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Issues:
1. Deduction of bad debts for assessment year 1972-73. 2. Claim for bad debts in assessment year 1973-74. 3. Interpretation of Section 36(1)(vii) and 36(2) of the Income-tax Act, 1961. Detailed Analysis: 1. The assessment proceedings for the assessment year 1972-73 involved the assessee's claim to deduct certain debts due from various companies. The Income Tax Officer (ITO) rejected the claim, stating it was premature as the irrecoverability of the debts was not established. The matter was taken to the Tribunal, which allowed the claim for one company but rejected it for the others. 2. In the assessment year 1973-74, the ITO did not consider the claim for bad debts, and the assessee did not approach the ITO as the appeal for the previous year was pending. After a Tribunal order in 1979, the assessee sought to claim the bad debts for 1973-74 under section 154 of the Income-tax Act. However, the ITO and the Appellate Authority Commissioner (AAC) rejected the claim, stating it was not a mistake apparent from the record justifying rectification. 3. The appeal before the Tribunal focused on the interpretation of Section 36(1)(vii) and 36(2) of the Act. The Tribunal analyzed the provisions, specifically clauses (iii) and (iv) of Section 36(2), which deal with the deduction of bad debts. It was emphasized that for a claim to be allowed under clause (iii), the debt must have been written off as irrecoverable in earlier accounts, and the ITO had not allowed it as a bad debt. The Tribunal clarified that the assessee cannot claim allowance under clause (iii) as a matter of right; it depends on the facts of each case. 4. The Tribunal highlighted that if the claim required factual investigation, it should be sought through revision or rectification under section 154. Quoting legal commentary, the Tribunal explained the process for claiming bad debts under clause (iii) and the need for a revision or rectification application. In the present case, the ITO rightly pointed out that the irrecoverability of the debts for 1973-74 was not established, which could not be rectified under section 154. Thus, the Tribunal dismissed the appeal, indicating that the department may consider the case sympathetically under relevant provisions of the Act upon proper approach.
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