Case Law Details
It is noted from the records that the assessee had claimed loss of goods (i.e. Tata Sky Vouchers / Coupon of the supplier company) by theft. However, in the assessment proceedings, the AO required the justification in this regard or also to produce the copy of the FIR for the legal action taken by the assessee which the assessee could not produced before the AO.
The AO for want of the evidence or justification as to the theft of the goods disallowed the claim of Rs. 4,77,500/- made by the assessee which has been confirmed by the ld. CIT(A) in first appeal. In the appellate proceedings, the ld. AR of the prayed that it is an admitted position that theft/ fraud had indeed taken place in the assessee company and the AO had nowhere doubted the fact of fraud but he disallowed the claim of the assessee for the reason that the assessee could not establish the fact of fraud like non- production of copy of FIR and not taking any legal action against the employee who was involved in this activity of fraud.
The ld. AR further submitted that non-action against those employees cannot bring the genuineness of the loss in question and more particularly when the fact of loss on account of fraud is an admitted position and thus the genuineness thereof automatically gets established. The ld. AR of the assessee relied on decision of Hon’ble Supreme Court in the case of Associated Banking of India Ltd. vs. CIT (supra).
Further the ld. AR of the assessee took resort of CBDT Circular No.25 of 1939 and Circular No. 13 of 1994 wherein it was clarified that losses arising due to embezzlement of 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 necessarily kept for the purpose of the business in the place from which it was lost.
EXTRACT OF THE JUDGMENT
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