- (1.) PRESENT income tax appeal has been filed under Section 260A of Income Tax Act, 1981 against the judgment and order dated 4.8.2006 passed by Income Tax Appellate Tribunal, Lucknow Bench, Lucknow in Appeal No. I.T.A. No. 501/LUC/2006 for Assessment Year 2002 -03.
(2.) ON the presentation of appeal in question, appeal was admitted for final hearing on following substantial question of law: (I) Whether on the fact and circumstances of the case the learned Income Tax Appellate Tribunal was right in law in holding that it is not obligatory on the part of the assessee to prove that the debt written off by him is indeed a bad deft for the purpose of allowance Under Section 36(1)(vii) of the I.T. Act, 1961 by relying on the order passed by Income Tax Appellate Tribunal in the case of Dy. CIT v. Oman International Bank SAOG : (2006)100 ITD 285 (Mum)(SB) ?. (ii) Whether on the peculiar fact and circumstances of the case the amended provisions of the Income Tax Act, 1961 w.e.f. 1.4.1989, to Section 36(1)(vii) read with 36(2) grants specific amnesty to the assessee for claiming any amount of Debt as bad barring the Assessing Officer to question the veracity of the same thus giving overriding power to one section contrary to the general scheme of enactment of the Income Tax Act, 1961 vide which the real income only is envisaged to be taxed ? Brief background of the case is that the respondent assessee is engaged in the business of developing and printing of photos. The respondent assessee filed its return showing an income of Rs. 4,65,640.00. The returned income was adjusted from the carried forward losses of the earlier year and thus Nil income had been shown. The case was processed Under Section 143(1) on 27.12.2002 on the returned income. The assessment was completed Under Section 143(3) on the total income of Rs. 13,14,540.00.
(3.) IN the income and expenditure account the respondent assessee claimed expenditure of Rs. 4,86,466.00 under the Head Amounts written off. The Assessing Officer observed that merely stating that the amount has been written off would not suffice as the respondent assessee failed to furnish the information, which may substantiate that the said debt is a bad debt as the onus to prove that it was a bad debt was on the respondent assessee who failed to discharge the same. Therefore, the Assessing Officer held the expenditure claimed by the respondent assessee under the head amounts written off as dis allowable as per the provisions of Section 36(1)(vii) of the I.T. Act.;