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Introducing the “In Favour Of” filter in Case Laws.
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of <h1>Banks Must Prove Bad Debts for Tax Deductions; Audit Certificates Alone Are Insufficient, Says Circular.</h1> The circular addresses whether banks should automatically receive full deductions for bad debts under the Income Tax Act. The suggestion that banks, due to their expertise, should have their claims accepted without scrutiny was rejected by the Board. It was determined that the Income-tax Officer should assess the facts to determine if a debt is bad, rather than accepting banks' declarations. The circular emphasizes that banks must provide evidence of irrecoverability, and audit certificates alone are insufficient. The Board maintains that while banks are required to write off bad debts under banking regulations, the Income Tax Act requires proof of irrecoverability for deductions.
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