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2023 (2) TMI 153 - AT - Income TaxDisallowance of business expenditure - disallowance of loss incurred made by the Ld. AO, on account of illegal siphoning of funds by the Finance Director by holding that there was no nexus between the loss incurred vis-à-vis the business operations carried on by the Appellant - HELD THAT:- We note in this case, the said embezzlement by the Director has been attributed to inflation of the expenditure by the said director over a period of few years. The assessee has clearly said that he has not made any debit of expenditure as embezzlement loss. It was only note in the account explaining loss from which the Revenue authorities have come to the conclusion that the assessee has debited embezzlement loss. Assessee has submitted that the Ld. CIT(A) has erred in stating that the assessee has recovered the embezzlement loss for the current year from the dues of such employees/director. As submitted a sheet of ledger account by reference to which he claimed that a very meagre amount has been collected and hence, the Ld. CIT(A) is wrong in holding that has been recovered. In our considered opinion, on the facts and circumstances of the case, this issue needs to be remitted back to the file of the AO. The AO is directed to factually verify the recovery and allow the balance of loss. As regards of the Ld. CIT(A) direction to the AO to take necessary remedial action for AY 2012-13 to 2013-14, we note that the assessee has submitted two case laws from ITAT , wherein it has been expounded that the Ld. CIT(A) cannot go beyond the assessment year which is under consideration before him. In this regard, the case laws referred are in [2017 (11) TMI 1934 - ITAT KOLKATA] and[2019 (6) TMI 351 - ITAT INDORE]. No contrary decision was shown to us by the Ld. DR. Hence, following these case laws, we hold that the Ld. CIT(A) has erred in passing the direction to take remedial action to AO for other years. Appeal of the assessee is allowed for statistical purpose.
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