2018 (5) TMI 1542 - AT - Income Tax

Claim of loss due to theft of goods - Held that - CIT-A after relying on various judicial pronouncements has recorded a finding to the effect that the sufficient evidences were placed on record by the assessee that there was loss due to theft of goods. The findings so recorded by the ld. CIT(A) has not been controverted by the DR by bringing any positive material on record. No reason to interfere in the findings of the ld. CIT(A) regarding deleting the disallowance made on account of loss due to theft of goods. - Decided in favour of assessee.

Summary

Issues:
Appeal against deletion of addition for loss due to theft of goods.

Analysis:
The revenue appealed against the deletion of addition of ?44,55,428 made by the Assessing Officer for disallowing the assessee's claim of loss due to theft of goods for the Assessment Year 2013-14. The CIT(A) had deleted the disallowance after considering various facts and evidence presented by the assessee. The AO disallowed the claim citing reasons like lack of stock register maintenance, loss not pertaining to the relevant year, insurance claim rejection, and pending court proceedings. The CIT(A) found the AO's concerns unjustified. The CIT(A) referred to the decision of the Hon'ble Gujarat High Court in a similar case to support the assessee's claim. The CIT(A) observed that the valuation of closing stock was accepted by the AO, hence doubting the value of the stolen goods was unjustified.

Regarding the claim not pertaining to the relevant year, the CIT(A) cited a judgment of the Hon'ble Punjab and Haryana High Court to support the assessee's position. The rejection of the insurance claim was deemed irrelevant by the CIT(A) as the IT authorities are not bound by the terms of the insurance agreement. The CIT(A) noted that the appellant provided substantial evidence, including FIR, seized goods details, and stock inventory, to establish the theft and resultant loss. The CIT(A) referred to various judicial decisions and case laws to support the allowance of the claim. The CIT(A) found the appellant's case stronger than a similar case and allowed the appeal based on the evidence presented.

The ITAT upheld the CIT(A)'s decision, noting that the sufficient evidence presented by the assessee regarding the loss due to theft of goods was not countered by the revenue. Therefore, the appeal of the revenue was dismissed, affirming the deletion of the addition for loss due to theft of goods.

In conclusion, the judgment highlights the importance of providing substantial evidence to support claims, the relevance of judicial precedents in decision-making, and the need for justifiable reasoning by tax authorities in disallowing deductions.