Tribunal allows appeal, directs deletion of Rs. 64,80,000 bad debts from income. Legal precedents cited.

The Tribunal allowed the appeal, directing the Assessing Officer to delete the addition of Rs. 64,80,000 as bad debts from the assessee's income. The decision was based on the assessee's treatment of the disputed amount in their books, supported by legal precedents emphasizing that irrefutable proof of bad debts is not required. The Tribunal noted the disputed amount remained unrecovered and that the matter was sub-judice, aligning with the High Court's interpretation of the relevant tax provisions under Section 36(1)(vii) of the Income Tax Act, 1961.

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Issues:
Appeal against addition of disputed income not realized under Section 145(2) of the Income Tax Act, 1961 for the assessment year 2013-14.

Analysis:
The appeal pertained to the addition made by the Assessing Officer of Rs. 64,80,000 as disputed income not realized under Section 145(2) of the Income Tax Act, 1961. The Assessing Officer observed a variance in rent receipts declared by the assessee concerning the rental income from a commercial building leased to an institute. The assessee contended that the balance amount was disputed and treated it as bad debts in their books. The Assessing Officer, unconvinced by the explanation, added the amount to the assessee's income. In the appellate proceedings, the CIT(Appeals) upheld the Assessing Officer's decision, prompting the assessee to appeal further.

During the hearing, the assessee relied on a High Court decision regarding bad debts to support their case. The Tribunal referred to legal precedents emphasizing that the Assessing Officer cannot demand irrefutable proof of bad debts and that the assessee's treatment of the amount in their books is sufficient. The Tribunal noted that the assessee had not recovered the disputed amount and that the matter was sub-judice. Following the High Court's interpretation of Section 36(1)(vii) of the Act, the Tribunal directed the Assessing Officer to delete the addition of Rs. 64,80,000 as bad debts from the assessee's income.

In conclusion, the Tribunal allowed the appeal, emphasizing that the disputed amount not realized by the assessee was correctly treated as bad debts in accordance with the legal provisions. The Tribunal's decision was based on the assessee's treatment of the amount in their books and the absence of evidence showing recovery, aligning with the High Court's interpretation of the relevant tax provisions.

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