Previous year for bad debt deduction must follow the legally relevant accounting period, not an earlier return date.

For an assessee already assessed on a source of income, the previous year could not be changed without the Income-tax Officer's consent, so a later return date did not displace the legally relevant accounting period. On that basis, the assessment year 1945-46 had to be tested by reference to the longer previous year ending on 17 October 1944, and the objection that the debt had not become doubtful or irrecoverable by 29 April 1944 failed. The unrecovered balance was therefore allowable as a bad debt deduction, and the issues were answered in favour of the assessee.

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Issues: Whether the relevant previous year for the assessment year 1945-46 ended on 29 April 1944 or on 17 October 1944, and whether the unrecovered balance of the debt was allowable as a bad debt deduction.

Analysis: The tax was chargeable under section 3 on the total income of the previous year, and the assessee had already been assessed in respect of the source of income on the basis of the longer accounting period ending on 17 October 1944. The previous year could not be varied except with the consent of the Income-tax Officer, and a return filed for an earlier date did not displace the legally relevant accounting period. Once the correct previous year was recognised, the objection that the debt had not been shown to have become doubtful or irrecoverable by 29 April 1944 could not stand.

Conclusion: The relevant previous year did not end on 29 April 1944, and the bad debt deduction was allowable; the questions were answered in favour of the assessee.

Ratio Decidendi: For an assessee already assessed in respect of a source of income, the previous year cannot be altered without the Income-tax Officer's consent, and deductions must be tested by reference to the legally relevant previous year under section 3.

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