NAVSHIV RETAIL PVT. LTD., NEW DELHI V. ITO, WARD- 17(4), NEW DELHI

ITA 3593/DEL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0444 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 14-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJOG KAPOOR
• Assessee Lawyers: S K CHATURVEDI
• Section: 143(3); 13

Judgement Text

, . . , IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH S.M.C, NEW DELHI BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER ! !! ! / ITA NO.3593/DEL/2018 '## '## '## '## / ASSESSMENT YEAR: 2014-15 M/S. NAVSHIV RETAIL PVT. LTD., 209, 2 ND FLOOR, PRAKASH DEEP BUILDING, TOLSTOY MARG, CONNAUGHT PLACE, NEW DELHI-110001. PAN-AACCN5896N .......... $% /APPELLANT VS THE ITO, WARD-17(4), NEW DELHI. . &'$% / RESPONDENT $%() / APPELLANT BY : SH. S.K.CHATURVEDI, CA &'$%() / RESPONDENT BY : SH. SANJOG KAPOOR, SR.DR '*(+,- / DATE OF HEARING : 04.12.2019 ./(+,- / DATE OF PRONOUNCEMENT: 20.12.2019 / ORDER PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER O F CIT(A)-22, NEW DELHI, DATED 27.03.2018 RELATING TO ASSESSMENT YEAR 2014-15 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. THE FIRST ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE ADDITION OF LOSS CLAIMED DUE TO FRAUD AT RS.26,58,534/-. 2 ITA NO. 3593/DEL/2018 ASSESSMENT YEAR: 2014-15 3. THE ASSESSEE HAS RAISED GROUND NOS.(I) TO (III) WITH REGARD TO THE AFORESAID ADDITION. 4. BRIEFLY IN THE FACTS OF THE CASE THE ASSESSEE WA S ENGAGED IN THE BUSINESS OF TRADING OF ELECTRONICS & TELECOM GOODS AND PROVISION OF VARIOUS SERVICES. FOR THE YEAR UNDER CONSIDERATION, THE AS SESSEE DETECTED A FRAUD IN ITS MUMBAI STORE AND FILED COMPLAINT WITH THE POLIC E. HOWEVER, THE POLICE DID NOT REGISTER THE FIR. THE ASSESSEE THEREAFTER, FILED LEGAL CASE U/S 156(3) OF CR.PC FOR DIRECTION TO POLICE TO REGISTER THE CA SE. CONSEQUENT THERETO, THE POLICE CASE WAS REGISTERED ON 18.02.2015. THE ASSE SSEE CLAIMED THE SAID LOSS ON ACCOUNT OF FRAUD AT RS.26,58,534/- AS AGAIN ST THE CLAIM MADE IN THE FIR AT RS.77,45,063/-. THE ASSESSING OFFICER DISAL LOWED THE CLAIM HOLDING THE SAID CLAIM TO BE ABNORMAL LOSS AS THE ASSESSEE DID NOT FILE ANY DOCUMENTARY EVIDENCE IN THIS REGARD. THE CIT(A) UP HELD THE ADDITION MADE BY THE ASSESSING OFFICER AGAINST WHICH THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE. 5. THE LD.AR FOR THE ASSESSEE AFTER TAKING US THROU GH THE FACTUAL ASPECT OF THE CASE POINTED OUT THAT THE FIR WAS LODGED ON THE ESTIMATED MARKET VALUE OF THE GOODS I.E. RS.77,45,063/-. HOWEVER, T HE CLAIM IN THE BOOKS OF ACCOUNTS WAS MADE ON BASIS OF COST OF GOODS I.E. RS .26,58,534/-. HOWEVER, BOTH THE AUTHORITIES HAVE NOT ACCEPTED THE CLAIM OF THE ASSESSEE IN THIS REGARD. HE PLACED RELIANCE ON THE CBDT CIRCULAR IS SUED ON THE ISSUE OF EMBEZZLEMENT LOSS BY EMPLOYEES AND ITS ALLOWABILIT Y IN THE HANDS OF THE ASSESSEE AND ALSO PLACED RELIANCE ON THE ORDER OF T HE JAIPUR BENCH OF THE 3 ITA NO. 3593/DEL/2018 ASSESSMENT YEAR: 2014-15 TRIBUNAL IN M/S. PAWAN SPECIALTIES (P.) LTD. VS THE ACIT IN ITA NO.809/JP/2016 RELATING TO ASSESSMENT YEAR 2011-12, ORDER DATED 15.02.2017. 6. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE AUTHENCITY OF LOSS CLAIMED WAS IN DOUBT AND IF THE AMOUNT OF STOCK EMB EZZLED WAS APPROX. RS.77 LACS THEN WHY THE CLAIM AT RS.26,58,534/-. H E PLACED STRONG RELIANCE ON THE ORDER OF THE CIT(A) IN THIS REGARD. 7. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS THE CLAIM OF DEDUCTION ON ACCOUNT OF EMBEZZLEMENT OF STOCK FROM THE MUMBAI PREMISES OF T HE ASSESSEE. THE OCCURRENCE OF THE FRAUD IS NOT IN DOUBT IN THE FACT S OF THE PRESENT CASE. SINCE NO FIR WAS REGISTERED BY POLICE INITIALLY BUT ON A COMPLAINT FILED BEFORE THE HONBLE HIGH COURT, DIRECTIONS WERE GIVEN TO TH E POLICE TO REGISTER FIR. IN OTHER WORDS, CLAIM OF THE ASSESSEE OF EMBEZZLEME NT OF THE STOCK STANDS ESTABLISHED BY THE SAID EVENTS IN THE CASE OF THE A SSESSEE. THE ASSESSEE DID FILE FIR BEFORE THE POLICE, THOUGH LATER ON THE SAM E WAS NOT PURSUED. ANOTHER ASPECT WHICH HAS BEEN NOTED BY THE AUTHORIT IES BELOW FOR MAKING THE AFORESAID ADDITION IS THAT IN THE FIR, THE QUAN TUM OF STOCK WAS MENTIONED AT RS.77,45,063/- AND CLAIM ON ACCOUNT OF EMBEZZLEMENT MADE WAS RS.26,58,534/-. THE EXPLANATION OF THE ASSESSE E IN THIS REGARD WAS THAT THE EXPENDITURE HAD BEEN BOOKED ON COST BASIS OF THE STOCK EMBEZZLED AND THE FIR LODGED WITH THE POLICE WAS ON ESTIMATED MARKET PRICE. THE QUESTION WHICH ARISES IS WHETHER SUCH AN EXPENDITUR E IS ALLOWABLE IN THE 4 ITA NO. 3593/DEL/2018 ASSESSMENT YEAR: 2014-15 HANDS OF THE ASSESSEE. THE ANSWER TO THE SAME IS YES ESPECIALLY IN VIEW OF THE BOARD CIRCULAR ISSUED BY THE CBDT IN THIS REGAR D. THE SAID CIRCULAR HAS BEEN TAKEN COGNIZANCE BY DIFFERENT HONBLE HIGH COU RTS AND MERELY BECAUSE NO FURTHER ACTION WAS PERUSED WITH THE POLICE CANN OT RESULT IN DENIAL OF THE SAID LOSS ON ACCOUNT OF EMBEZZLEMENT OF STOCK IN TH E HANDS OF THE ASSESSEE. THE JAIPUR BENCH OF TRIBUNAL IN M/S. PAWAN SPECIAL TIES (P.) LTD. (SUPRA) IN SIMILAR CIRCUMSTANCES HAS ALLOWED THE CLAIM OF THE ASSESSEE APPLYING THE CBDT CIRCULAR NO.25 OF 1939 AND 13 OF 1944 AND DECI SIONS OF VARIOUS HONBLE HIGH COURTS. IN THE PRESENT SET OF FACTS, THE FACTUM OF LOSS BY EMBEZZLEMENT STANDS ESTABLISHED ONCE THE HONBLE HI GH COURT DIRECTS THE POLICE TO REGISTER THE COMPLAINT OF THE ASSESSEE. BUT, NON-PURSUANCE OF THE SAME, WOULD NOT RESULT IN THE DISALLOWANCE OF EXPEN DITURE IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, I DIRECT THE ASSESSING OFFICER TO ALLOW THE EXPENDITURE OF RS.26,58,534/-. THUS, GROUND NOS. (I) AND (III) RAISED BY THE ASSESSEE ARE ALLOWED. 8. IT MAY BE POINTED OUT THAT THE ASSESSEE HAS ALSO RAISED ANOTHER ISSUE VIDE GROUND NO.(IV) WHICH WAS NOT ARGUED BEFORE US. HENCE, THE SAME DOES NOT NEED ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DAY OF DECEMBER, 2019. SD/- (SUSHMA CHOWLA) /JUDICIAL MEMBER 5 ITA NO. 3593/DEL/2018 ASSESSMENT YEAR: 2014-15 / ' DATED : 20 TH DECEMBER, 2019 . * AMIT KUMAR * (&+121+3 COPY OF THE ORDER IS FORWARDED TO : 1. $% / THE APPELLANT 2. &'$% / THE RESPONDENT 3. 4 5 6 / THE CIT(A) 4. 7 4 / THE PR. CIT 5. 6. 189&+' / DR, ITAT, DELHI 9:#;*3 GUARD FILE. ' ' ' ' / BY ORDER , '1+&+ // TRUE COPY // =>? =>? =>? =>? , ASSISTANT REGISTRAR, ITAT, DELHI