concurring: I do not agree that the amount collected in 1920 on accounts charged off for prior years should be included in 1920 income because of an estoppel. An estoppel must be certain and may not depend upon argument or inference. It is a matter of defense and should be pleaded and proven by the one asserting it. This same party should suffer if the proof is inadequate. In order to work an estoppel of this kind there must be, among other things, (1) conduct, acts, language or silence amounting to a representation or a concealment of material facts; (2) the truth concerning these facts must be unknown to the other party, who claims the benefit of the estoppel, and this party must be without convenient or ready means of acquiring this knowledge by the exercise of reasonable diligence; (3) the latter must also be led by his reliance on the conduct of the other to change his position for the worse. An estoppel has no application where the material facts are known to both parties. The object of the rule is to repress fraud and render men truthful in their dealings with each other.
The Commissioner was investigating the.tax liability of this taxpayer for four years, the yrears 1917 to 1920, inclusive. The information which he obtained from the taxpayer showed that the latter pursued a consistent course in all of those years so far as the matter now under discussion is concerned. There is nothing in the record to distinguish the facts for 1920 from those for the other years. The Commissioner knew that in each year the petitioner deducted a certain amount from its income which it considered a fair amount, in the light of its experience, to represent bad debts; it next absorbed this amount by charge-offs in specific accounts, first wiping out all delinquent accounts and then spreading the remainder among the active accounts; as amounts thus charged off were collected in later years, the collections were again included in income. These are the material facts. Both parties knew them. What other fact was represented or concealed which could work an estoppel? ' The petitioner contended that it had thus met the requirements of the act as to ascertainment of worthlessness and charge off in all years. The prevailing opinion holds that having taken this position he is es-topped to take another. But this contention of the taxpayer was no more than a statement of a conclusion. The prevailing opinion seems to hold that the Commissioner may say to this taxpayer, “ You have persuaded me to allow you deductions for prior years, so I include certain items in your 1920 income regardless of whether or not they are properly income for 1920 and ymu may not show or even contend that they are not income for that year.” This would make the unequal resistance of the Commissioner to one argument on similar facts for four years the basis of an estoppel. The Commissioner is able to form his own conclusions from a given state of facts and can not claim an estoppel where another’s argument made *417him vacillate. The difficulty does not arise from any unfair advantage taken by the petitioner.
The Commissioner singled out the year 1920 and disallowed a part of the deduction for that year. We approve his action as to that year. Why he did not follow his agent’s report, disallow similar parts of the deductions for other years and exclude the collections from income, I do not know. If it was on account “ of the additional information submitted in conference of September 16, 1922,” what was that information? Apparently without any further information the Commissioner eventually proposed the large deficiency for 1920 by disallowing the excess of the bad debt deduction over the total of the delinquent accounts as an arbitrary deduction. In this connection he pointed to collections in the succeeding year, but he had the same information for 1917, 1918 and 1919.
The taxpayer says, “ If you will not adopt my consistent method, then take another consistent view, that of your revenue agent for example, whereby my income for 1920 will not be distorted.” He is not estopped to make this plea. We should not support the Commissioner if these items were not income in 1920. Errors of other years need not concern us under such circumstances, for the Commissioner has not shown that any material fact was unknown to him or misrepresented when he made his determination as to those years or when his determination became final.
The Commissioner determined that proper amounts were charged off for prior years. The presumption is that he was correct. The proof does not show that the amount charged off was incorrect in the light of the circumstances known at the end of each of those years. Amounts later collected were then unknown. In my opinion the Commissioner wins the point without benefit of an estoppel.
GoodRich agrees with this concurring opinion.