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TMI Blog2018 (5) TMI 1542X X X X Extracts X X X X X X X X Extracts X X X X ..... 24-5-2018 - SHRI R.C. SHARMA, ACCOUNTANT MEMBER For The Revenue : Sh. Ashok Khanna JCIT For The Assessee : None ORDER PER: R.C. SHARMA, AM This is an appeal filed by the revenue against the order of the CIT(A)-2, Jodhpur dated 08/11/2017 for the A.Y. 2013-14 in the matter of order u/s 143(3) of the Income-tax Act, 1961 [hereinafter referred to as the Act , for short]. 2. In this appeal, the revenue is aggrieved for deleting the addition of ₹ 44,55,428/- made by the Assessing Officer, disallowing the assessee s claim of loss due to theft of goods. 3. I have heard the ld DR and perused the material available on the record and found that the loss claimed by the assessee on account of theft, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tricted his concern to the extent of loss claimed by the appellant, which in my view is not a justifiable action. Either the AO was supposed to reject the valuation of closing stock or the method adopted by the assessee in preparing the physical inventory. However, in the instant this is not the case of the AO. Here, I may refer to the decision of the Hon'ble Gujarat High Court in the case of Bombay Forgings Pvt. Ltd. Vs. CIT as cited above by the appellant supra, wherein the Hon'ble Gujarat High Court held that: ... it was an admitted position that the embezzlement had taken place during the relevant previous year and the same was duly reflected in the books of account by omission of the value of such goods from Ore sales a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year, the adjustment can be claimed in the assessment year when it came to be known . The ratio of this judgment is squarely applicable to the facts of the present case in as much as fact of loss due to theft came to be known in the year under consideration. Hence, this observation of the AO has no relevance while deciding the issue of loss. 4.5 As regards the AO s another observation that the goods of the assessee were insured but no claim against the theft was admitted by the Insurance company, I find that mere rejection to admit claim by the insurance company cannot be the ground for rejection of claim of loss under the income-tax Act. There is agreement with the person and insurance company and this agreement has vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Punjab and Haryana High Court in the matter of Punjab Steel Stockholders Syndicate Ltd Vs CIT (125 ITR 519) wherein it has been held that If the assessee is able to place relevant material before the authorities for proving the loss irrespective of the fact whether the accused charged of embezzlement has been convicted or not the authorities cannot refuse to consider the material by observing that the conviction of the person accused of embezzlement, has not been recorded In the present case, the assessee produced its balance-sheets, audit report, copy of the first information report, copy of the letter dated 10th September, 1969, of the assessee along with its enclosure. 4.6.1. The Hon'ble ITAT Jaipur Bench in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aud is an admitted position arid thus the genuineness thereof automatically gets established. The ld AR of the assessee relied on decision of Hon'ble Supreme Court in the case of Associated Banking of India Ltd vs. CTT (supra). Further the Id AR of the assessee took resort of CBDT Circular No. 25 of 1939 and Circular No. 13 of 1994 wherein it was clarified that losses arising dm to embezzlement of employees or due to negligence of employees should be allowed if the loss took place in the normal course of business and the amount involved was necessarily kept for the purpose of the business in the place from which it was lost. The Hon'ble Supreme Court has further considered the matter and laid down the law in this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record by the appellant before me and examining the same with income Tax Act as well as existing judicial decisions as of now subject to the final outcome of the criminal case filed by the appellant. 05. In the result, the appeal is allowed. 4. It is clear from the order of the ld. CIT(A) that after relying on various judicial pronouncements, he 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 recoded by the ld. CIT(A) has not been controverted by the ld Departmental Representative by bringing any positive material on record. Accordingly, I do not find any reason to interfere in the findings of the ld. CIT(A) regard ..... X X X X Extracts X X X X X X X X Extracts X X X X
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