TMI Blog1986 (6) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... was not handed over by him to the assessee nor deposited the collected amount in the account of the assessee. Therefore, FIR was lodged on 29th Jan., 1981 in the basis of which FIR was registered and police challan was made against Shri Kishore Hemani in the Court of Metropolitan Magistrate, Bombay, having the jurisdiction to try the offence, under s. 408 of the IPC that Shri Hemani was bailed out and thereafter jumped the bail, therefore, a criminal case against him for embezzlement has been held up. In view of above facts, the assessee claimed that as Shri Kishore Hemani has embezzled an amount of Rs. 2,64,795, mentioned above and, therefore, it is trading lost in the case of the assessee for which the assessee is entitled to claim. 4. The ITO did not allow the claim of the assessee for the reasons mentioned in his order in para No. 3 inter alia that the assessee had failed to adduce and evidence to prove that Shri Hemani was authorised by the assessee to make collection on her behalf. Reliance was placed on the decision of Hon'ble Supreme Court in the cases Badri Dass Daga vs. CIT (1958) 34 ITR 10 (SC) and Associated Banking corporation of India vs. CIT (1965) 56 ITR 1 (SC) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e embezzled amount to be allowed as a trade loss for the asst year 1985-86 and not in the year in which it was claimed 1985-86 and not in the year in which it was claimed (1982-83). Reliance was placed on the decision of Hon'ble Supreme Court in the case Associated Banking Corporation 'of India vs. CIT (1965) 56 ITR 1 (SC) wherein their Lordship held that it is established principle that a trade loss in a commercial essence arises where there is no reasonable chance of possibility to recover the loss from the person who had occasioned the loss to the assessee. Thus, the AAC in view of the reasons mentioned in para No. 5 and above directed the ITO to allow the claim of the assessee as trade loss for the asst. yr. 1985-86. 6. The revenue being aggrieved has preferred this appeal while the assessee cross objection to support the order of AAC. Shri Suman, the learned departmental representative contends that on the facts and in the circumstances of the case, the AAC has erred in directed to allow the deduction of Rs. 2,64,795 embezzled by one Shri Hemani as a trade loss for the asst. yr. 1985-86 without considering the fat that Shri Hemani was never an employee of the assessee and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in the shape of assessment orders in their cases before the AAC as the assessment record was with the ITO and, therefore, the evidence furnished by the assessee in the shape of assessment orders before the AAC is not fresh evidence and as such the AAC is justified in admitting it in evidence in deciding the appeal. He further contends that in the case embezzlement for the amount of Rs. 2,64,795 is proved and, therefore, the AAC is justified in allowing it as trading loss to the assessee. Reliance is placed on the decision of Hon'ble Supreme Court in the case of Associated Banking Corporation of India vs. CIT (1985) 56 ITR 1 (SC). He further contends that the reasons assigned by the ITO are invalid, moreover, reliance placed by the ITO in his order is incorrect as the cases relied upon by the ITO supra are not applicable to the facts of the case. Reliance is also placed on the paper book from pages 1 to 64. In arguing the cross-objection, Shri Bajaj contends that it is there to support the order of the AAC and if the order of the AAC is confirmed, then the cross-objection is liable to be dismissed as infractuous. Shri Suman, the learned departmental representative co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther, non-allowance of claim in the case of the assessee is clearly discrimination, which is not permitted under the process of law. 10. In the case Associated Banking Corporation of India Ltd. vs. CIT (1985) 56 ITR 1 (SC) their Lordships Hon'ble Supreme Court held that when there is embezzlement in the course of business, then the amount embezzled is trading loss of the assessee, that it is established principle that a trade loss in a commercial sense, arises when there is not reasonable chance or possibility to recover the loss. The AAC following the decision of Hon'ble Supreme Court, held that in the case the Inspector of Police General Branch, CID, Bombay vide letter dt. 1st Aug., 1983 confirmed and certified that the complaint of criminal breach of trust by Shri Kishore Hemani was registered and investigated by the Branch vide C.R. No. 37/81 under s. 408 IPC in respect of following accounts: 1. M/s. Bishan Dyg. / Ptg. Wvg. Mills Rs. 12,000.00 2. M/s J.S. Sobha Singh Sons Rs. 45,695.61 3. M/s Bubber Textile Mills Rs. 7,49,24.00 4. M/s Pukhraj Processors Rs. 2,64,795.00 . Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d challan is made to the Metropolitan Magistrate Shri Hemani was charge sheeted by the trial Court. Therefore, in view of it, it cannot be held that there is no evidence that Shri Kishore Hemani was not authorised to collect the sale-proceeds on behalf of the assessee. Further in the cases M/s J.S. Sobha Singh Sons and Harideep Singh Bubber on the identical facts, the ITO has accepted their claims, then I do not see any reason for non-accepting the claim of the assessee. The other reasons, which are there in the order of the ITO are irrelevant and his findings and conclusions, are based on surmises and conjectures. Therefore, I hold that the ITO has committed an error in law and facts in disallowing the claim of the assessee and as such his order cannot be restored. 13. In view of my above discussion and reasons thereto, I hold that the AAC is justified in allowing the claims of the assessee and as such, I confirm the impugned order. 14. As the cross-objection of the assessee is to support the order of the AAC, which has been confirmed by me and, therefore, I hold that the cross-objection of the assessee, in this situation of the matter has become infructuous. 15. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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