was admitted vide order dated 7 -11 -2005, by framing "two substantial questions of law: 1. Whether on the facts and in the circumstances of the case, the Tribunal had any material to hold that the assessee was having the opening capital as on 1 -4 -1986 at Rs. 60 lacs in money lending business ? 2. Whether the Tribunal was justified in allowing the claim of the assessee for deduction on account of bad debts at Rs. 4,04,525 without finding that the conditions under Section 36(2)(i) of the Income Tax Act, 1961 has been established so as to warrant allowance of bad debts ? We have heard learned Counsel for the parties, and have gone through the judgment of the learned Tribunal, being Annex. 5. The first question has been dealt with by the learned Tribunal in para 14 onwards of the impugned judgment. The learned Tribunal considered the fund flow statement, during the block period. Then, the conclusions have been given in para 14.7 onwards, and a look thereat shows, that it has noticed, that it would be clear from the orders of the tax authorities, that the business of the assessee's family was money lending, and this fact was proved from the certificate of the Gram Panchayat, Kelwa, certifying that about 40 books of accounts, relating to money lending, have been destroyed, as they were eaten by termites. Then, it has also been found, that father of the assessee was holding the license of money lending business, which was later on transferred in the name of the assessee, after the death of the father, and that, these facts have not been denied at any stage. Then it has been found, that the statements recorded by the assessing officer clearly establish, that the assessee was engaged in money lending business, and was charging interest @ 12 per cent in earlier years, and thereafter @ 15 to 18 per cent, in subsequent years. Though these affidavits 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 year 1997 -98 the accepted income from marble business was at Rs. 1,30,762, which does show, that the assessee was not engaged in marble business only, rather his major portion of the income was coming from another business, which cannot be other than the money lending. Then, for the purpose of arriving at the opening balance, it was noticed, that the assessee had separated from his father in 1963, and received assets of money lending business at Rs. 3.05 lacs, along with cash/stock of Rs. 50,000. In this regard there was a settlement deed, which has not been doubted. The other cash balance has been disbelieved, and the learned Tribunal found, that the assessee continued with the debtors of Rs. 3.50 lacs, in the money lending business since 1963, as is evident from the settlement deed. Then by calculating rate of interest that was being charged, a detailed chart has been worked out, as to how the capital went on being increased. Then, from out of that, after deducting personal, and non -business expenditure, the figure of Rs. 60 lacs have been arrived at, to be the opening balance as on 1 -4 -1986.
(3.) IN our view, on the face of this, it cannot be said, that the learned Tribunal did not have any material, to hold, that the assessee was having the opening capital of Rs. 60 lacs, as on 1 -4 -1986, rather the capital available in 1963 is continuing to be in money lending business, and looking to the interest being charged by him, having been duly proved by evidence (oral), which has been believed by the learned Tribunal, and then, on mathematical calculations, the above figure has been arrived at. In our view, thus there was sufficient material available with the learned Tribunal, to arrive at the above figure of opening capital of Rs. 60 lacs as on 1 -4 -1986.;