ITO 14(1)(1), MUMBAI V. BAANGANGA JEWELLERS, MUMBAI

ITA 1904/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9728 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 20-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT & SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 1904/MUM/2014 ASSESSMENT YEAR : 2010-11 ITO 14(1)(1) MUMBAI VS. BAANGANGA JEWELLERS, 130/132 CHANFRA MAHAL, 8 SHEIKH MEMON STREET, ZAVERI BAZAR, MUMBAI 400 002 PAN AAAFB6459L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUMAN KUMAR RESPONDENT BY : NONE DATE OF HEARING : 11.09 .2017 DATE OF PRONOUNCEMENT : 11. 0 9 .2017 O R D E R PER P K BANSAL, VICE-PRESIDENT: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A)-25, MUMBAI, DATED 20.12.2013, FOR A.Y.2010 - 11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) HAS ERRED IN THE LAW AS WELL AS ON THE FACTS IN ALLOWING LOSS CLAIMED BY THE ASSESSEE AS TRADING LOSS, AS THE ASSESSEE FAILED TO PRODUCE DOCUMENTARY EVIDENCE LIK E ITEM WISE INVENTORY OF JEWELLERY, MANUFACTURING DETAILS, DOCU MENTARY EVIDENCE REGARDING SALARY PAYMENT TO THE EMPLOYEE I NVOLVED IN TRANSIT OF JEWELLERY WHICH WAS STOLEN, ALSO THE INS URANCE COMPANY HAS REJECTED THE CLAIM OF THE ASSESSEE. ITA NO.1904/MUM/2014 BAANGANGA JEWELLERS 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD. CIT(A) ERRED IN LAW IN ALLOWING THE LO SS CLAIMED BY PLACING RELIANCE ON THE CASE LAWS WHICH ARE NOT REL EVANT TO INSTANT CASE. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES T O THE ALLOWANCE OF LOSS INCURRED BY THE ASSESSEE ON ACCOUNT OF THEFT OF JEW ELLERY THOUGH THE CLAIM MADE TO THE INSURANCE COMPANY HAD BEEN REJECTED. N ONE APPEARED ON BEHALF OF THE ASSESSEE EVEN THOUGH THE CASE WAS EAR LIER ADJOURNED FOR TODAY ON THE REQUEST OF THE ASSESSES COUNSEL. WE NOTED THAT ON EARLIER THREE OCCASIONS ALSO THE CASE WAS ADJOURNED ON ONE PRETEX T OR THE OTHER ON THE REQUEST OF THE ASSESSEES COUNSEL. ON 01/05/2017, THE ASSESSEES COUNSEL, ADVOCATE SHRI SASHANK, HAS DULY NOTED THE DATE FIXE D FOR HEARING OF 11.09.2017. WE, THEREFORE, PROCEED TO DISPOSE OF T HE APPEAL AFTER HEARING THE LEARNED DR AND ON THE BASIS OF THE MATERIAL AVA ILABLE ON RECORD. 3. AFTER HEARING THE LEARNED DR AND GOING THROUGH T HE ORDERS OF THE TAX AUTHORITIES BELOW, WE NOTED THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND DEALING IN GOLD JEWELLERY, PRE CIOUS STONES AND F & O. THE ASSESSEE FILED THE RETURN OF INCOME ON 23.09.20 10 DECLARING THE TOTAL INCOME AT ` 2,02,810/-, WHICH WAS PROCESSED U/S. 143(1). SUBS EQUENTLY, THE ASSESSMENT WAS COMPLETED U/S. 143(3) ON 18.03.2013, BY MAKING ADDITION OF ` 93,69,402/- BY DISALLOWING THE LOSS INCURRED BY TH E ASSESSEE ON ACCOUNT OF THEFT. THE ASSESSING OFFICER NOTED THAT THE ASSESS EE MAINLY SOLD GOODS IN ITA NO.1904/MUM/2014 BAANGANGA JEWELLERS 3 VARIOUS MAJOR CITIES IN INDIA. ON 28.10.2017, THE MANAGING PARTNER SHRI NAVRATNAMAL GANA HAD SENT HIS SON SHRI JINESH GANNA ALONG WITH SHRI MANISH K NANAVATI, SHRI RAMESH KHANDELWAL AND SHRI BIPIN J AIN TO HYDERABAD BY BUS FOR SELLING GOLD AND ORNAMENTS WEIGHING 11.382 KG. ON 28.10.2007, AT AROUND 8 PM TO 8.30 PM SHRI VIKASH (SON OF SHRI NAV RATNAMAL GANNA) TELEPHONICALLY INFORMED NAVRATNAMAL GANNA THAT SHRI MANISH HAD CALLED FROM PUNE INFORMING ABOUT THE THEFT OF GOLD JEWELLERY. THEREAFTER, SHRI NAVRATNAMAL GANNA, SHRI VIKASH AND SHRI PRAKASHCHAN D GANNA LEFT FOR PUNE. IN THE MEANTIME, THEY TOLD SHRI MANISH TO INFORM TH E POLICE ABOUT THE INCIDENT. WHEN THEY REACHED PUNE ON 29.12.2007 AT 1.30 AM, ENQUIRED FROM SHRI JINESH GANNA ALONG WITH SHRI MANISH K NANAVATI , SHRI RAMESH KHANDELWAL AND SHRI BIPIN JAIN ABOUT THE INCIDENT. THEY INFORMED THAT ON 29.10.2007 AROUND 8.30 PM THEIR BUS NO. KA-03, B-96 26 STOPPED NEAR PUNE CENTRAL PARK HOTEL FOR DINNER. AFTER DINNER, WHEN THEY RETURNED THEY FOUND THAT THE BAG WAS IN PROPER PLACE BUT AGAIN IN PUNE WHEN THEY OPENED AND CHECKED THE BAG, THEY FOUND THE GOLD ORNAMENTS MISS ING. ONE LADY SMT. KALPNA, WHO WAS ALSO TRAVELLING IN THE SAME BUS, IN FORMED THE POLICE THAT OUT OF THE FOUR PERSON ONE CAME BACK WITH THE CLEANER A ND OPENED THE BAG AND TOOK SOMETHING OUT AND WENT FOR DINNER AND WHEN THE Y REACHED PUNE THEY STARTED SPEAKING LOUDLY SAYING THAT GOLD ORNAMENT O F 4629.700 GMS AND 6752 GMS HAS BEEN STOLEN. THUS, IT WAS UNDERSTOOD THAT IT WAS SHRI RAMESH KHANDELWAL, WHO CAME BACK WITH THE CLEANER AND OPEN ED THE BAG AND TOOK ITA NO.1904/MUM/2014 BAANGANGA JEWELLERS 4 SOMETHING OUT OF THE BAG AND KEPT THE BAG BACK IN I TS PROPER PLACE. IN THIS REGARD NOTE ON LOSS BY THEFT OF ` 98 LACS WAS GIVEN BY THE ASSESSEE. THE POLICE NOTED THAT THE THEFT HAD OCCURRED NEAR ABOUT PUNE. THE ASSESSING OFFICER ASKED FOR THE COPY OF THE FIR FROM THE ASSE SSEE, WHICH WAS DULY SUBMITTED. THE ASSESSING OFFICER FURTHER NOTED THA T ORIENTAL INSURANCE COMPANY IN REPLY TO NOTICE U/. 133(6) STATED THAT T HE STOCK RECEIPT REGISTER OF THE ASSESSEE DID NOT HAVE DETAILS OF GOLD ORNAMENTS CARRIED BUT ONLY THE TOTAL WEIGHT. SECONDLY, THE MUSTER ROLLS CUM WAGES REGIS TER REFLECTED THE NAMES OF EMPLOYEE SHRI MANISH K NANAVATI, SHRI RAMESH KHA NDELWAL AND SHRI BIPIN JAIN AS ON OCT 27,2008 BUT THE REGISTER DID NOT REF LECT THE AMOUNT OF WAGES AND SIGNATURE OF THE EMPLOYEES IN THE AVAILABLE COL UMN. FURTHER, THE ASSESSEE SUBMITTED A DETAILED NOTE ALONG WITH HANDW RITTEN STOCK REGISTER IN WHICH ENTRIES OF ISSUE OF 11,382 GMS GOLD ORNAMENTS TO SRI RAMESH KHANDELWAL AND SHRI MANISH K NANAVATI FOR TOUR TO H YDERABAD ON OCTOBER 27 WERE NOTED. A COPY OF VOUCHERS BEARING NO.71 AND 7 6 DATED OCTOBER 27 SHOWING ISSUE OF 6,752.500 GMS AND 4,629.700 GMS RE SPECTIVELY TO SHRI RAMESH KHANDELWAL AND SHRI MANISH K NANAVATI WERE A LSO PROVIDED. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE C ONTENTIONS OF THE ASSESSEE AND TOOK A VIEW THAT ON THE BASIS OF PROBA BILITY, NONE OF THE PRUDENT BUSINESS MAN WOULD IN ONE GO SEND 1/4 TH OF ITS TOTAL GOLD THROUGH THE EMPLOYEES BY BUS FOR MAKING SALES OUTSIDE THE CITY. THE ASSESSING OFFICER THEREFORE, DISALLOWED THE ALLEGED LOSS AND ADDED A SUM OF ` 93,69,402/- TO ITA NO.1904/MUM/2014 BAANGANGA JEWELLERS 5 THE INCOME OF THE ASSESSEE. ON APPEAL, THE CIT(A) HAS APPRECIATED ALL THE FACTS AND EVIDENCE INCLUDING THE FIR AS WELL AS THE STOCK STATEMENT, MUSTER ROLL ALONG WITH THE VOUCHER NOS. 71 & 76 SHOWING TH E ISSUE OF GOLD ORNAMENTS OF 6,752.500 GMS AND 4,629.700 GMS RESPECTIVELY TO SHRI RAMESH KHANDELWAL AND SHRI MANISH K NANAVATI. AFTER CALLING FOR A R EMAND REPORT FROM THE ASSESSING OFFICER AS WELL AS REJOINDER FROM THE ASS ESSEE, THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: 5.6 I HAVE PERUSED THE ASSESSMENT ORDER, WRITTEN S UBMISSIONS OF THE APPELLANT, REMAND REPORT, REJOINDER AND THE FACTS AND CIRCUMSTANCE OF THE CASE. THE FACTS IN THE CASE OF THE APPELLANT ARE THAT IT IS A FIRM FROM CARRYING ON BUSINESS IN MANU FACTURING GOLD ORNAMENTS AND JEWELLERY AND SELLING THE SAME ON WHO LESALE BASIS. FOR THE A.Y.2010 - 2011, IT FILED A RETURN OF INCOM E SHOWING TOTAL INCOME OF RS.202 S 810A IN THE ASSESSMENT ORDER 18/03/2013 PASSED BY THE A.O. HE DETERMINED THE TOTAL INCOME AT RS.95 ,72,210/- IN ARRIVING AT THIS TOTAL INCOME, THE A.O DISALLOWED A SUM OF RS.93,69,402/- CLAIMED BY THE APPELLANT AS LOSS ON ACCOUNT OF THEFT OF GOLD JEWELLERY WHILE SAME WAS BEING TAKEN TO HYD ERABAD TO BE SHOWN TO THE PURCHASERS. THE APPELLANT SENT THREE O F ITS EMPLOYEES AND A PARTNER'S SON ON 28/10/2007 BY BUS TO HYDERAB AD TO HAND OVER ITEM OF JEWELLERY WEIGHING 11.382 KG FOR SALE ON APPROVAL. THESE FOUR PERSONS LEFT MUMBAI AT ABOUT 5.15 PM IN A VOLVO BUS. BETWEEN 8 AND 8.30 PM WHEN THE BUS HALTED AT CENTRA L PARK HOTEL PUNE FOR DINNER THE EMPLOYEES AND THE PARTNER'S SON GOT DOWN FROM THE BUS FOR DINNER AND THE BAG CONTAINING THE ITEM OF JEWELLERY WAS KEPT UNDER THE SEAT OCCUPIED BY TWO OF THE EMPLOYEE S (JINESH AND BIPIN). AFTER HAVING DINNER ALL THE FOUR RETURNED B ACK AND GOT INTO THE BUS. THEY FOUND THAT THE BAG CONTAINING JEWELLE RY WAS BELOW THE SEATS OF TWO THE EMPLOYEES, WHERE IT WAS KEPT B EFORE THEY LEFT FOR DINNER. AFTER TRAVELLING FOR SOME TIME THEY NOT ICED THE BAG WAS VERY LIGHT AND THEREFORE OPENED IT AND FOUND THAT T HE GOLD ORNAMENTS WERE NOT THERE. SHRI.VIKAS TELEPHONED ON HIS MOBILE TO THE MANAGING PARTNER OF THE APPELLANT- FIRM. THE MA NAGING PARTNER IMMEDIATELY LEFT FOR PUNE. A PRELIMINARY COMPLAINTS WAS LODGED IN BUND GARDEN POLICE STATION AT ABOVE 1.30 AM ON 29/1 0/2007.THE ITA NO.1904/MUM/2014 BAANGANGA JEWELLERS 6 POLICE INFORMED THE COMPLAINANT THAT AS THE THEFT H AS TAKEN THE PLACE UNDER THE JURISDICTION OF DEHU ROAD POLICE ST ATION PUNE, THE FIR WAS FORWARDED TO DEHU ROAD POLICE STATION AT AB OUT 2.30 PM .A COMPLAINT WAS ALSO FILED BEFORE THE FIRST CLASS MAG ISTRATE, WADGAON, MAVIL (CRIMINAL M.NO.43 9/2007) AGAINST TH E THREE EMPLOYEES AND THE CLEANER OF THE BUS (FOURTH ACCUSE D IN THE COMPLAINT FILED BEFORE THE MAGISTRATE). THE MAGISTR ATE IN HIS ORDER DATED 25/02/2011 RELEASED THE THREE EMPLOYEES OF TH E APPELLANT FROM THE CHARGES FRAMED AGAINST THEM AND DIRECTED T HAT THE CASE AGAINST THE FOURTH ACCUSED (CLEANER OF THE BUS) SHO ULD BE CONTINUED. 5.7. LATER ON A CLAIM WAS MADE BEFORE THE ORIENTAL INSURANCE COMPANY LTD. AFTER MAKING ITS INQUIRIES THE INSURAN CE COMPANY IN ITS LETTER DATED 28/04/2008 REJECTED THE CLAIM OF T HE APPELLANT. THE ORIENTAL INSURANCE COMPANY LTD. HELD THAT THE ISSUE VOUCHER AND STOCK RECEIPT REGISTER MAINTAINED BY THE APPELLANT DID NOT SHOW THE ITEMIZED DETAILS OF THE GOLD ORNAMENTS CARRIED. THE ENTRIES ONLY SHOWED THE TOTAL WEIGHT AND NO DESCRIPTION OF THE O RNAMENTS CARRIED WAS GIVEN. FURTHER THE INSURANCE COMPANY AL SO STATED THAT THE WAGES REGISTER MAINTAINED BY THE APPELLANT DID NOT SHOW THE AMOUNT OF WAGES AND THE SIGNATURE OF THE EMPLOYEES UNDER THE APPROPRIATE COLUMNS. THE INSURANCE COMPANY FOUND TH AT NO OTHER EVIDENCES LIKE SALARY VOUCHERS OR SALARY REGISTER W ERE PROVIDED TO THE INSURANCE COMPANY. 5.8.IN THE ASSESSMENT ORDER THE A.O HELD THAT ENOUG H EVIDENCE WAS NOT ON RECORD TO PROVE THAT THE APPELLANT'S EMPLOYE ES AND THE PARTNER'S SON DID NOT CARRIED THAT MUCH OF GOLD JEW ELLERY WHICH CLAIMED AS LOSS. FURTHER HE ALSO RELIED ON THE FACT THAT THE INSURANCE COMPANY ALSO REJECTED CLAIMED OF THE APPE LLANT IN REGARD TO THE LOSS OF GOLD JEWELLERY. THE A.O THEREFORE RE JECTED THE CLAIM OF THE APPELLANT AND ADDED THE SAME WHILE ARRIVING AT THE APPELLANT'S TOTAL INCOME. I HAVE CONSIDERED THE ABOVE POINTS RAISED BY THE A. O. FROM THE PAPERS ON RECORD I FIND THAT: (I). THE ASSESSEE HAS BEEN MANUFACTURING ARTICLES O F GOLD JEWELLERY AND SELLING THEM ON WHOLESALE BASIS. GOLD JEWELLERY IS THEREFORE PART OF STOCK-IN-TRADE OF THE APPELLANT. ITA NO.1904/MUM/2014 BAANGANGA JEWELLERS 7 (II) THREE EMPLOYEES OF THE APPELLANT (MANISH KAPUR CHAND NANAVATI, MAHESH MEGHRAJ KHANDALWALAND BIPIN SOHANL AL JAIN) AND JINESH GANNA SON OF PARTNER NAVRATNAMAL GANNA, WERE ASKED TO CARRY JEWELLERY WEIGHING 11.382 KG OF GOLD TO HYDER ABAD. THE FOUR LEFT BY A VOLVO BUS TO HYDERABAD. THE BAG CONTAININ G JEWELLERY WAS KEPT UNDER THE SEATS OCCUPIED BY TWO OF THE EMPLOYE ES. BETWEEN 8 -8.30 PM THE BUS HALTED AT A HOTEL TO ENABLED PASSE NGERS TO HAVE THEIR DINNER. THE FOUR PERSONS ALSO GOT DOWN FROM T HE BUS AND AFTER HAVING DINNER RETURNED BACK TO THE BUS AND FOUND TH AT THE BAG CONTAINING JEWELLERY WAS IN THE PROPER PLACE WHERE IT WAS KEPT EARLIER. AFTER THE BUS TRAVELLED A FEW MILES, THE B AG WAS OPENED AND TO THEIR SURPRISE, THE FOUR FOUND THAT THE JEWELLER Y IN THE BAG WAS MISSING. A POLICE COMPLAINT WAS PREFERRED AND THE P OLICE ALSO FILED A CASE BEFORE THE MAGISTRATE AGAINST THE THREE EMPLOY EES AND THE CLEANER OF THE BUS. THE MAGISTRATE IN HIS ORDER DAT ED 25/02/2011 RELEASED THE THREE EMPLOYEES OF THE CHARGES FRAMED AGAINST AS THEM AND DIRECTED THAT THE PROCEEDINGS AGAINST THE FOURTH ACCUSED (WHO WAS ABSENT IN THE COURT) SHOULD BE CONTINUED. THIS CLEARLY SHOWS THAT THE APPELLANT PURSUED THE MATTER WITH TH E POLICE BUT MAGISTRATE RELEASED THE THREE EMPLOYEES OF THE APPE LLANT. (III) THE APPELLANT PREFERRED ITS CLAIM WITH THE OR IENTAL INSURANCE COMPANY LTD. THE INSURANCE COMPANY IN ITS LETTER DA TED 28/04/2008 REJECTED THE CLAIM OF THE APPELLANT. IN THIS LETTER THE INSURANCE COMPANY POINTED OUT CERTAIN DEFICIENCIES IN THE REGISTERS MAINTAINED BY THE APPELLANT. THESE DEFICIENCIES ARE MENTIONED IN PARAGRAPH 4.4 OF THE ASSESSMENT ORDER. THE MAIN DEF ICIENCY POINTED OUT IS THAT NO ITEM-WISE STOCK REGISTER WAS MAINTAIN. THIS IS NOT VERY RELEVANT AS THE REGISTER MAINTAINED SHOWS CLEARLY THE DETAILS OF PURCHASES AND THE SALES MADE WHICH ALSO CONTAIN QUANTITATIVE DETAILS. THE REGISTER MAINTAINED SHOWS THAT ITEMS OF JEWELLERY WEIGHING MORE THANLL.382 KG OF GOLD WERE AVAILABLE WITH THE APPELLANT. WHILE THE STOCK AVAILABLE IN OCTOBER 2007 WAS 22678.49 GRAMS OF JEWELLERY, 11382.2 GRAMS OF JEWEL LERY WAS GIVEN FOR CARRYING THE SAME TO HYDERABAD. THE CLAIM THAT JEWELLERY WEIGHING 11382.2 GRAMS WAS CARRIED BY THE FOUR PERS ONS ON 28/10/2007 AND THE SAME WAS LOSS, IS THEREFORE, EST ABLISHED. THE REJECTION OF THE APPELLANT'S CLAIM BY THE ORIENTAL INSURANCE COMPANY LTD BASED ON DEFECTS IN SOME OF THE REGISTE R MAINTAINED BY THE APPELLANT, HAS NO RELEVANCE ON THE ISSUE OF THE LOSS OF JEWELLERY. ITA NO.1904/MUM/2014 BAANGANGA JEWELLERS 8 5.10. THE APPELLANT ALSO RELIED ON A FEW DECISIONS IN SUPPORT OF ITS CLAIM. IN THE CASE OF SHRI RAM HARI RAM JEWELLERS VS DEPUTY COMMISSIONER OF INCOME TAX REPORTED AT 48 ITD 175 ( DELHI) (TM) THE FACTS ARE SIMILAR TO THE FACTS IN THE CASE OF T HE APPELLANT. IN THIS CASE RELIED UPON BY THE APPELLANT, THE ITAT ALLOWED THE CLAIM OF THE ASSESSEE ON ACCOUNT OF THEFT OF GOLD JEWELLERY FROM ITS SHOP PREMISES. IN VIEW OF THE ABOVE, THE APPELLANT'S CLAIM FOR DED UCTION OF RS.93,69,402/- AS TRADING LOSS IS ALLOWABLE. THIS D ISALLOWANCE MADE BY THE A.O IS DELETED ACCORDINGLY. 4. THE LEARNED DR RELIED ON THE ORDER OF THE ASSESS ING OFFICER AND CARRIED US THROUGH THE ASSESSMENT ORDER WHEREIN IT HAS BEEN MENTIONED THAT PRUDENT BUSINESS MAN WOULD NOT IN ONE GO SEND 1/4 TH OF ITS TOTAL TURNOVER IN GOLD THROUGH THE EMPLOYEES BY BUS FOR MAKING SALES OUTSI DE THE CITY. BUT HE DID NOT DISPUTE THE FACT THAT THE ASSESSEE HAS LODGED A CRIMINAL COMPLAINT AGAINST THE SAID EMPLOYEES U/S. 408 OF THE IPC ACT. IT IS ALSO NOT DENIED THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF SELLING GOL D ORNAMENTS AT DIFFERENT PLACES REGULARLY THROUGH ITS EMPLOYEES AND THE JEWE LLERY HAD BEEN LOST DURING THE TRANSIT. THE JEWELLERY WAS SENT NOT ONLY WITH THE EMPLOYEES BUT THE SON OF THE MANAGING PARTNER SHRI JINESH GANNA WAS ALSO ACCOMPANY THEM AND THE JEWELLERY WAS KEPT IN A BAG BELOW THE SEAT WHER E SHRI JINESH GANNA & BIPIN JAIN WERE SEATED. THE INCIDENT HAPPENED WHE N ALL OF THEM WENT FOR DINNER WHEN THE BUS STOPPED AT HOTEL CENTRE PARK. IT IS CASE WHERE THE THEFT WAS NOTICED NOT ONLY BY THE EMPLOYEES BUT ALSO THE MANAGING PARTNERS SON AND EVEN ONE LADY SMT. KALPANA TRAVELLING IN THE SA ME BUS, WHO CONFIRMED TO ITA NO.1904/MUM/2014 BAANGANGA JEWELLERS 9 HAVING SEEN ONE OF THE EMPLOYEES ALONG WITH THE CLE ANER RETURNING TO THE SEAT AND TAKING SOMETHING FROM THE BAG. ALL THE PA SSENGERS IN THE BUS WENT TO THE POLICE STATION WHERE FIR WAS LODGED. ALL TH EE EVIDENCE PROVE THAT THEN HAS INDEED TAKEN PLACE. IT IS NOT A CASE WHERE WE CAN SAY THAT THE EVIDENCE HAS BEEN CREATED BY THE ASSESSEE. HAD IT BEEN THE CASE, FIR U/S. 408 OF THE IPC WOULD NOT HAVE BEEN LODGED. HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF G. G. DANDEKAR MACHINE WORKS LTD. VS. CIT 2 02 ITR 161 HAS CLEARLY HELD WHETHER ANY LOSS FROM THEFT, DACOITY, EMBEZZLE MENT, ETC., IS DEDUCTIBLE OR NOT, WHAT IS MATERIAL IS WHETHER THE LOSS INCURR ED BY THEFT, DACOITY, ETC., IS INCIDENTAL TO THE CARRYING ON OF THE BUSINESS. I T DOES NOT MAKE MUCH DIFFERENCE WHETHER SUCH ACT IS COMMITTED BY THE EMP LOYEES OF THE ASSESSEE OR BY STRANGERS . IT IS DIFFICULT TO DRAW A DISTINCTION BETWEEN EMBEZ ZLEMENT OF THE AMOUNT FROM THE BANK AND THEFT OF THE AMOUNT FR OM THE CASH BOX OF THE BUSINESSMAN FROM HIS SALES COUNTER OR BUSINESS PREM ISES. WHAT IS MATERIAL IS WHETHER THE LOSS WAS CAUSED TO THE ASSESSEE IN THE COURSE OF HIS BUSINESS ACTIVITY. IN THE CASE OF BADRIDAS DAGA VS. CIT 34 ITR 10 (SC), THE HONBLE APEX COURT TOOK A VIEW THAT LOSS RESULTING FROM EMB EZZLEMENT BY AN EMPLOYEE OR AGENT IN A BUSINESS IS ADMISSIBLE AS A DEDUCTION UNDER SECTION 10(1) OF THE INDIAN INCOME-TAX ACT, IF IT ARISES DU RING THE COURSE OF CARRYING ON OF THE BUSINESS AND IS INCIDENTAL TO IT. THIS I S A CASE WHERE THEFT HAS TAKEN PLACE IN RESPECT OF THE TRADING ASSET OF THE ASSESS EE AND DURING THE COURSE OF ITA NO.1904/MUM/2014 BAANGANGA JEWELLERS 10 CARRYING ON THE BUSINESS BY IT. MERELY BECAUSE THE INSURANCE COMPANY HAS NOT COMPENSATED THE ASSESSEE AND DID NOT ACCEPT THE CLAIM OF THE ASSESSEE DOES NOT MEAN THAT THE ASSESSEE HAS NOT INCURRED LO SS OR THEFT HAS NOT TAKEN PLACE. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT (A) AND DISMISS THE APPEAL OF THE REVENUE 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DAY OF SEPTEMBER, 2017. SD/- (PAWAN SINGH) (P K BANSAL) JUDICIAL MEMBER VICE-PRESIDENT MUMBAI; DATED: 12 TH SEPTEMBER, 2017 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, B BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI