Appeal – A. Y. 2006-07 – CIT(A) can consider the claim though not made in the return or the revised return

For the A. Y. 2006-07, the Assessing Officer rejected the assessee’s claim made by way of a letter, during the assessment proceedings, for deduction of the bad debts written off by it on the ground that it could have only been made by way of revised return u/s. 139(5). CIT(A) accepted the claim and granted the deduction. The Tribunal held that the CIT(A) could have considered such claim even during the course of appellate proceedings otherwise than by way of a revised return, he did not examine whether, in fact, the assessee had taken such debts into consideration while computing its total income. For that purpose, the Tribunal remanded the matter to the Assessing Officer for a decision afresh.

On appeal by the Revenue, the Delhi High Court upheld the decision of the Tribunal and held as under:

“i) The Tribunal was right in holding that while there was a bar on the Assessing Officer entertaining such claim without a revised return being filed by the assessee, there was no such restraint on the CIT(A) during the appellate proceedings. However, while permitting such a claim he ought to have examined whether in fact the bad debts were written off by the assessee in the first instance in the accounts and then taken into consideration while computing the income.

ii) Remand of the matter to the Assessing Officer for that purpose was, therefore, justified.”