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TMI Blog1999 (5) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... uditor and it was found that the embezzlement started from 1982-83 to 1984-85. Yearwise break-up has been given in the order of the Commissioner. The Assistant Commissioner of Income-tax, observed : "Embezzlement loss incurred during the year ending June 30, 1985, amounting to Rs. 28,025 is allowed. The assessee is not allowed to carry forward of previous years embezzlement losses pertaining to the assessment year 1984-85 and previous assessment years for the reasons mentioned in the assessment order for 1985-86." The return filed by the petitioner was for the loss of Rs. 3,77,175, whereas, the income computed in the assessment order was Rs. 1,63,900. The Income-tax Officer allowed the embezzlement loss for the year ending June 30, 1985 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in treating the loss of the previous year, as not allowable in the year 1986-87. Reliance is placed on the Central Board of Direct Taxes Circular No. 35-D (XLVII-20) of 1965-F. No. 10/48/65-I.T.(AI), dated November 2, 1965, which reads : "Allowance of embezzlement loss : Losses by embezzlement by employees---Treatment of, for the purposes of income-tax assessments.---A reference is invited to the instructions on the above subject contained in Board's Circular No. 25 of 1939 and Circular No. 13 of 1944. In these circulars it was clarified that losses arising due to embezzlement by 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 necessari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laiming and securing reliefs and in this regard the officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department ; for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility of claiming refunds and reliefs rests with the assessee on whom it is imposed by the law, officers should : (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reasons or other; (b) freely advise them when approached by them as to their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner and that the assessee has not filed a valid revision. I have considered over the matter. At this stage, I will not examine the question of maintainability of revision which has to be examined by the Commissioner of Income-tax. Suffice it to observe the observation that the embezzlement related to earlier year, cannot be claimed in the subsequent year, is contrary to the observations of the apex court. The petitioner was made aware of the audit report for the loss in the assessment year 1986-87 and it is on the said amount becoming irrecoverable that a loss could be claimed. In these circumstances, the order passed by the Commissioner of Income-tax is set aside. It is directed that the Commissioner would consider the entire ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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