The Jammu & Kashmir Bank Ltd., Srinagar V. The Deputy Commissioner of Income tax, Jammu

ITA 71/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8898 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-12-2015
• Assessment Year: 1998-1999
• Appeal Filed On: 07-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K SHARDA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR [JAMMU CAMP; JAMMU] BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER I.T.A NOS.71 & 72(ASR)/2014 ASSESSMENT YEARS: 1998-99 & 2000-01 THE JAMMU & KASHMIR BANK LTD. M.A. ROAD, SRINAGAR. PAN: AAACT6167G VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-I, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. R.K. GUPTA (CA) RESPONDENT BY: SH. R.K. SHARDA (DR.) DATE OF HEARING: 2.12. 2015 DATE OF PRONO UNCEMENT: 22.01.2016 ORDER PER T. S. KAPOOR (AM): THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS OF LEARNED CIT(A), BOTH DATED 29.11.2013. TH E ASSESSEE HAS RAISED SIMILAR GROUNDS OF APPEAL. FOR THE SAKE OF CONVENI ENCE THE GROUND OF APPEAL TAKEN BY THE ASSESSEE IN ITA 71(ASR)2014 IS REPRODUCED BELOW. THAT THE WORTHY CIT(A) IS NOT JUSTIFIED IN CONFIRM ING THE ACTION OF THE ASSESSING OFFICER WHO HAS IGNORED THE DIRECTIONS OF HONBLE ITAT BY DISALLOWING THE AMOUNT OF LOSS AMOUNTING TO RS,3,08 ,02,450/- IN RESPECT OF FRAUDS/EMBEZZLEMENTS THROUGH THESE HAVE BEEN DETECTED DURING THE FINANCIAL YEAR RELEVANT TO THE ASST. YEA R UNDER CONSIDERATION. ITA NOS. 71 & 72 ASR 2014 ASS T. YEARS 1998-99 & 2000-01 2 2. THE APPEALS WERE HEARD TOGETHER AND THEREFORE, F OR THE SAKE OF CONVENIENCE A COMMON A CONSOLIDATED ORDER IS BEING PASSED. THE ASSESSEE IS A BANK AND ITS BRANCHES ARE SPREAD ALL OVER INDIA. THE COMMON ISSUE INVOLVED IN THESE APPEALS IS REGARDING ALLOWABILITY OF LOSS OCCURRED TO ASSESSEE ON ACCOUNT OF FRAUD AND EMBEZZ LEMENT IN VARIOUS BRANCHES OF THE BANK. THE ASSESSEE HAS CLAIMED THAT LOSS IS SAID TO HAVE OCCURRED IN THESE YEARS AS LOSSES WERE BOOKED DURIN G THESE YEARS AND THEREFORE, HAD ARGUED THAT DATE OF OCCURRENCE OF LO SS HAS TO BE CONSTRUED TO BE DATE OF BOOKING OF SUCH LOSSES AS THE LOSS IS BOOKED AFTER COMPLETION OF VARIOUS FORMALITIES. THE ASSESSING OF FICER DURING ASSESSMENT PROCEEDINGS DID NOT AGREE WITH THE CONTE NTIONS OF THE ASSESSEE AND AFTER NOTING DOWN IN THE ASSESSMENT OR DER THE DATES OF OCCURRENCE OF FRAUD HELD THAT SINCE THE FRAUDS WERE OCCURRED AND DETECTED IN EARLIER YEARS, THEREFORE, EXPENDITURE W AS NOT ALLOWABLE IN THESE YEARS. 3. ON APPEAL BEFORE LEARNED CIT(A), THE LEARNED CIT (A) ALLOWED THE RELIEF TO THE ASSESSEE. ON FURTHER APPEAL BY DEPART MENT TO HONBLE TRIBUNAL THE HONBLE TRIBUNAL THOUGH HELD THAT THE LOSS SHOULD BE ALLOWABLE IN THE YEAR IN WHICH IT WAS OCCURRED AND DETECTED HOWEVER, SINCE THE DATES OF OCCURRENCE AND DETECTION OF FRAU DS WERE NOT AVAILABLE FROM FACTS THEREFORE, THE SAME WAS RESTORED TO THE OFFICE OF ASSESSING OFFICER WITH A DIRECTION TO ALLOW THE EMBEZZLEMENTS OF LOSS ONLY IF THE SAME WAS DETECTED IN THE ACCOUNTING YEAR RELEVANT T O ASST. YEAR UNDER ITA NOS. 71 & 72 ASR 2014 ASS T. YEARS 1998-99 & 2000-01 3 CONSIDERATION. WHILE ARRIVING AT THE DECISION THE T RIBUNAL HAD RELIED UPON THE TRIBUNAL DECISION IN THE CASE OF ASSESSEE ITSELF FOR F.Y 1983-84 AND 1984-85. IN VIEW OF DIRECTIONS OF THE HONBLE T RIBUNAL, THE ASSESSING OFFICER HAS AGAIN PASSED AN ORDER REFUSING TO ALLOW THE DETECTIONS ON ACCOUNT OF FACT THAT THE DATES OF OCCURRENCE AND DA TE OF DETECTION OF FRAUDS DID NOT FALL IN THE ASST. YEARS UNDER CONSID ERATION. FOR THE SAKE OF CONVENIENCE THE FINDINGS OF ASSESSING OFFICER FOR H IS ORDER DATED 20.11.2009 FOR ASST. YEAR 1998-99 IS REPRODUCED BEL OW. THERE IS NO DISPUTE ANYWHERE WITH THE FINDINGS OF THE THEN ASSESSING OFFICER WITH REGARD TO THE FACTS MENTIONED IN THE A NNEXURE-A TO THE ASSESSMENT ORDER DATED 20.03.2001, WHICH WERE BASED ON THE DETAILS CULLED OUT FROM THE DETAILS FURNISHED BY THE ASSESS EE ITSELF DURING THE ASSESSMENT PROCEEDINGS. THE EXTRACT OF THE ANNEXURE -A IS REPRODUCED HEREUNDER:- S.NO. NAME OF THE BRANCH AMOUNT INVOLVED DATE OCCURRENCE OF DATE OF DETECTION 1. JAIPUR BRANCH 1,85,000 18.03.97 19.03.97 & 27 . 03.1997 2. ZAINAKADAL BRANCH 84,450 25.02.1997 25 . 03.1997 3. AMIRAKADAL BRANCH 55,000 15.03.1997 17.03.1997 4. KOTRANKA BRANCH 3,50,000 01.03.1997 19.03.1997 5. CHENNAI BRANCH 2,94,06,000 07.03.1995 \3.\2.\995 TO AUGUST, 1996 6. BUDGAM BRANCH 7,22,000 01.10.1993 04.04.1994 TO 05.04.1994 TOTAL 3,08,02,450 THE HONBLE ITAT, AMRITSAR BENCH, AMRITSAR VIDE PAR A 15 OF ITS AFOREMENTIONED ORDER, HAS DIRECTED TO ALLOW THE EMB EZZLEMENT LOSS ONLY IF THE SAME WAS DETECTED IN THE ACCOUNTING YEAR RELEVA NT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. FROM THE DATES AS MENTION ED IN THE TABLE ABOVE, IT IS AMPLY CLEAR THAT THE TIME/ PERIOD WHEN THE EM BEZZLEMENT WAS DETECTED DID NOT PERTAIN TO THE ASSESSMENT YEAR UND ER CONSIDERATION AND THERE IS NO AMBIGUITY IN IT. FURTHER IN ITS EPLY DA TED 14.10.2009, THE ASSESSEE S COUNSEL HAS INVITED THE ATTENTION TO TH E CIRCULAR NO.35D (XLVII- 20) F. NO. 10/48/65-IT(AI) DATED 24.11.1965. THE AS SESSEE HAS STATED THAT AS PER THE SAID CIRCULAR THE LOSS SHOULD BE AL LOWED AS DEDUCTION IN THE ITA NOS. 71 & 72 ASR 2014 ASS T. YEARS 1998-99 & 2000-01 4 YEAR IN WHICH IT IS DISCOVERED. IN THE SECOND LAST PARA OF THE SAID CIRCULAR, THE RELEVANT PORTION OF THE SAME IS REPRODUCED AS U NDER:- ........IN THE SECOND CASE THE DECISION IS THAT LO SS MUST BE DEEMED TO HAVE ARISEN ONLY WHEN THE EMPLOYER COMES TO KNOW ABOUT IT AND REALIZES THAT THE AMOUNTS EMBEZZLED CANNOT BE RECOV ERED. THE CIRCULAR ON WHICH THE ASSESSEE HAS PLACED RELIA NCE, CLEARLY STATES THAT LOSS MUST BE DEEMED TO HAVE ARISEN ONLY WHEN THE EM JOLOER COMES TO KNOW ABOUT IT AND REALIZES. THUS, VITAL INGREDIENT TO PASS THE TEST OF ALLOWABILITY OF THE LOSS TO THE ASSESSEE IS THAT TH E LOSS IS ALLOWABLE WHEN THE ASSESSEE COMES TO KNOW ABOUT IT AND REALIZES THAT THE A MOUNT HAS BEEN EMBEZZLED. THE SUBMISSIONS NOW PUT-FORTH BY TH E ASSESSEES COUNSEL WOULD NOT RENDER ANY FAVOUR TO IT AS THE DATE OF RE ALIZATION OR DETECTION OF EMBEZZLEMENT HAS BEEN CLEARLY ESTABLISHED WHICH WER E FOUND BY THE ASSESSING OFFICER AND WERE NOT PERTAINING TO THE AS SESSMENT YEAR UNDER CONSIDERATION. THE PERIOD TO WHICH THE COUNSEL OF T HE ASSESSEE COMPANY HAS REFERRED IS NOT THE PERIOD WHEN THE EMBEZZLEMEN T WAS DETECTED BY THE ASSESSEE COMPANY BUT THE PERIOD OF SUBSEQUENT ACTIO N TAKEN BY THE ASSESSEE FOR BOOKING THE CULPRIT AND WHEN CORRECTIV E MEASURES WERE TAKEN TO MAKE THE LOSS GOOD. 3.2. IN VIEW OF THE ABOVE FACTS, AND THE FINDING OF THE HON'BLE TRIBUNAL THAT THE EMBEZZLEMENT LOSS IS TO B E ALLOWED ONLY IN THE YEAR SAME WAS DETECTED, THEREFORE, I AM SATISFIED T HAT SINCE THE EMBEZZLEMENT LOSS WAS NOT DEDUCTED DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY IS NOT ENTITLED TO ANY RELIEF ON THIS ACCOUNT AND ACCORDINGLY THE AMOUNT OF RS.3,08,02,450 IS CHARGED TO TAX UNDER THIS HEAD. SIMILARLY, THE FINDINGS OF ASSESSING OFFICER IN ASS T. YEAR 2000-2001 ARE REPRODUCED BELOW. THEREFORE, IT SHOWS THAT WHILE DECIDING THE ISSUE AT STAKE, THE HONBLE TRIBUNAL WAS OF THE VIEW THAT THE DEDUCTION IS TO B E ALLOWED IN THE YEAR IN WHICH THE FRAUD WAS DETECTED. AFTER GOING THROUGH T HE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER ON 18.03.2003 AT PA GE NO.2, THE DATE OF DETECTION IN RESPECT OF CANNAUGHT PLACE, NEW DELHI AND EXTENSION COUNTER SUKAT HAS BEEN MENTIONED AS 30.03.1999 AND 27.03.19 99 WHEREAS IN RESPECT OF JAWAHAR NAGAR, SRINAGAR BRANCH, NO DATE OF DETECTION HAS BEEN MENTIONED AND INSTEAD DATE OF FILING OF FIR AS 31. 03.1998 HAS BEEN MENTIONED. IN HIS SUBMISSIONS NOW MADE BY THE COUNS EL OF THE ASSESSEE IT HAS AGAIN BEEN CONFIRMED IN RESPECT OF CANNAUGHT PL ACE, DELHI IN THE FOLLOWING WORDS THAT ON 30.03.1999 THE BRANCH OFFICIALS CAME TO KNOW ABOUT THE MISTAKE COMMITTED BY THEM. . . . AND IN RESPECT OF EXTENSION COUNTER SKUAST, SHALIMAR IT HAS BEEN CONF IRMED THAT FRAUD HAS BEEN COMMITTED BY THE ASSISTANT CASHIER ON 27.03.19 99 WHEN HE GRABBED THE AMOUNT DEPOSITED BY THE PARTY IN R/D ACCOUNT NO . 1001/8. THEREFORE, IN RESPECT OF BOTH THESE ENTRIES THERE IS NO VARIAT ION AND THE FRAUD WAS ITA NOS. 71 & 72 ASR 2014 ASS T. YEARS 1998-99 & 2000-01 5 DETECTED DURING THE ACCOUNTING PERIOD 1998-99, WHIC H IS RELEVANT TO THE ASSESSMENT YEAR 1999-2000 AND NOT TO THE ASSESSMENT YEAR 2000-01, THEREFORE, THE ASSESSEE BANK IS NOT LIABLE TO ANY R ELIEF ON THIS ACCOUNT. AS REGARDS THE FRAUD IN RESPECT OF JAWAHAR NAGAR, SRIN AGAR BRANCH, THE REPRESENTATIVE OF THE ASSESSEE IN HIS SUBMISSIONS H AS CLEARLY MENTIONED THAT ON 31.03.1998 BRANCH OFFICE RESIDENCY ROAD, SRINAGAR MADE A CASH REMITTANCE RS.35.00 LACS THROUGH CASH VAN AND ACCORDINGLY RAISED DEBIT FOR THIS MUCH OF AMOUNT VIDE CR NO.015092 WHE REAS EXTN. COUNTER JAWAHAR NAGAR RESPONDED CREDIT OF RS.25.00 LACS ONLY VIDE CA NO.0159091 DATED 31.03.1998, THE CR WAS FICTITIOUSLY USED BY THE CULPRIT IN THE BOOKS OF EXTN. COUNTER FOR GRABBING THE AMOUNT OF RS.10.00 LACS. THIS FACT HAS ALSO BEEN CONFIRMED BY THE LET TER OF FIR WRITTEN BY THE MANAGER TREASURY COUNTER, JAWAHAR NAGAR. SRINAGAR B RANCH TO THE STATION HOUSE OFFICER RAJBAGH, SRINAGAR THAT THE FRAUD WAS COMMITTED ON 31.03.1998. THEREFORE, KEEPING IN VIEW BEING FOLLOW ED BY THE ASSESSEE I.E. MERCANTILE, THE ASSESSEE BANK WAS REQUIRED TO BOOK THE SAID CLAIM ONLY IN THE EARLIER ASSESSMENT YEAR AND NOT IN THE YEAR UND ER CONSIDERATION. EVEN AFTER THE CLOSE OF THE ACCOUNTING PERIOD, THERE IS AMPLE TIME WITH THE ASSESSEE COMPANY TO PREPARE THE FINAL ACCOUNTS WHEN IT WAS REQUIRED TO ASCERTAIN ITS LIABILITIES CORRECTLY AND MAKE CLAIMS IN THE YEAR TO WHICH THEY PERTAIN. IN THE LIGHT OF THESE FACTS, I AM OF THE V IEW THAT, THE ASSESSEE COMPANY IS NOT ENTITLED TO ANY RELIEF ON THIS ACCOU NT AND ACCORDINGLY THE AMOUNT OF RS. 10,66,000/- (10,00,000+62,000+4000) I S CHARGED TO TAX UNDER THIS HEAD. 4. AGGRIEVED WITH THE ORDERS THE ASSESSEE FILED APP EALS BEFORE CIT(A), WHO ALSO UPHELD THE ORDERS OF ASSESSING OFFICER. 5. AGGRIEVED THE ASSESSEE AGAIN FILED APPEALS BEFO RE US. 6. AT THE OUTSET, THE LEARNED AR INVITED OUR ATTENT ION TO CIRCULAR NO. 35D(XL)(VII)-20 DATED 24.11.1965 PLACED AT PAPER BO OK PAGE 1 AND SUBMITTED THAT AS PER THIS CIRCULAR THE LOSS BY EMB EZZLEMENTS IN THE CASE OF BANKS HAS TO ALLOW IN THE YEAR IN WHICH IT IS DI SCOVERED. HE SUBMITTED THAT THE WORD DISCOVERED IS DIFFERENT FROM WORD D ETECTION AND SUBMITTED THAT DETECTION IS AN ACT OF THE MOMENT AND IT RELAT ES TO THAT WHICH IS PASSING WHEREAS DISCOVERY IS EITHER GRADUAL OR AN I MMEDIATE ACT AND MAY BE MADE OF THAT WHICH HAS LONG SINCE PASSED. HE SUB MITTED THAT IN THE ITA NOS. 71 & 72 ASR 2014 ASS T. YEARS 1998-99 & 2000-01 6 PRESENT CASES THE BRANCH MANAGERS HAD DISCOVERED TH E FRAUDS AND HAD REPORTED THE SAME TO THE CONTROLLING OFFICERS AND O NLY AFTER INVESTIGATION BY CONTROLLING AUTHORITIES THE FRAUD WERE DETECTIVE D AND SUCH DISCOVERY WAS IN THE YEARS UNDER CONSIDERATION AND THEREFORE, THE AMOUNTS HAS TO BE ALLOWED IN THE YEARS UNDER CONSIDERATION ONLY. 7. THE LEARNED DR ON THE OTHER HAND, HEAVILY RELIED UPON THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSI NG OFFICER HAS CLEARLY NOTED THE DATES OF OCCURRENCE AND DETECTION OF FRAU DS AND AS PER THE HONBLE TRIBUNAL ORDER THE LOSS WAS TO BE ALLOWED O NLY IF THE FRAUDS WERE DETECTED IN THE YEAR UNDER CONSIDERATION. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GO NE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND EARLIER THESE AP PEALS WERE RESTORED BACK TO THE OFFICE OF ASSESSING OFFICER VIDE SEPARA TE ORDERS OF TRIBUNAL DATED 1 ST DECEMBER, 2006 AND 20.07.2007. THE HONBLE TRIBUNA L ORDER FOR ASST. YEAR 1998-99 HAD HELD AS UNDER. 7.5 WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY C ONSIDERED THE RIVAL SUBMISSIONS, EXAMINED THE FACTS, EVIDENCE AND MATER IAL PLACED ON RECORD. AS MENTIONED EARLIER, SIMILAR ISSUE CAME UP BEFORE THE TRIBUNAL FOR THE ASSESSMENT YEARS 1983-84 & 84-85 AND THE 'TRIBUNAL VIDE ITS ORDER DATED 09.03.2005 (SUPRA) HAS HELD THAT THE EMBEZZLE MENT LOSS SHOULD BE ALLOWED IN THE ACCOUNTING YEAR RELEVANT TO THE ASSE SSMENT YEAR WHEN THE LOSS WAS DETECTED. ON THE BASIS OF SUCH FINDINGS, T HE TRIBUNAL ALLOWED A LOSS OF RS. 40,000/- AND UPHELD THE DISALLOWANCE OF RS. 3,84,000/- FOR THE A.Y. 1983- 84. AS REGARDS THE ASSESSMENT YEAR 1 984-85, THE FINDING RECORDED BY THE AO WAS THAT ENTIRE EMBEZZLEMENT LOS S OF RS.3,90,975/- HAD OCCURRED AND DETECTED IN THE EARLIER ASSESSMENT YEAR, WHEREAS THE ITA NOS. 71 & 72 ASR 2014 ASS T. YEARS 1998-99 & 2000-01 7 LD. CIT(A) HAS HELD THAT ONLY A LOSS OF RS. 70,000/ - HAD OCEURRED AND WAS DETECTED IN THE EARLIER YEAR. CONSIDERING THE C ONFLICTING OBSERVATIONS OF THE AO AND THE LD. CIT(A), THE MATTER WAS RESTOR ED TO THE FILE OF THE AO WITH A DIRECTION THAT DISALLOWANCE SHOULD BE MAD E ONLY IN RESPECT OF LOSS WHICH OCCURRED AND WAS DETECTED IN THE EARLIER AND SUBSEQUENT ASSESSMENT YEARS. THE REMAINING LOSS WHICH WAS DETE CTED IN THE ACCOUNTING YEAR RELEVANT TO THE ASSESSMENT YEAR 198 4-85 WAS DIRECTED TO BE ALLOWED. THE RELEVANT FINDINGS RECORDED IN PARAG RAPHS 13 TO 15'% OF THE AFORESAID ORDER ARE AS UNDER: 13. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY C ONSIDERED THE RIVAL SUBMISSIONS. WE HAVE ALSO EXAMINED THE FACTS, EVIDENCE AND MATERIAL PLACED ON RECORD AND GONE THROUGH THE ORDE RS OF THE AUTHORITIES BELOWJPHE ASSESSEE IS ENGAGED IN THE B ANKING BUSINESS AND SUCH BUSINESS IS BEING RUN FROM VARIOU S BRANCHES. THUS EMBEZZLEMENT LOSS IS INCIDENTAL TO ASSESSEES BUSINESS AND N ALLOWABLE IN VIEW OF THE JUDGMENT OF HONBLE . SUPR EME COURT IN THE CASE OF BAD RID ASS DAGA VS. CIT FSUBRA)' (34- ITR-10). HOWEVER, IT IS THE CLAIM OF THE ASSESSEE THAT THE E MBEZZLEMENT LOSS IS BEING CLAIMED IN THE YEAR WHEN THE SAME WAS DISCOVERED. NO DOUBT IN THE CASE OF ASSOCIATED BANKING CORPORAT ION OF INDIA LTD. VS. CIT, THE HONBLE SUPREME COURT HAS OBSERVE D THAT IT CANNOT BE SAID THAT THE LOSS RESULTS AT A TIME WHEN THE ASSESSEE OBTAINS THE KNOWLEDGE OF THE SAME. STILL AN EMPLOYE E MAY BE PERSUADED OR COMPELLED BY PROCESS OF LAW OR OTHERWI SE TO RESTORE WHOLLY OR PARTIALLY SUCH ILL-GOTTON AMOUNT. THEREFO RE, SO LONG AS A REASONABLE CHANCE OF OBTAINING RESTITUTION EXISTS, LOSS MAY NOT IN A COMMERCIAL SENSE BE SAID TO HAVE RESULTED. HOWEVER, THE C.B.D.T. CONSIDERED THE RATIO OF TWO JUDGEMENTS OF HONBLE S UPREME COURT IN THE CASES OF BADRIDASS DAGAS VS. CIT (SUPRA) AND ASSOCIATED BANKING CORPORATION OF INDIA LTD; VS. CIT (SUPRA) A ND CLARIFIED THE POSITION VIDE THEIR CIRCULAR DATED 24 LH NOV 1965 THAT THE LOSS B; EMBEZZLEMENT BY EMPLOYEES SHOULD BE TREATED AS INCI DENTAL TO BUSINESS AND THE SAME ( IN WHICH IT IS DISCOVERED S UCH INSTRUCTIONS ARC BINDING ON THE AUTHORITIES BELOW. BY REFERRING TO SUCH INSTRUCTIONS, THE HONBLE GUJARAT HIGH COURT IN THE CASE OF DINESH MILLS LTD; VS. CIT (SUPRA) HELD THAT THE. EMBEZZLEM ENT LOSS BY AN EMPLOYEE SHOULD BE ALLOWED IN THE YEAR IN WHICH IT WAS DISCOVERED ITA NOS. 71 & 72 ASR 2014 ASS T. YEARS 1998-99 & 2000-01 8 BY THE ASSESSEE. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE GUJARAT HIGH COURT AND BY REFERRING TO THE AFORESAID INSTRUCTIONS OF THE BOARD, WE HOLD THAT THE ASSESSE E WOULD BE ENTITLED TO CLAIM DEDUCTION OF SUCH LOSS IN THE YEA R WHEN THE SAME HAD BEEN DETECTED. 14. NOW WE FIND FROM PAGE 13 TO 16 OF THE ASST. ORD ER FOR 1983-84 THAT OUT OF EMBEZZLEMENT LOSS OF RS. 4.24 L ACS, THE LOSS AMOUNTING TO RS. 40,000/- HAD OCCURRED AND WAS DETE CTED IN THE ACCOUNTING YEAR UNDER REFERENCE. HOWEVER, THE REMAI NING LOSS OF RS. 3,84,000/- RELATING TO TWO OTHER BRANCHES TOOK PLACE \\N THE EARLIER ASSTT. YEARS AND WAS ALSO DETECTED IN THE E ARLIER ASSTT. YEARS. THE ATTENTION OF THE ID. COUNSEL WAS DRAWN TO THE FINDINGS RECORDING BY THE AO ON PAGE 14 OF THE ASSTT. ORDER. HE COULD NOT CONTROVERT THE FINDINGS RECORDED BY THE AO WHICH WE RE BASED ON THE INSPECTION OF THE RELEVANT FILES. THUS, THE LEA RNED CT1 T (A) WAS-NOT JUSTIFIED IN ALLOWING EMBEZZLEMENT LOSS OF RS. 3.84 LACS FOR THE A.Y. 1983-84. ACCORDINGLY, WE SET~ ASIDE TH E ORDER OF THE C1T(A) AND RESTRICT THE DEDUCTION TO RS. 40000/- AN D CONFIRM THE DISALLOWANCE OF RS. 3.84 LACS. THIS GROUND OF APPEA L IS PARTLY ALLOWED. 15. AS REGARDS, THE ASSTT. YEAR 1984-85, THE AO HA S OBSERVED THAT IN ALMOST ALL THE CASES, SUCH LOSS HAD OCCURRED PRI OR TO THE PREVIOUS YEAR. THE LEARNED C1T(A) HELD THAT ONLY OU T OF RS. 3,90,975/- , EMBEZZLEMENT LOSS OF RS. 70,000/- OCCU RRED AND DETECTED IN THE EARLIER YEAR. THIS FINDING APPEARS TO BE CONTRARY TO THE FINDING RECORDED BY THE AO. IN ANY CASE, THIS I S QUESTION OF FACT WHICH CAN EASILY BE VERIFIED, AS RELEVANT FACTS REL ATING TO THIS ISSUE HAVE NOT BEEN PLACED BEFORE US. WE ACCORDINGLY SET ASIDE THE ORDER OF THE C1T(A) AND RESTORE THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTION THAT THE DISALLOWANCE SHOULD BE MADE ONLY IN RESPECT OF LOSS WHICH OCCURRED AND WAS DETECTED IN THE EARLIER /SUBSEQUENT YEAR. IF THE LOSSTCLATED TO EARLIER YEAR, WHAT WAS DETECTED IN THE ASSTT. YEAR UNDER REFERENCE, THE ASSESSEE WOULD BE ENTITLED TO CLAIM DEDUCTION FOR TTHE SAME. NEEDLESS TO SAY THAT THE A SSESSEE SHALL BE ALLOWED REASONABLE OPPORTUNITY WHILE DECIDING THE M ATTER. WE ITA NOS. 71 & 72 ASR 2014 ASS T. YEARS 1998-99 & 2000-01 9 ORDER ACCORDINGLY. THIS GROUND OF APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THUS FROM THE FINDINGS RECORDED ABOVE, IT IS CLEAR THAT THE TRIBUNAL HAS HELD THAT THE CLAIM OF THE ASSESSEE FOR EMBEZZLEMEN T LOSS WAS TO BE ALLOWED IN THE YEAR WHEN SUCH LOSS WAS DETECTED. IT SIMPLY MEANS WHEN THE OCCURRENCE OF LOSS COMES TO THE KNOWLEDGE OF TH E BANK. THE PRESENT EASE ALSO REQUIRES TO BE DECIDED IN THE LIGHT OF TH ESE FACTS. NOW THE AO HAS RECORDED A CLEAR FINDING IN THE ASSTT. ORDER TH AT THE DETAILS OF EMBEZZLEMENT/DACOITICS ALONGWITH NAME OF THE BRANCH , DATE ON WHICH OCCURRED, COPY OF FIR, IF ANY LODGED ETC. WERE OBTA INED FROM ASSESSEE. THESE HAVE ALSO BEEN LISTED IN ANNEXURE A OF THE ASSESSMENT ORDER. ME HAS GIVEN A CLEAR FINDING THAT DETECTION OF LOSS RE LATING TO JAIPUR, AMIRAKADAL (SGR) ZAINIA KADAL (SGR.), CHENNAI, BADG AM (SGR.) AND KOTRANKA (BUDAL) WERE DETECTED IN THE ACCOUNTING YEAR RELEVA NT TO THE ASSTT. YEAR 1997-98. THE LOSS IN RESPECT OF BUDGAM (SGR.) WAS D ETECTED IN THE YEAR 1995-96.THE AO HAS'SPECIFICALLY NOTED THE DATES OF OCCURRENCE AND DATES OF DETECTION IN ANNEXURE A OF THE ASSESSMENT ORDE R. THESE DETAILS WERE CULLED OUT FROM THE DETAILS FURNISHED BY THE ASSCSS EE ITSELF BASED ON EACH INDIVIDUAL CASE FILES. THUS, AS PER FINDINGS GIVEN BY THE AO, THE ASSCSSEE IS NOT ENTITLED TO DEDUCTION OF EMBEZZLEMENT LOSS B ECAUSE SUCH LOSS WAS NOT DETECTED IN THE ACCOUNTING YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER REFERENCE. THE FD. CIT(A) HAS GIVEN A FINDING THAT THE ASSCSSEE WOULD BE ENTITLED TO THE CLAIM OF LOSS WHEN THE SAM E HAD BEEN CRYSTALISED AND FINALIZED AND NOT MERELY ON THE DATE OF OCCURRE NCE.. THIS FINDING OF CIT(A) HAS NOT BEEN UPHELD BY THE TRIBUNAL FOR THE ASSESSMENT YEAS 1983-84 & 84-85 WHERE IT WAS HELD THAT THE CLAIM OF THE ASSCSSEE WOULD BE ALLOWED IN THE YEAR WHEN THE LOSS WAS DETECTED. THE LD. G1T(A) HAS NOT DISPUTED THE FINDING OF AO THAT THE LOSS DISALL OWED BY THE AO WAS DETECTED IN THE EARLIER ASSESSMENT YEARS. IN THE WR ITTEN SUBMISSIONS FILED BEFORE THE CIT(A). THE ASSESSEE HAS SUBMITTED THAT DUE TO PROCEDURES INVOLVED, THE BOOKING OF LOSS WAS DONE ONLY AFTER O BTAINING THE APPROVAL OF THE R.B.I. AND OTHER PROCEDURAL FORMALITIES. BUT THE DECISION OF THE TRIBUNBAL FOR THE EARLIER YEAR REFERRED TO THE FAC TUM OF DETECTION OF EMBEZZLEMENT LOSS AND NOT TO THE YEAR WHEN LOSS WAS BOOKED BY THE ASSESSEE. ADMITTEDLY, THE ASSESSEES FOLLOWING A MER CANTILE SYSTEM OF ACCOUNTING. THE LOSS SHOULD BE CLAIMED IN THE YEAR AS SOON AS THE SAME IS DETECTED. THE DATE OF OCCURRENCE WOULD NOT BE I MPORTANT IF THE SAME ITA NOS. 71 & 72 ASR 2014 ASS T. YEARS 1998-99 & 2000-01 10 DOES REPORT REFERRED TO BY THE LD. COUNSEL, THE AO HAS REFERRED TO THE LETTER OF ASSESSEE WHERE IT WAS CLAIMED THAT BOOKIN G OF FRAUDS WAS DONE IN THE FINANCIAL YEAR 1997-98 RELEVANT TO ASST. YEA R 1998-99. BUT BOOKING OF FRAUD OR LOSS IN THE ACCOUNTING YEAR UNDER REFER ENCE DOES NOT MEAN THAT THE LOSS WAS DETECTED IN THE ASSESSMENT YEAR UNDER REFERENCE. IF THE LOSS WAS DETECTED EARLIER AND WAS BOOKED IN THE ASSESSMENT YEAR UNDER REFERENCE, THE ASSESSEE WOULD NOT BE ENTITLED TO THE SAME. THE FACTS OF THE CASE FOR THE ASSESSMENT YEAR UNDER REFERENCE ARE SIMILAR TO THE FACTS OF THE CASE FOR THE ASSTT. YEAR 1984-85 WHERE THE O RDER OF THE CIT(A) WAS SET ASIDE AND MATTER RESTORED TO THE AO WITH A DIRE CTION TO ALLOW SUCH LOSS ONLY IF THE SAME WAS DETECTED IN THE ASSTT. YE AR UNDER REFERENCE. IN THIS VIEW OF THE MATER, WE CONSIDERED IN THE ASSTT. YEAR UNDER REFERENCED UNDER REFERENCE. IN THIS VIEW OF THE MATTER, WE CONSIDER IT FAIR TO SET ASIDE THE ORDER OF THE C1T(A) AND RESTORE THE ISSUE TO THE FI LE OF THE AO WITH A DIRECTION TO ALLOW THE EMBEZZLEMENT LOSS ONLY IF TH E SAME WAS DETECTED IN THE ACCOUNTING YEAR RELEVANT TO THE ASSTT. YEAR UND ER CONSIDERATION. NEEDLESS TO SAY THAT THE ASSESSEE SHALL BE ALLOWED A REASONABLE OPPORTUNITY BEFORE DECIDING THE ISSUE AFRESH. WE OR DER ACCORDINGLY. THIS GROUND OF APPEAL IS TREATED AS ALLOWED FOR STATISTI CAL PURPOSES. THE APPEAL IN ASST. YEAR 2000-2001 WAS DISPOSED OFF BY HONBLE TRIBUNAL VIDE ORDER DATED 20.07.2007 ALONG WITH APPEAL FOR A SST. YEAR 1997-98. FOR ASST. YEAR 1997-98, THE TRIBUNAL HAD ALLOWED THE AP PEAL OF REVENUE UNDER SIMILAR FACTS AND CIRCUMSTANCES WHEREAS FOR ASST. Y EAR 2000-01, THE TRIBUNAL HAD RESTORED THE MATTER TO OFFICE OF ASSES SING OFFICER FOR ALLOWING THE LOSS TO ASSESSEE ONLY IF DATES OF OCCURRENCE AN D DETECTION FELL IN THAT ASST. YEAR. FOR THE SAKE OF COMPLETENESS THE FINDINGS OF HONBLE TRIBUNAL IN RESPECT OF ASST. YEAR 1997-98 AND 2000-2001 ARE REP RODUCED BELOW. 15. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CO NSIDERED THE RIVAL SUBMISSIONS, EXAMINED THE FACTS, EVIDENCE AND MATERIAL PLACED ON RECORD. SIMILAR ISSUE CAME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 1998-99, 1997-98 & ITA NOS. 71 & 72 ASR 2014 ASS T. YEARS 1998-99 & 2000-01 11 2000-2001 (SUPRA). THE TRIBUNAL OBSERVED THAT THE D ATE OF OCCURRENCE OF EMBEZZLEMENT WOULD NOT BE IMPORTANT IF THE LOSS HAS NOT BEEN DET ECTED AT THE TIME OF OCCURRENCE. HOWEVER, THE TRIBUNAL NOTICED THAT THE ASSESSEE WAS FOLLOWING MERCANTILE METHOD OF ACCOUNTING. THEREFORE, THE LOSS SHOULD BE CLAIMED I N THE YEAR IN WHICH THE SAME IS DETECTED. THE RELEVANT FINDINGS RECORDED BY THE TRI BUNAL IN PARAGRAPHS 7.5. TO 8 OF THE ORDER ARE AS UNDER : 7.5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS, EXAMINED THE FACTS, EVIDENCE AND MATERIAL PLACED ON RECORD. AS MENTIONED EARLIER, SIMILAR ISSUE CAME UP BEFORE THE TRIBUNAL FOR THE ASSESSMENT YEARS 1983-84 & 84-85 AND THE TR IBUNAL VIDE ITS ORDER DATED 09.03.2005 (SUPRA) HAS HELD THAT THE EMBEZZLE MENT LOSS SHOULD BE ALLOWED IN THE ACCOUNTING YEAR RELEVANT TO THE ASSE SSMENT YEAR WHEN THE LOSS WAS DETECTED . ON THE BASIS OF SUCH FINDINGS, THE TRIBUNAL ALLOWED A LOSS OF RS. 40,000/- AND UPHELD THE DISAL LOWANCE OF RS. 3,84,000/- FOR THE A.Y. 1983-84. AS REGARDS THE ASS ESSMENT YEAR 1984- 85, THE FINDING RECORDED BY THE AO WAS THAT ENTIRE EMBEZZLEMENT LOSS OF RS.3,90,975/- HAD OCCURRED AND DETECTED IN THE EARL IER ASSESSMENT YEAR, WHEREAS THE LD. CIT(A) HAS HELD THAT ONLY A LOSS OF RS. 70,000/- HAD OCCURRED AND WAS DETECTED IN THE EARLIER YEAR. CONS IDERING THE CONFLICTING OBSERVATIONS OF THE AO AND THE LD. CIT( A), THE MATTER WAS RESTORED TO THE FILE OF THE AO WITH A DIRECTION THA T DISALLOWANCE SHOULD BE MADE ONLY IN RESPECT OF LOSS WHICH OCCURRED AND WAS DETECTED IN THE EARLIER AND SUBSEQUENT ASSESSMENT YEARS. THE REMAIN ING LOSS WHICH WAS DETECTED IN THE ACCOUNTING YEAR RELEVANT TO THE ASS ESSMENT YEAR 1984-85 WAS DIRECTED TO BE ALLOWED. THE RELEVANT FINDINGS R ECORDED IN PARAGRAPHS 13 TO 15 OF THE AFORESAID ORDER ARE AS U NDER: 13. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY C ONSIDERED THE RIVAL SUBMISSIONS. WE HAVE ALSO EXAMINED THE FA CTS, EVIDENCE AND MATERIAL PLACED ON RECORD AND GONE THR OUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE IS EN GAGED IN THE BANKING BUSINESS AND SUCH BUSINESS IS BEING RUN FRO M VARIOUS BRANCHES. THUS EMBEZZLEMENT LOSS IS INCIDENTAL TO A SSESSEES BUSINESS AND IS ALLOWABLE IN VIEW OF THE JUDGMENT O F HONBLE SUPREME COURT IN THE CASE OF BADRIDASS DAGA VS. CIT (SUPRA) (34- ITR-10). HOWEVER, IT IS THE CLAIM OF THE ASSESSEE T HAT THE EMBEZZLEMENT LOSS IS BEING CLAIMED IN THE YEAR WHEN THE SAME WAS DISCOVERED. NO DOUBT IN THE CASE OF ASSOCIATED BANKING CORPORATION OF INDIA LTD. VS. CIT, THE HONBLE SUPR EME COURT HAS OBSERVED THAT IT CANNOT BE SAID THAT THE LOSS RESUL TS AT A TIME WHEN THE ASSESSEE OBTAINS THE KNOWLEDGE OF THE SAME . STILL AN EMPLOYEE MAY BE PERSUADED OR COMPELLED BY PROCESS O F LAW OR OTHERWISE TO RESTORE WHOLLY OR PARTIALLY SUCH ILL-G OTTON AMOUNT. THEREFORE, SO LONG AS A REASONABLE CHANCE OF OBTAIN ING RESTITUTION EXISTS, LOSS MAY NOT IN A COMMERCIAL SE NSE BE SAID TO HAVE RESULTED. HOWEVER, THE C.B.D.T. CONSIDERED THE RATIO OF TWO ITA NOS. 71 & 72 ASR 2014 ASS T. YEARS 1998-99 & 2000-01 12 JUDGEMENTS OF HONBLE SUPREME COURT IN THE CASES OF BADRIDASS DAGAS VS. CIT (SUPRA) AND ASSOCIATED BANKING CORPO RATION OF INDIA LTD; VS. CIT (SUPRA) AND CLARIFIED THE POSITI ON VIDE THEIR CIRCULAR DATED 24 TH NOV,1965 THAT THE LOSS BY EMBEZZLEMENT BY EMPLOYEES SHOULD BE TREATED AS INCIDENTAL TO BUSINE SS AND THE SAME SHOULD BE ALLOWED AS DEDUCTION IN THE YEAR IN WHICH IT IS DISCOVERED. SUCH INSTRUCTIONS ARE BINDING ON THE AU THORITIES BELOW. BY REFERRING TO SUCH INSTRUCTIONS, THE HON BLE GUJARAT HIGH COURT IN THE CASE OF DINESH MILLS LTD; VS. CIT (SUPRA) HELD THAT THE EMBEZZLEMENT LOSS BY AN EMPLOYEE SHOULD BE ALLOWED IN THE YEAR IN WHICH IT WAS DISCOVERED BY THE ASSES SEE. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE HONBLE GUJARAT HIGH COURT AND BY REFERRING TO THE AFORESAI D INSTRUCTIONS OF THE BOARD, WE HOLD THAT THE ASSESSEE WOULD BE EN TITLED TO CLAIM DEDUCTION OF SUCH LOSS IN THE YEAR WHEN THE S AME HAD BEEN DETECTED. 14. NOW WE FIND FROM PAGE 13 TO 16 OF THE ASSTT. OR DER FOR 1983-84 THAT OUT OF EMBEZZLEMENT LOSS OF RS. 4.24 LACS, THE LOSS AMOUNTING TO RS. 40,000/- HAD OCCURRED AND WAS DETECTED IN TH E ACCOUNTING YEAR UNDER REFERENCE. HOWEVER, THE REMAINING LOSS O F RS. 3,84,000/- RELATING TO TWO OTHER BRANCHES TOOK PLACE IN THE EA RLIER ASSTT. YEARS AND WAS ALSO DETECTED IN THE EARLIER ASSTT. YEARS. THE ATTENTION OF THE LD. COUNSEL WAS DRAWN TO THE FINDINGS RECORDING BY THE AO ON PAGE 14 OF THE ASSTT. ORDER. HE COULD NOT CONTROVERT THE FINDINGS RECORDED BY THE AO WHICH WERE BASED ON THE INSPECTION OF THE RELEVANT FILES. THUS, THE LEARNED CIT(A) WAS NOT JUSTIFIED IN ALLO WING EMBEZZLEMENT LOSS OF RS. 3.84 LACS FOR THE A.Y. 1983-84. ACCORDI NGLY, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTRICT THE DEDUCTION TO RS. 40000/- AND CONFIRM THE DISALLOWANCE OF RS. 3.84 LACS. THIS GRO UND OF APPEAL IS PARTLY ALLOWED. 15. AS REGARDS, THE ASSTT. YEAR 1984-85, THE AO HAS OBS ERVED THAT IN ALMOST ALL THE CASES, SUCH LOSS HAD OCCURRED PRIOR TO THE PREVIOUS YEAR. THE LEARNED CIT(A) HELD THAT ONLY OUT OF RS. 3,90,975/- , EMBEZZLEMENT LOSS OF RS. 70,000/- OCCURRED AND DET ECTED IN THE EARLIER YEAR. THIS FINDING APPEARS TO BE CONTRARY T O THE FINDING RECORDED BY THE AO. IN ANY CASE, THIS IS QUESTION O F FACT, WHICH CAN EASILY BE VERIFIED, AS RELEVANT FACTS RELATING TO T HIS ISSUE HAVE NOT BEEN PLACED BEFORE US. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTION THAT THE DISALLOWANCE SHOULD BE MADE ONLY IN RESPEC T OF LOSS, WHICH OCCURRED AND WAS DETECTED IN THE EARLIER/SUBSEQUENT YEAR. IF THE LOSS RELATED TO EARLIER YEAR, WHAT WAS DETECTED IN THE A SSTT. YEAR UNDER REFERENCE, THE ASSESSEE WOULD BE ENTITLED TO CLAIM DEDUCTION FOR THE SAME. NEEDLESS TO SAY THAT THE ASSESSEE SHALL BE AL LOWED REASONABLE ITA NOS. 71 & 72 ASR 2014 ASS T. YEARS 1998-99 & 2000-01 13 OPPORTUNITY WHILE DECIDING THE MATTER. WE ORDER AC CORDINGLY. THIS GROUND OF APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THUS, FROM THE FINDINGS RECORDED ABOVE, IT IS CLEAR THAT THE TRIBUNAL HAS HELD THAT THE CLAIM OF THE ASSESSEE FOR EMBEZZL EMENT LOSS WAS TO BE ALLOWED IN THE YEAR WHEN SUCH LOSS WAS DETECTED. I T SIMPLY MEANS WHEN THE OCCURRENCE OF LOSS COMES TO THE KNOWLEDGE OF TH E BANK. THE PRESENT CASE ALSO REQUIRES TO BE DECIDED IN THE LIGHT OF TH ESE FACTS. NOW THE AO HAS RECORDED A CLEAR FINDING IN THE ASSTT. ORDER TH AT THE DETAILS OF EMBEZZLEMENT/DACOITIES ALONGWITH NAME OF THE BRANC H, DATE ON WHICH OCCURRED, COPY OF FIR, IF ANY LODGED ETC. WERE OBTA INED FROM ASSESSEE. THESE HAVE ALSO BEEN LISTED IN ANNEXURE A OF THE ASSESSMENT ORDER. HE HAS GIVEN A CLEAR FINDING THAT DETECTION OF LOSS RE LATING TO JAIPUR, AMIRAKADAL (SGR) ZAINIA KADAL (SGR.), CHENNAI, BADG AM (SGR.) AND KOTRANKA (BUDAL) WERE DETECTED IN THE ACCOUNTING YE AR RELEVANT TO THE ASSTT. YEAR 1997-98. THE LOSS IN RESPECT OF BUDGAM (SGR.) WAS DETECTED IN THE YEAR 1995-96.THE AO HAS SPECIFICALLY NOTED THE DATES OF OCCURRENCE AND DATES OF DETECTION IN ANNEXURE A OF THE ASSES SMENT ORDER. THESE DETAILS WERE CULLED OUT FROM THE DETAILS FURNISHED BY THE ASSESSEE ITSELF BASED ON EACH INDIVIDUAL CASE FILES. THUS, AS PER F INDINGS GIVEN BY THE AO, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION OF EM BEZZLEMENT LOSS BECAUSE SUCH LOSS WAS NOT DETECTED IN THE ACCOUNTI NG YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER REFERENCE. THE LD. CIT(A) HAS GIVEN A FINDING THAT THE ASSESSEE WOULD BE ENTITLED TO THE CLAIM OF LOSS WHEN THE SAME HAD BEEN CRYSTALISED AND FINALIZED AND NOT MERELY O N THE DATE OF OCCURRENCE.. THIS FINDING OF CIT(A) HAS NOT BEEN UP HELD BY THE TRIBUNAL FOR THE ASSESSMENT YEAS 1983-84 & 84-85 WHERE IT WA S HELD THAT THE CLAIM OF THE ASSESSEE WOULD BE ALLOWED IN THE YEAR WHEN THE LOSS WAS DETECTED. THE LD. CIT(A) HAS NOT DISPUTED THE FINDI NG OF AO THAT THE LOSS DISALLOWED BY THE AO WAS DETECTED IN THE EARLIER AS SESSMENT YEARS. IN THE WRITTEN SUBMISSIONS FILED BEFORE THE CIT(A). TH E ASSESSEE HAS SUBMITTED THAT DUE TO PROCEDURES INVOLVED, THE BOOK ING OF LOSS WAS DONE ONLY AFTER OBTAINING THE APPROVAL OF THE R.B.I. AND OTHER PROCEDURAL FORMALITIES. BUT THE DECISION OF THE TRIBUNAL FOR T HE EARLIER YEAR REFERRED TO THE FACTUM OF DETECTION OF EMBEZZLEMENT LOSS AND NOT TO THE YEAR WHEN LOSS WAS BOOKED BY THE ASSESSEE. ADMITTEDLY, T HE ASSESSEE IS FOLLOWING A MERCANTILE SYSTEM OF ACCOUNTING. THE LO SS SHOULD BE CLAIMED IN THE YEAR AS SOON AS THE SAME IS DETECTED. THE DA TE OF OCCURRENCE WOULD NOT BE IMPORTANT IF THE SAME DOES NOT COME TO THE NOTICE OF ASSESSEE. AS REGARDS THE REFERENCE TO THE REMAND RE PORT REFERRED TO BY THE LD. COUNSEL, THE AO HAS ONLY REFERRED TO THE LE TTER OF ASSESSEE WHERE IT WAS CLAIMED THAT THE BOOKING OF FRAUDS WAS DONE IN THE FINANCIAL YEAR 1997-98 RELEVANT TO ASSESSMENT YEAR 1998-99. BUT BO OKING OF FRAUD OR LOSS IN THE ACCOUNTING YEAR UNDER REFERENCE DOES N OT MEAN THAT THE LOSS WAS DETECTED IN THE ASSESSMENT YEAR UNDER REFERENCE . IF THE LOSS WAS DETECTED EARLIER AND WAS BOOKED IN THE ASSESSMENT YEAR UNDER REFERENCE, THE ASSESSEE WOULD NOT BE ENTITLED TO T HE SAME. THE FACTS OF THE CASE FOR THE ASSESSMENT YEAR UNDER REFERENCE AR E SIMILAR TO THE FACTS ITA NOS. 71 & 72 ASR 2014 ASS T. YEARS 1998-99 & 2000-01 14 OF THE CASE FOR THE ASSTT. YEAR 1984-85 WHERE THE O RDER OF THE CIT(A) WAS SET ASIDE AND MATTER RESTORED TO THE AO WITH A DIRE CTION TO ALLOW SUCH LOSS ONLY IF THE SAME WAS DETECTED IN THE ASSTT.YEA R UNDER REFERENCE. IN THIS VIEW OF THE MATTER, WE CONSIDER IT FAIR TO SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO ALLOW THE EMBEZZLEMENT LOSS ONLY IF THE SAME WAS DETECTED IN THE ACCOUNTING YEAR RELEVANT TO THE ASSTT. YEAR UNDER CONSIDERATIO N. NEEDLESS TO SAY THAT THE ASSESSEE SHALL BE ALLOWED A REASONABLE OPPORTUN ITY BEFORE DECIDING THE ISSUE AFRESH. WE ORDER ACCORDINGLY. THIS GROUND OF APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 15.1. NOW IN THIS CASE, WE FIND THAT DURING THE CO URSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 1997-98, THE AO HAD EXAMINED THE CLAIM OF THE ASSESSEE AFTER CALLING FOR THE DETAILS FROM THE ASS ESSEE. THE AO HAS CLEARLY NOTED THE DATES OF OCCURRENCE OF EMBEZZLEMENT AND THE DATE O F DETECTION. IN THE WRITTEN SUBMISSIONS FILED BEFORE THE CIT(A), THE ASSESSEE H AD ITSELF GIVEN THE DATES OF OCCURRENCE AND THE DATES OF DETECTION AS NOTED BY THE CIT(A) O N PAGE 4 OF THE IMPUGNED ORDER. THE FACTUAL POSITION STATED BY THE AO AND NOTED BY THE CIT(A) ON THE BASIS OF WRITTEN SUBMISSIONS FILED, HAS NOT BEEN CONTROVERTED BY THE CIT(A). WHILE DECIDING THE APPEALS FOR THE ASSESSMENT YEARS UNDER CONSIDERATION, THE T RIBUNAL HAS NOT ACCEPTED THE SUBMISSIONS OF THE ASSESSEE THAT LOSS HAS TO BE ALL OWED IN THE YEAR WHEN ALL PROCEDURAL FORMALITIES HAVE BEEN COMPLIED WITH. WE HAVE HELD T HAT SINCE THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THE EMBEZZLEMENT L OSS SHOULD BE CLAIMED AS SOON AS THE SAME IS DETECTED. NOW ADMITTEDLY, THE DATES ON WHI CH LOSS WAS DETECTED FOR THE ASSTT. YEAR 1997-98 DO NOT FALL IN THE ACCOUNTING YEAR REL EVANT TO THE ASSTT.YEAR 1997-98. THEREFORE, THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE OF LOSS MADE BY THE AO. ACCORDINGLY, THE ORDER OF THE CIT(A) IS SET ASI DE AND THAT OF THE AO RESTORED SO FAR AS ASSTT. YEAR 1997-98 IS CONCERNED. THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED. 15.2. AS REGARDS THE ASSTT. YEAR 2000-01, THE EXAC T DATES OF THE OCCURRENCE AND DATES OF DETECTION HAD NOT BEEN SEPA RATELY NOTED BY THE AO. FOR EXAMPLE, EMBEZZLEMENT LOSS OF RS. 10 LACS R ELATES TO TREASURY ACCOUNT, DATE OF DETECTION HAS NOT BEEN GIVEN BY TH E AO IN THE ASSTT. ORDER. HE HAS ONLY GIVEN DATE OF FILING OF F.I.R. THEREFOR E, FOR THIS ASSTT.YEAR, WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE O RDER OF THE CIT(A) AND RESTORE THIS ISSUE TO THE FILE OF THE AO FOR DECIDI NG THE SAME AFRESH KEEPING IN VIEW THE DIRECTIONS OF THE BENCH FOR THE EARLIER ASSTT. YEAR AS REPRODUCED ABOVE AND AFTER ALLOWING REASONABLE OPPORTUNITY TO THE ASSESSEE. WE ORDER ACCORDINGLY AND THIS GROUND OF APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. FROM THE ABOVE ORDERS OF TRIBUNAL AS REPRODUCED ABO VE, WE FIND THAT THE TRIBUNAL HAD HELD IN ALL THESE YEARS THE LOSS ON AC COUNT OF FRAUDS HAS TO BE ALLOWED IN THE YEAR IN WHICH IT WAS DETECTED AND THE SUBMISSIONS OF ASSESSEE THAT LOSS HAS TO BE ALLOWED IN THE YEAR WH EN ALL PROCEDURAL ITA NOS. 71 & 72 ASR 2014 ASS T. YEARS 1998-99 & 2000-01 15 FORMALITIES HAVE BEEN COMPLIED WITH HAS NOT BEEN AC CEPTED. THEREFORE, IN VIEW OF THE ABOVE, THE APPEALS IN THESE YEARS ARE C OVERED AGAINST THE ASSESSEE AS IN THE PRESENT YEARS, THE ASSESSING OFF ICER HAD CLEARLY HELD THAT DATES OF OCCURRENCE OF FRAUDS AND DETECTION TH EREOF WERE NOT FALLING IN THE PRESENT YEARS. THE LEARNED AR DID NOT BRING TO OUR NOTICE ANY JUDGMENT OF HONBLE HIGH COURT AGAINST THE TRIBUNAL ORDERS IN THE ABOVE YEARS. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE TRIBUNAL ORDERS IN THE CASE OF ASSESSEE ITSELF, WE ARE NOT IN AGREEMENT WI TH THE ARGUMENTS OF LEARNED AR AS THESE HAVE ALREADY BEEN DEALT WITH BY THE TRIBUNAL IN ITS EARLIER ORDERS. 9. IN VIEW OF THE ABOVE, THE APPEALS FILED BY THE A SSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22ND J ANUARY, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED: 22.01.2016. PK/PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.