TMI Blog1976 (7) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... he expenses at Rs. 12,000 for the asstt. year 1970-71 but since according to the Income-tax Officer such expenses represent mostly entertainment, he disallowed the expenses in excess of Rs. 500 u/s. 37 (2B) of the Act and thereby he disallowed a sum of Rs. 7,330. Likewise, for the asstt.year 1971 - 72 the ITO observed that out of a total claim of Rs. 12,572 under the head Kharach Khata, most of the expenses at Rs. 12,000 under the head Beopari expenses and disallowed the entire claim of the assessee for the assessment year 1971 - 72. Besides the above in the assessment year 1970 - 71; the Income-tax Officer observed that the assessee has claimed bad debts of Rs. 33,274 which include the following parties: M/s. Mohd. Ali Rs. 4,034 . M/s. Edu Ghullam Nabi Rs. 6,500 . M/s. Mehandi Hasan Rs. 2,158 . M/s. Ram Manohar Rs. 1,000 . M/s. Mohd. Yamin, Mohd, Sadiq Rs. 1,371 . Rahim Illahai Abdul Shkoor Rs. 1,847 . Allah Rakha Akhtavall Rs. 595 . M/s. Rafiq Ahmed Khan Rs. 605 Rs. 18,111 The Income-tax Officer further ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... So far as the claim of bad debts is concerned, the AAC observed that to take a few items of test basis in the case of Bashir Ahmed Bardar Hussan of Mirapur, there was old balance of Rs. 3,000 on2nd May, 1968. It was a running account and the total transaction in this account upto31st March, 1969amounted to Rs. 8,835 on which a sum of Rs. 7,408 was received and the balance of Rs. 1,426 was written off as bad debts. The assessee had been receiving small amounts on various debts and he mainly confirmed his attention to the recoveries rather than doing some further business with the debtor. As such, the A.A.C. held that the claim of bad debt can be considered as genuine as no further litigation could have helped the assessee to recover any part of this amount. Thereafter he observed that broadly this is the position with the following accounts as well : (1) Rahim Allabhai Abdul Shakur, Mangalore Rs. 1,652 (2) Mohd. Hassan, Mirzapuri Rs. 2,163 (3) Rafiq Ahmed Khan,Rampur Rs. 605 (4) Riaz Mohd. Ali Ahmed Hassan, Mangalore Rs. 4,039 He further observed that in the account of Iddo Gulam Nabi, Mangalore who was Raden cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfactory evidence as therefore, some sort of an estimated disallowance has to be made. Of course, in a matter of bad debts it is normally necessary to consider each item of bad debt and also consider how far its recoverability has been established by the assessee. But in the circumstances of present case such a course is not possible and since the assessee is handicapped from producing such evidence, we have no resort to some estimate as was done by the Income-tax Officer. As we have mentioned before the Items which the assessee has to prove come to Rs. 10,500, we would estimate the irrecoverable amount at Rs. 5,000 applying more or less the same proportion as the Income-tax Officer has done. This would be the only disallowance to be sustained in place of 13,971 disallowed by the Income-tax Officer. The assessment will be modified accordingly. Thus, following the ratio decided in the above appeal, we deem it proper to restore back the matter to the file of the A.A.C. with the direction that he will allow the claims of bad debts which are below 1,000 and for rest of the claims he will examine the evidence on behalf of both the parties and decide each item of the bad debt accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 1971 - 72 and as such, he took the status of the firm for this year as an unregistered firm. 10. The AAC in appeal observed that in his opinion the filing of the new prescribed form in the case of assessee was a mere ceremony and formality because the issue of any partner being the benamidar of any other partner in the firm did not apply. The Income-tax Officer also did not point out clearly as to how the form No.12 filed along with the return was not in the prescribed form. The form then filed was in the prescribed form and was relevant for the assessment year 1971 - 72 as no new form was available at that time. Even then the partners of the assessee firm according to the AAC duly complied with the requirements of the ITO specifically and materially, though there was no doubt about the genuineness of the firm. The AAC also observed that in the manner the information or notice was given to the assessee and its counsel, as quoted in order sheet entry above, the assessee and his counsel had done their best to comply with the information by 22nd November, 1973 when the ITO was to take up the case after the earlier date of hearing on 20th October, 1973. If at all the Income-tax Of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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