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TMI Blog1991 (11) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... ht in holding that there was no cessation of liability in respect of the credit balances aggregating to Rs. 1,46,285 and that being so, the addition of the aforesaid amount was not sustainable under section 41(1) of the Income-tax Act, 1961, or, alternatively, even under the head 'Income from business or other sources'? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in coming to the conclusion that the assessee's claim for bad debts was tenable by ignoring the fact that the assessee-company was not carrying on any money-lending business in the previous year ?" The brief facts giving rise to the present petition are that, in the assessment year 1973-74, the assessee has written off debts amounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner under section 144B(4). An appeal was preferred against this order to the Commissioner of Income-tax (Appeals), Rajasthan-1, Jaipur, which was dismissed and, in the Tribunal, the claim for bad debts of Rs. 8,04,199 was allowed. In respect of Rs. 1,46,285, it was held that the Inspecting Assistant Commissioner has no jurisdiction under section 144B(4) to give the direction in respect of an item which is not proposed to be included in the draft assessment. The balance of Rs. 74,633 was deleted on the ground that the transfer entry is a unilateral act of the assessee and that there was no cessation of liability. The Tribunal has rejected the application submitted under section 256(1), on the ground that no question of law arose. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of any recovery. This report was alleged to have been received by the assessee-company on February 20, 1973. The said report has not been enclosed as an annexure to the reference application but, from a perusal of the order of the Income-tax Appellate Tribunal, it appears that, even in the said report, it has not been mentioned that the said amounts have not become bad debts in the earlier years. Mr. Mehta has submitted that the question whether a debt is bad or not is one of fact and he has relied on the decision of their Lordships of the Supreme Court in Bank of Bihar Ltd. v. CIT [1962] 45 ITR 427, in which it has been held by their Lordships that the question whether a debt is bad is one of fact and if there is some evidence to j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as correct in law in holding that the bad debts of Rs. 1,25,271 were genuine and written off in the year under consideration was held to be a question of law and the said question was refrained as under (at page 183) : " Whether, in the facts and circumstances of the case, the Incometax Appellate Tribunal was correct in law in holding that the bad debts of Rs. 1,25,271 could be written off in the year under consideration on the basis of material and details furnished to the Tribunal ?" Looking to the overall position and without expressing any opinion about the correctness or otherwise of the claim of Rs. 8,04,199, we are of the opinion that a question of law does arise, as the validity of such bad debts written off by the assessee in i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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