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2023 (2) TMI 1076 - KARNATAKA HIGH COURTLoss on gold - loss of 99.055 kgs of gold valued - AO has recorded in his order that assessee’s auditor had mentioned that the said quantity of gold has been charged off from the stock - Assessee submitted that the inventory of 99.055 Kgs of gold was untraceable and the loss of gold was only 0.047% of the total gold transactions during the year 2011-12 which is accepted in the manufacture of ornaments - ITAT has allowed assessee’s appeal on this aspect on the premise that the loss of gold accounts for only 0.047% of the total gold transactions without any rationale - HELD THAT:- Loss of gold is only 0.047% of the total transaction. Secondly that during the search the Revenue could not find any material. There is no logical explanation by the ITAT as to why loss of 0.047% must be allowed. The total loss claimed is 99.055 Kgs. The assessee’s explanation at the first instance before the AO is that the gold was misappropriated. Before the First Appellate Authority the explanation is that assessee did not know about the loss till conducting annual inventory. Both explanations are not supported by any evidence. If 99.055 Kgs gold were to be misappropriated, management of any prudent company would take necessary action such as filing a police complaint etc. The second explanation that the assessee did not know about the loss at all, is on the face of it, unacceptable. In our view, the reasons recorded by the ITAT are perverse and therefore, unsustainable in law - Decided against assessee.
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