Tribunal upholds CIT(A)'s decision on bad debts claim, citing write-off proof not required

The Tribunal upheld the CIT(A)'s decision to allow the claim of bad debts of Rs. 20,48,399 for the Asstt. year 2002-2003, dismissing the Revenue's appeal. The Tribunal ruled that once the business debt was written off, it was not necessary to prove it as bad, especially when the Revenue did not question the write-off in the account books. The decision aligned with previous judgments from the Hon'ble Gujarat High Court and the Hon'ble Apex Court, leading to the dismissal of the Revenue's appeal.

---

---

Issues: Allowability of bad debts

Issue Analysis:
The appeal by the Revenue for the Asstt. year 2002-2003 is against the order of the CIT(A) directing to allow the claim of bad debts of Rs. 20,48,399. In the first round of litigation, the Tribunal dismissed the appeal of the Revenue due to the disputed tax effect being below Rs. 2 lakhs. The Hon'ble jurisdictional High Court set aside the Tribunal's order and remanded the appeal to be decided on merits. The learned counsel for the assessee argued that the issue of bad debts' allowability is covered by the binding decision of the Hon'ble Apex Court and the Hon'ble Gujarat High Court. The Revenue contended that the assessee failed to prove the debt had become bad. The Tribunal found that the CIT(A) rightly followed the decision of the Hon'ble Gujarat High Court, stating that once the assessee wrote off the business debt, it is not necessary to establish it as bad. As the Revenue did not doubt the write-off in the account books, the Tribunal decided in favor of the assessee, confirming the CIT(A) order and dismissing the Revenue's appeal.

Conclusion:
The Tribunal confirmed the order of the CIT(A) allowing the claim of bad debts and dismissed the appeal of the Revenue for the Asstt. year 2002-2003.

---