SUSHMITA SEN EXIM P. LTD, MUMBAI V. ACIT 11(1), MUMBAI

ITA 352/MUM/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8099 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 13-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SATBIR SINGH
• Section: 143(3)

Judgement Text

I.T.A NO.3521/ MUM/2011 SUSHMITA SEN 1 IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH, MUMBAI. [ BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ] I.T.A NO.352/ MUM/2011 ASSESSMENT YEAR: 2006-07 SUSHMITA SEN EXIM P.LTD. .. APPELLANT 6 TH & 7 TH FLOOR, SADGURU SUNDARI, DR. AMBEDKAR ROAD, KHAR (W), MUMBAI. PA NO.AACCS 1487 N VS ACIT 11(1) .. RESPONDEN T R.NO.467, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. APPEARANCES: STANY SALDANHA, FOR THE APPELLANT SATBIR SINGH, FOR THE RESPONDENT O R D E R 1. THE SHORT GRIEVANCE THAT I AM REQUIRED TO ADJUDI CATE IN THIS APPEAL IS WHETHER OR NOT THE CIT (A) WAS JUSTIFIED IN UPHOLDING THE D ISALLOWANCE OF ` .5,19,485 IN RESPECT OF LOSS OF STOCK DUE TO FLOODS ON 26.7.2005. THE A SSESSMENT YEAR INVOLVED IS 2006-07 AND THE IMPUGNED ASSESSMENT IS FRAMED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. I.T.A NO.3521/ MUM/2011 SUSHMITA SEN 2 2. THE MATERIAL FACTS RELATING TO THIS GRIEVANCE AR E LIKE THIS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NO TICED THAT THE ASSESSEE HAS SHOWN STOCK LOSS DUE TO FLOOD TO THE EXTENT OF ` .5,19,485. WHEN THE ASSESSEE WAS REQUIRED TO GIVE FURTHER DETAILS OF THE SAID LOSS, IT WAS EXPLAINED THAT IN THE RAINS AND FLOODS ON 26.7.2005, THESE STOCKS OF THE ASSESSEE W ERE TOTALLY DAMAGED AND WERE RENDERED UNSUITABLE FOR ANY COMMERCIAL PURPOSE AND, THEREFORE, THE STOCKS WERE WRITTEN OFF. THE ASSESSING OFFICER, HOWEVER, DECLI NED THE CLAIM OF DEDUCTION ON THE GROUND THAT NO OTHER SUBSTANTIAL EVIDENCE, EXCEPT SUBMISSION OF THE ASSESSEE TO STRENGTHEN THE CLAIM OF LOSS WAS PRODUCED. AGGRIEV ED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A) BUT WITHOUT ANY SUCCESS. 3. WHILE THE CIT (A) TOOK NOTE OF NEWSPAPER ARTICLE , PRINTOUT OF WHICH WAS FURNISHED BY THE ASSESSEE, THAT MAKES MENTION OF T HE DAMAGES CAUSED BY RAINS AND FLOOD IN THE AREA WHERE APPELLANTS STOCK WERE SAID TO HAVE BEEN STORED, THE CIT (A) DECLINED TO GIVE RELIEF ON THE GROUND THAT PHOTOGR APHS ARE NOT ENCLOSED. THE CIT (A) WAS THUS OF THE VIEW THAT THE ASSESSEE HAS NOT EVIDENCED THAT THE AREA, WHERE STOCKS WERE STORED, WAS ACTUALLY ADVERSELY AFFECTED DURING THE DELUGE OF 26.7.2005. THE ASSESSEE IS NOT SATISFIED AND IS IN APPEAL BEFO RE THE TRIBUNAL. 4. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTUAL MATRIX OF THE CASE AS ALSO T HE LEGAL POSITION. 5. I HAVE NOTICED THAT THE REASON OF DISALLOWING TH E IMPUGNED CLAIM OF LOSS OF STOCK PRIMARILY IS THAT THERE IS NO CONCLUSIVE EVID ENCE TO ESTABLISH THAT THE STOCKS WERE ADVERSELY AFFECTED DURING THE DELUGE ON 26 TH JULY, 2005. IT IS, HOWEVER, NOT IN DISPUTE THAT THE AREA WHERE THE ASSESSEE IS OPERATI NG AND WHERE THE GOODS ESSENTIALLY WERE KEPT, WAS INDEED AFFECTED BY ANY U NPRECEDENTED RAINS AND FLOODS ON 26.7.2005, WHICH BROUGHT THE ENTIRE CITY OF MUMB AI TO A STANDSTILL. IT IS ALSO A WELL KNOWN FACT THAT THE RAINS AND RESULTANT WATER LOGG ING DID CAUSE HUGE DAMAGES IN THE AFFECTED AREAS. UNDER THESE CIRCUMSTANCES, IN MY CONSIDERED VIEW, IT WILL BE CONTRARY TO PREPONDERANCE OF PROBABILITIES TO HOLD THAT THE LOSS CLAIMED BY THE I.T.A NO.3521/ MUM/2011 SUSHMITA SEN 3 ASSESSEE IS FICTITIOUS OR UNREASONABLE. IT WAS EXP LAINED BY THE ASSESSEE THAT THERE WAS NO SALES IN THE RELEVANT PREVIOUS YEAR AND THES E GOODS WERE BROUGHT FORWARD AS OPENING STOCK AND WERE PLACED IN BASEMENT GARAGE. I HAVE ALSO NOTICED THAT THE ONLY REASON OF DECLINING THE DEDUCTION IS DISBELIEF OF ASSESSEES CLAIM FOR WANT OF CONCLUSIVE EVIDENCE TO SUPPORT THE CLAIM SO MADE BU T THEN IT IS NOT IN DOUBT THAT THE AREA, IN WHICH STOCKS WERE STORED, SUFFERED FROM HU GE DAMAGES BY UNPRECEDENTED RAINS. WHILE THERE IS INDEED NO EVIDENCE TO ESTABLI SH ASSESSEES CLAIM TO THE HILT BUT GIVEN THE ADMITTED FACTS AND CIRCUMSTANCES OF THE C ASE, EVEN IN THE ABSENCE OF SUCH CONCLUSIVE EVIDENCE, ASSESSEES CLAIM DESERVES TO B E ACCEPTED IN THE LIGHT OF SURROUNDING CIRCUMSTANCES IN THIS PECULIAR FACT SIT UATION. IN ANY CASE, IT WAS NON MOVING STOCK WHICH IS BROUGHT FORWARD FROM THE EARL IER YEAR, AND THE AMOUNT IS RELATIVELY SMALL. IN VIEW OF THIS AND ALSO BEARI NG IN MIND THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDER ED VIEW THAT THE DISALLOWANCE WAS UNCALLED FOR. I ACCORDINGLY DIRECT THE AO TO D ELETE THE SAME. 6. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 14 TH MARCH, 2011 SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI, DATED 14 TH MARCH, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),3, MUMBAI 4. COMMISSIONER OF INCOME TAX,11 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH SMC, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI I.T.A NO.3521/ MUM/2011 SUSHMITA SEN 4 I.T.A NO.3521/ MUM/2011 SUSHMITA SEN 5