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TMI Blog2009 (9) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee that the amount became bad debt in the year relevant for assessment i.e. 1984-85 itself, could not be rejected. Mere fact that assessee continued efforts by obtaining decree which could not be executed in subsequent year is not enough to reject the opinion of the assessee that the amount had already become bad debt - 85 of 1998 - - - Dated:- 14-9-2009 - ADARSH KUMAR GOEL and DAYA CHAUDHARY, JJ. Mr. Rajesh Katoch, Standing Counsel for the revenue. Mr. Pankaj Jain, Advocate for the assessee. ORDER The Income Tax Appellate Tribunal, Chandigarh has referred following question of law for opinion of this Court under Section 256(1) of the Income Tax Act, 1961 (for short, "the Act"), arising out of its order dated 29.11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee's books of account are not only subject to statutory audit but are also under the control of the Comptroller and Auditor General of India and a such the write off of the amount of Rs.2,62,326/- must be treated to be based on the honest judgment. It is true that the assessee filed a suit against the purchaser and obtained an ex-parte decree also and the debtor appeal against the decree was also dismissed by the District Judge, Ropar in 1992, but that decree was however, a paper decree because nothing in fact was received by the assessee till date. We, therefore, hold that the assessee was justified in writing off the amount as bad and irrecoverable in the year under consideration and that write off was based on an honest judgment and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such circumstances, the Tribunal was justified in deleting the additions on that account. 7. Learned counsel for the assessee relies on judgments of the Bombay High Court in Jethabhai Hirji and Jethabhai Ramdas v. CIT (1979) 120 ITR 792 (Bom.) and Jhunjhunwala Company v. Assistant Commissioner of Income Tax (2003) 259 ITR 178 (Bom), holding that a prudent businessman had to act on the basis of the material before him and if there is no basis for recovering the amount, he could certainly write off the debt as bad debt. 8. We are of the view that it is not the case of the revenue that the debt was ever recovered or had ever become recoverable. Before the Tribunal, the contention on behalf of the revenue was that the amount m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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