TMI Blog1979 (7) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods of the debtor, which were stolen. In fact, the assessee was able to recover an amount of Rs. 10,000 out of this debt in the subsequent previous year relevant to the present reference, viz., the year 1966-67. This view of the ITO was upheld by the Tribunal in appeal relating to the assessment year 1965-66. While disposing of the appeal for the assessment year 1965-66, the Tribunal observed on facts, that the assessee would be at liberty to claim it in the subsequent year, if the facts stated by the assessee before the Tribunal were found to be correct by the lower authorities. In the assessment year 1966-67, the assessee neither made any claim for bad debt before the ITO, nor did it do so before the AAC. At the time, when the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances, the Tribunal was justified in admitting the additional ground raised by the assessee in respect of bad debt claim of Rs. 8,086 and in then allowing the assessee's claim ? " Sri R. K. Gulati, appearing for the department, has raised a number of ingenious arguments to defeat the claim of the assessee. It has been urged that as the assessee had not made the claim before the ITO or before the AAC, the claim could not be raised before the Tribunal for the first time. Elaborating the argument, it was urged that the Tribunal can consider only such claims as have been made either before the ITO or the AAC, but as that was not done, the assessee was not aggrieved by the orders passed by these authorities and as such could not be permitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision as beneficial as s. 36(2)(iii) or (iv) of the present Act. The result was that in case the claim of an assessee for a bad debt in a particular year was turned down on the score that it had not become bad debt in that year, the assessee in the majority of cases could not claim it as a bad debt in any other year. Chagla, Chief justice, noticed this lacuna, and observed as under : " As we had occasion to point out before, the present income-tax law with regard to bad debts makes the position of the assessee extremely difficult. He may write off a debt in a particular year and may claim it and the claim may be disallowed. In the next year he cannot make that claim because it would be urged against him that he did not write off the deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debt or part became a bad debt in any earlier previous year not falling beyond a period of four previous years immediately preceding the previous year in which such debt or part is written off, the provisions of sub-section (6) of section 155 shall apply. " These provisions indicate that the ITO, while calculating the true income of the assessee for the purpose of this Act, is under a duty to make the deductions set out therein. That, however, does not mean that the ITO can do so without any material being available on the record. The deductions can be allowed only in case there is material permitting such a deduction. All that we stress is that a statutory duty has been cast upon the ITO to make the deductions set out under s. 36. Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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