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Deductability of disallowed Bad debts during assessment procedure in future year

Started by singai, January 25, 2013, 06:02:51 PM

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We had a Scrutiny assessment for one of our client. The client has written off certain amount as Bad debts. During the process of scrutiny assessment, the AO contented that out of the bad debts written off, there were transactions with the entity during the year under assessment and hence, these were not eligible to be written off as bad debts in the same year and as a best practice, the AO wanted the client to wait for atleast 1-2 years and then write off the money which is not recoverable.
As i can recollect, there is no specific provision which says how many days/months/years that a debt has to be in the books to be treated as Bad debts. As for as the debt is not recoverable and if can be proved, I feel the amount can be written off.
But to buy peace with the AO, we have offered part of the bad debts as income and paid tax on this amount.

My question is

1. Can these bad debts which were offered as income (not as bad debts and reduced from expenses) be treated as Bad debts in future years, since between the assessment year and the current year, there is a gap of 2 years and since money is not received from these parties, can we write off these offered bad debts back as debtors during assessment procedure, in current year?