TMI Blog1933 (10) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1985-86 and the petitioner claimed as a deduction from his income the sum of ₹ 30,580 as a debt which he said had become bad in that year. A considerable time ago the assessee had advanced a sum of money to one Janki Das and by the Sambat year 1985-86 this had accumulated to the said sum of ₹ 30,580. From the year 1979-80 until the year 1982-83 there were acknowledgements by the debtor Janki Das in the books of the assessee and in each of those four successive years the total amount of the debt up to that date was stated together with interest for that year. The interest was compound interest and therefore there was a continuance of the transactions during those years, the amount of interest continually increasing and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to see whether it was incapable of realization, and when it became incapable of realziation, and that he came to the conclusion, in agreement with the Income-tax Officer and the Assistant Commissioner that the debt had become barred by limitation in the year 1982-83 and not 1985-86. The assessee then came to this Court with a petition praying for an order on the Commissioner to state a case. In the order of this Court the Commissioner was asked to state a case upon three points mentioned by the petitioner in his petition. The points were : (1) When does a debt become a bad debt ? Has the assessee the option of declaring debts bad when he finds that from the circumstances of the debtors he is unable to recover them ? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y not have been barred by limitation, the circumstances of the debtor may have made the debt quite irrecoverable. He therefore proceeded upon what he has described as a further inquiry by himself and the results of that inquiry are set forth in the last paragraph of his statement of the case. Now it is clear that it has been the practice of the Incometax officer, and one cannot say that it is an unreasonable practice, to regard a debt as bad prima facie when it is barred by limitation and no longer recoverable and that appears as being the guide in the matter. The presumption is, however, rebuttable by evidence according to the circumstances of the case. The Commissioner when stating the case departed from the presumption laid down by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of such interest and they therefore themselves treated the debt as being still alive and the income as having been notionally received. The present decision with which we are dealing that the debt became irrecoverable and had ceased to exist as notional liability before the period 1985-86 cannot be justified on any ground of consistency. The procedure adopted by the Commissioner in starting an inquiry after the order of the High Court directing him to state a case is to my mind to be deprecated in this particular case, because it is clearly a hurried inquiry undertaken in order to bring the case within the law as stated by the Privy Council. The assessee was all along under the impression, as was indeed the Court, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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