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TMI Blog2015 (10) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... liberty to raise all such arguments as he may deem fit and proper. For the reasons set out above, we once again remit the matter to the file of the Assessing Officer for fresh adjudication de novo, in terms of our directions above, inter alia in the light of the legal proceedings in respect of the embezzlement that the assessee claims to have suffered. With these directions, the matter stands restored to the file of the Assessing Officer. - Decided in favour of assessee for statistical purposes. - I.T.A. No. 69/Ahd/08 - - - Dated:- 30-4-2015 - Pramod Kumar AM and S.S. Godara JM For The Appellant : S N Divatia For The Respondent : A L Kureel and Dinesh Singh ORDER Per Pramod Kumar AM: 1. By way of this appeal, the assessee appellant has challenged correctness of the order dated 3rd October 2007 passed by the CIT(A) in the matter of assessment under section 143(3) r.w.s. 147 and 250 of the Income Tax Act, 1961, for the assessment year 1991 -92. 2. Grievance of the assessee, in substance, is that the CIT(A) erred in upholding the disallowance of ₹ 5,16,480 in respect of the alleged loss due to embezzlement suffered by the assessee. 3. To adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia, declined the claim of deduction for the loss due to embezzlement on the ground that that as held in the first round of proceedings, the circumstances under which the loss had arisen cannot be said to be in the normal course of business , that no new material has been brought on record to support the claim of deduction, that even if loss is accepted to have arisen, it could be allowed as deduction only when it is irrecoverable whereas right now matter is sub judice and the embezzled monies, even if any, cannot be said to be fully unrecoverable. A reference was then made to the findings in the first round of proceedings wherein it was said to have been held that the assessee was all along aware about the bank accounts which were allegedly used for embezzlement and that it is unbelievable that the company went on issuing cheques, which are mentioned in misappropriation, without getting the amount back in cash . A reference was also made to the observation made by the coordinate bench in order dated 11th November 2005 to the effect that the fact remains that the name of the assessee appears in these dubious transactions . The claim of deduction on account of embezzlement was thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Statement of Gautam Dalal, who happened to be an employee of the company, corroborated this. In view of the above discussions, all the grounds of appeal are hereby rejected. 5. The assessee is aggrieved of the stand so taken by the CIT(A) and is in appeal before us. 6. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal postion. 7. We have noted that in this round of proceedings also, the Assessing Officer has heavily relied upon findings in the first round of proceedings and proceeded to adopt the same as the assessee has not brought on record any new material, and, therefore, as per the Assessing Officer, these findings have reached finality. This approach is clearly fallacious. When the assessment order passed by the Assessing Officer in the first round has been remitted, to the file of the Assessing Officer, by the coordinate bench on the ground that it has been passed without confronting the assessee with the certain statements recorded by the investigation wing, all the findings in that assessment order cannot be treated to have achieved finality. There was no occasion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is read together. This observation is as follows: We have heard the parties at length regarding the issue of reopening of assessment and violation of principles of natural justice. First, we shall deal with the plea of the learned counsel that reassessment proceedings are bad in law. We are unable to agree with this proposition of the learned counsel as sufficient (for the purpose of reopening the assessment) material has come on the record to come to a reasonable belief that the assessee was indulging in bogus purchases. Whether it was at the behest of the assessee or network of an employee, that is altogether a different aspect (but the) fact remains that the name of the assessee appears in these dubious transactions. This information, though, may be available for a particular period but looking at the system a reasonable belief cam be formed that bogus purchases may be there in all these years. In view of these observations, we uphold the reopening of the assessments. 8. The coordinate bench then proceeds to examine the issue of violation of principles of natural justice. The above observation is in the context of reopening, and, in our humble understanding, this ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny, in the hands of the person who is alleged to have, or has actually, embezzled the money will not have any bearing on the deductibility of this loss, if otherwise admissible, in the hands of the assessee. In view of these discussions, in our considered view, the entire issue of admissibility of deduction in respect of alleged embezzlement needs to be considered afresh in a fair and objective manner and in the light of related legal developments as a result of civil and criminal proceedings initiated by the directors of the company against K B Thakkar and vice versa. 9. As the very basic issue of admissibility of deduction in respect of the loss die to embezzlement is required to be, in the light of the above discussions, required to be decided afresh, we donot consider it appropriate to deal with other peripheral issues raised in the orders of the authorities below. Suffice to say that the matter will be decided afresh, uninfluenced by the findings in the first round of proceedings (which have come to a naught due to the matter having been restored to the file of the Assessing Officer due to the proceedings in the first round having been held to be vitiated in law due to viol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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