V.K.SINGHAL, J. - (1.) THE Income -tax Appellate Tribunal has referred the following two questions of law arising out of its order dated December 18, 1981, in respect of the assessment year 1974 -75: '1. Whether, in the facts and circumstances of the case, the Tribunal having held that on the final declaration of dividend in the insolvency of debtor on October 19, 1973, as per cheque of date, the claim of bad debt of Rs. 1,35,681 had shifted to the assessment year 1974 -75, was justified not to have held that other ingredients of Section 36(2)(iii) of the Act were automatically fulfilled and that the assessee was entitled to the allowance of the said bad debt for the assessment year 1974 -75 ? 2. Whether, in the facts and circumstances of the case, the Tribunal was justified to dismiss the assessee's appeal on the new ground that credit for the dividend was taken by the assessee in the accounts for the assessment year 1975 -76 and Section 154 was not attracted?'
(2.) THE brief facts of the case are that the assessee was due to receive a sum of Rs. 1,35,681 from Kaluram Nemichand of Beawar. For the assessment years 1962 -63 to 1964 -65, the debt was claimed as bad while computing the income of the assessee. The claim was rejected as premature by the income -tax authorities. The matter was ultimately challenged before this court under Section 256 and finally the application under Section 256(2) was rejected on. April 19, 1978. The debtor filed an insolvency petition before the Insolvency Judge, Ajmer, on February 23, 1965. The assessee was informed by the receiver vide letter dated November 3, 1973, that a sum of Rs. 126.04 was available as final dividend. A cheque for that amount dated October 19, 1973, was also sent. The cheque was encashed and credited in the account of the assessee for the accounting year relevant to the assessment year 1975 -76. The claim of the assessee was that since the final dividend was declared on October 19, 1973, therefore, the debt had become bad during the relevant accounting year ending Diwali 2030 (October 26, 1973), relevant to the assessment year 1974 -75. The assessee applied on April 25, 1978, for rectification under Section 154 to the Income -tax Officer for allowing the claim of bad debt for the assessment year 1974 -75. The claim was rejected by the Income -tax Officer and the Appellate Assistant Commissioner. The Tribunal also dismissed the appeal of the assessee on the ground that the earlier claim made for the assessment years 1962 -63, 1963 -64 and 1964 -65 was found premature and hence it amounted to a direction that the claim should be allowed in the year in which the insolvency petition was disposed of. The claim could not be pressed at the time of the assessment for the year 1974 -75, since the assessee was simultaneously pursuing the remedy on different lines by way of reference in respect of earlier assessment years. When his reference application was rejected, his claim to deduct the bad debts survived for the assessment year 1974 -75. The claim for bad debts in the assessment years 1962 -63, 1963 -64 and 1964 -65 was considered to be premature. There was no finding that the debt became bad in 1974 -75 and as such all that was said was that the debt did not become bad in those years. It was for the assessee to place the facts before the Income -tax Officer at the time of assessment for 1974 -75 and claim that the debt became bad in 1974 -75. The assessee's claim was based on the provisions of Section 36(2)(iii) and it was observed that the decision of the High Court was given on April 19, 1978, and the cheque of the receiver was dated October 19, 1973, for Rs. 126.04. Even these documents did not form part of the record for the assessment year 1974 -75 till the assessment was completed. It will be a mistake apparent from record with which the Tribunal did not agree.
(3.) LEARNED counsel for the assessee relied upon the decision in the case of CIT v. K. N. Oil Industries : [1983]142ITR13(MP) wherein it was held that even if the relief has not been claimed in the assessment proceedings, it can be claimed by rectification of assessment. The decision in the case of CIT v. Sarju Prasad : [1984]148ITR718(All) has also been relied upon that if there was failure to file estimate within time it could move the Tribunal for rectification under the Act. The decision in the case of CIT v. Mattoo Worsted Spg. and Wvg. Mills has also been relied upon that if the conditions set out in Section 80J are satisfied and the claim was not made in the original assessment rectification is permissible. It is stated that in view of the decision in the case of Addl CIT v. S. RM. PL Subramania Chettiar : [1979]119ITR925(Mad) the debt had become bad on the date when the final dividend was received in the insolvency proceedings. In this case, the final dividend was declared on October 19, 1973, and as such the debt had become bad during the accounting period ending Diwali 2030 (October 26, 1973), relevant to the assessment year 1974 -75.;