' DOST MUHAMMAD KHAN, J.---This appeal and connected Appeal Nos. 139 to 146 of 2001 and 136 to 138 of 2001 and 10 to 15 of 2002 call into question the judgment, dated 28-3-2001 and 31-3-2001 respectively of the learned I.T.A.T. Through the impugned judgments it was held that the loan advanced by the assessee to Salim Sugar Mills (Pvt.) Limited being non-recoverable and "Bad debt", therefore, shall be excluded from the assets of the assessee and is not taxable under the provisions of the Wealth Tax Act. These separate appeals have arisen because of separate orders for different assessm ent years commencing from 1993-94 to 2000-2001.
' The appellant has formulated the following points of law to be answered by this Court:-
(i) Whether under the facts and circumstances of the case the I.T.A.T. Was justified to direct the deletion of assets allegedly claimed as "Bad debts" from the net wealth of assessee in the absence of any evidence as to the insolvency of the loanee company.
(ii) Whether under the facts and circumstances of the case the I.T.A.T. Was justified to direct the deletion of the assets allegedly claimed as "Bad debts" from the net wealth of the assessee in spite of the fact that the assessee has continuously advanced loan to the loanee company and it the loanee company is not in a position of repayment then why further loans are being advanced.
(iii) Whether under the facts and circumstances of the case the I.T.A.T. Was justified to direct the deletion of assets allegedly claimed as "Bad debts" from the net wealth of the assessee when in the case of one assessee Mr. Faisal Salim alleged "Bad debts" have been returned by the loanee company in subsequent year.
' The learned I. T .A.T. Held that the amount of non-recoverable loan being a Bad debt is, therefore, neither liable to be taxed nor the wealth tax thereon can be recovered from the assessee. The said view was formed because of its earlier view, dated 28-3-2000 taken in Appeals Nos. 52 to 59 relating to the assessm ent years of 1993-94 and 1994-95.
2. Now the central point which will provide answer to all the 3 questions so formulated is as to what is the true import and meaning of a "Bad debts".
The dictionary meaning of a Bad debt is that it is a kind of debtIA which is not recoverable or in other will never be paid.
' To hold that a debt is a Bad debt, all the attending circumstances are to be looked into, which include that how much efforts have been made genuinely by the creditor assessee in recovering the loan, what is the present financial status of the loanee/debtors and whether it has assets more than debt amount which can liquidate the same if put on sale.
3. The determination of the term "Bad debt", therefore, essentially requires thorough examination of the matter which involves factual inquiry. In case of assessee claiming exemption from tax payment on each plea the burden is on him to show through evidence and cogent materials that the loan advanced by him has become a Bad debt and despite of best efforts it cannot be recovered and it can never be recovered. Unless and until all these and other relevant conditions are fully satisfied it would be difficult to conclude that a debt claimed to be a C bad one is so because no fair judgment of a Court or findings of a Tribunal can be rested on a simple hollow claim of an assessee. There can he no gainsaying of the fact that business of industry, trade and commerce is of fluctuating fortunes as the daily picture of the stock market by rise and fall of the share price of such business concerned tells us a lot therefore, it is the essential obligation of the assessee to provide proof that the loanee has become absolutely insolvent and incapable of paying back the loan to the assessee but this can be achieved only by providing evidence and for which fact-finding inquiry becomes more essential, in the absence of which any decision in that regard would be one in vacuum.
4. In the instant case, the first chunk of the loan amount was advanced by the assessee to the loanee in or before the financial year, 1992 and in the following year this amount was declared to be a Bad debt and non-recoverable wherein exemption from wealth tax was claimed. Still it is not understandable as it appears to be wanton commercial/business venture that after giving its own judgment declaring the loanee not capable of returning that amount to the assessee it unwisely extended further rather big chunk of the remaining amount of D the so-called Bad debt. This, to our minds, was an act on the part of assessee not appealing to prudent mind as it was more risky than striking a bargain on a fish which is still in the deep sea. The loanee to whom the subsequent amount of loan was extended admittedly has by then drowned beyond its neck level on account of financial crisis, thus no earthly reason existed which could prompt the assessee in acting in this unnatural way which runs counter to natural human behaviour and business.
' Investments by a company with a company or companies as has been observed is always well- planned and calculated one but the assessee in the instant case has acted the other way.
' In view of these facts and in the absence of any materials/evidence on record no case at present appears to have been made out to declare the debt in question as a "Bad debt". No clear picture of the loanee financial position is coming forth on record and that no conclusive findings to that effect have been recorded by either E Assessing Officer or the I.T.A.T. Because no ample proof was provided by the assessee, therefore, the learned I.T.AT. Was not correct in holding the view because previously it has done so. It is not an acceptable, safe and sound yardstick for a fair decision on the subject in issue.
5. The first forum of appeal while remanding the case to the Assessing Officer has taken a correct step for doing complete justice to both the taxing department as well as the assessee. No prejudice shown to have been caused to the assessee and indeed there is none because it will have an ample opportunity to prove by evidence that the debt in question is a bad one and non- recoverable because of the insolvency or inability of the loanee to repay the same back. No element of injustice has been caused to the assessee emanating from the judgment of the Income Tax Wealth Tax Commissioner (Appeals).
' In the case of CIT v. Coates of India Ltd. Almost similar proposition of law was involved wherein the learned Judges of the Bench almost expounded the principle of law at par with the view taken by us above.
' For the foregoing discussion, we answer the three law points formulated in this appeal and in the connected appeals in the negative and in favour of the appellant in the above terms. Accordingly all these appeals are allowed and the view taken by the learned. I.T.A.T. On all the three law points is declared to be not sustainable in law.
' Effect to these judgments shall be given in the manner and terms prescribed by the provisions of section 27 of the Wealth Tax Act, 1963.