TaxTMI 
TaxTMI 
2014 (7) TMI 719
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.... (hereinafter referred to as the AO) rejecting the claim of the assessee under section 36(1)(viii) on account of bad debts written off amounting to Rs. 45,54,306/-. 3. The brief facts of the case are that the assessee is a proprietor of M/s. Space International which is carrying on business as merchant exporter of Dyes & Chemicals. During the assessment proceedings u/s 143(3) of the Act, the Assessing Officer (herein after referred to as AO) noticed that the assessee has debited an amount of Rs. 45,54,306/- as bad debts to the P&L account. The AO asked the assessee to furnish the details of bad debts and to explain as to when it was offered for taxation and the details of steps taken for recovery of such bad debts. The assessee vide letter....
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....nd to inform the income tax department about the court's order dated 15/1/2008. The assessee was also legally bound to revise his return of income after withdrawal of the case in the Court. But the assessee failed to do so. The assessee had admitted before the Court that the accused has agreed to pay the full amount. He further observed that the ledger account furnished by the assessee wherein he has written-off Rs. 45,54,306/- as bad debt by making a journal entry, was not correct because since the matter was pending before the Court and the debtor had categorically admitted to settle the issue. He therefore, disallowed the above amount of Rs. 45,54,306/- and added to the assessee's total income. Aggrieved from the said addition, t....
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....thus he has written off the same, even though, he continues to contest the suit/complaint for recovery of the said debt, it does not mean that his decision was not bonafide. Our view finds support from the decision of the Hon'ble Bombay High Court in the case of "Jethabhai Hirji and Jethabhai Ramdas vs. CIT" (1979) 120 ITR 792. Though, while withdrawing the complaint the assessee had stated before the court that the accused had agreed to pay the amount and the matter was likely to settle between the parties, it gives no presumption that the accused/debtor had actually paid the amount to the assessee. There may be so many reasons for a businessman which may require him to withdraw the criminal complaint against the debtor taking into conside....