Sabyasachi Mukharji, J. - (1.) In this reference under Section 256(2) of the I.T. Act, 1961, the Tribunal has referred the following question, as directed by this court : "Whether, on the facts and in the circumstances of the case, there was any relevant evidence before the Tribunal to support its opinion that the Appellate Assistant Commissioner was not justified in accepting the assessee's claim for deduction of Rs. 59,477 ?"
(2.) We are concerned in this reference with the assessment year 1971-72, for which the relevant accounting year is the calendar year 1970. In the return of income as well as during the assessment proceedings, the assessee claimed deduction of Rs. 59,477 being bad debts written off in its books of account. This amount was claimed on account of three debtors. The first debtor was M/s, Sankar Coal Co., Kanpur. There was a debt to be recovered from this company amounting to Rs. 47,659. The ITO found from the copy of the account filed that the assessee had regular transactions with this party up to the calendar year 1968 relevant to the assessment year 1969-70, when the outstanding balance stood at Rs. 47,659. This amount, the assessee claimed, was carried forward and written off during the year being unable to realise the amount. It was stated before the ITO and noted in the assessment proceedings that the assessee had filed a suit in the court of the Second Sub-Judge, Alipore, being Suit No. 26 of 1969, and as the defendant in that suit did not appear in the court, an ex parte decree was passed on the 28th April, 1970. It was further stated on behalf of the assessee that the assessee had failed to trace out the whereabouts of the assessee and, as such, the decree could not be executed. The ITO further noted that no evidence in support of these contentions had been produced to show that the firm had really been closed. In that view of the matter and in the absence of anything else the ITO disallowed the claim as being premature.
(3.) The second claim was for a sum of Rs. 4,546 in the name of M/s. Bamundia Coal Co. Ltd., Calcutta. From the copy of account filed before the ITO, it was seen, the outstanding balance of the calendar year 1969, relevant to the assessment year 1970-71, was carried forward and written off during the year. It was stated that the assessee being unable to realise the amount had filed a suit against the party in the Presidency Small Causes Court, Calcutta, being Suit No. 300 of 1970. That debtor did not appear and the suit was decreed ex parte on the 16th November, 1970. It was further stated before the ITO that the ex parte decree could not be executed as the colliery had been nationalised by an Ordinance dated 18th October, 1971. The ITO was unable to accept the contention of the assessee that the assessee could not realise its deb't of Rs, 4,545 in respect of the ex parte decree passed on the 16th November, 1970, and this was also disallowed by the ITO as premature.;