1984 (9) TMI 122 - AT - Income Tax

Issues Involved:
1. Jurisdiction and validity of the assessment order dated 21-4-1982.
2. Validity of the revised return filed on 1-11-1980 under section 139(5).
3. Time-barred nature of the assessment.
4. Deductibility of bad debts claimed by the assessee.

Detailed Analysis:

1. Jurisdiction and Validity of the Assessment Order Dated 21-4-1982:
The primary issue is whether the assessment order dated 21-4-1982 is valid or void due to jurisdictional and time-bar constraints. The assessee argued that the order is without jurisdiction as it is barred by time, contending that the original return filed on 31-3-1979 was under section 139(4) and thus, the revised return filed on 1-11-1980 is non est in law. The assessment should have been completed within two years, i.e., by 31-3-1981. The Tribunal, however, concluded that the assessment was completed within the permissible time limit, as the ITO completed the assessment within 180 days from 29-10-1981.

2. Validity of the Revised Return Filed on 1-11-1980:
The assessee's counsel argued that a revised return under section 139(5) can only rectify mistakes in returns filed under section 139(1) or 139(2), not under section 139(4). Supporting this, the counsel cited the Allahabad High Court's decision in Dr. S.B. Bhargava v. CIT and Metal India Products v. CIT, which held that a return under section 139(4) cannot be revised under section 139(5). However, the departmental representative countered this by citing the Calcutta High Court's decision in Kumar Jagadish Chandra Sinha v. CIT, which allowed for the filing of revised returns even under section 139(4). The Tribunal favored the Calcutta High Court's view, holding that the revised return filed on 1-11-1980 is valid and the assessment is not time-barred.

3. Time-barred Nature of the Assessment:
The Tribunal examined whether the assessment was completed within the statutory period. The original return was filed on 31-3-1979, and the revised return on 1-11-1980. The ITO framed the draft assessment order on 29-10-1981 and completed the final assessment on 21-4-1982. Given the Tribunal's acceptance of the revised return's validity, it concluded that the assessment was completed within the permissible time frame, thus not time-barred.

4. Deductibility of Bad Debts Claimed by the Assessee:
The assessee claimed bad debts totaling Rs. 1,69,840, which the ITO disallowed, noting that no efforts were made to recover the debts. The Commissioner (Appeals) allowed deductions for debts under Rs. 1,000 but disallowed larger amounts due to lack of evidence. The Tribunal scrutinized the disallowed items and found that debts from two parties who had expired could be considered irrecoverable. Consequently, the Tribunal allowed these two items as bad debts but upheld the disallowance for other items due to insufficient evidence.

Conclusion:
The Tribunal held that the revised return filed on 1-11-1980 is valid and the assessment completed on 21-4-1982 is within the time limit. On the merits of the bad debts claim, the Tribunal allowed the deduction for debts owed by deceased parties but upheld the disallowance for other debts due to lack of evidence. The appeal was thus partly allowed.

← Previous Next →