TMI Blog2019 (10) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... was the year in which the loss on account of embezzlement was, in fact, discovered. Which year the assessee can claim the deduction on account of such losses, i.e., embezzlement of the fund. Admittedly, the fund was embezzled by the employee of the assessee in the earlier years, but the assessee did not claim the deduction for the same till date as it was hopeful of recovering the same amount from the employee. In the year under consideration, the assessee has lost its hope for the recovery of the amount from the employee. Assessee has written off such amount as bad debt in the year under consideration. In our considered view, it is the decision of the assessee to hold the amount as irrecoverable from the employee. The Revenue cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals), Ahmedabad-5, dated 13/04/2016 ( in short Ld.CIT(A) ) arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as the Act ) dt. 27/09/2010 relevant to the Assessment Year 2008-2009. The assessee has raised the following grounds of appeal; 1. That on facts and in law, the learned CIT(A) has grievously erred in confirming the disallowance of claim of bad debt/trading loss of ₹ 4,66,444/- 2. That in the alternate, and without prejudice to the above ground, direction ought to have been given to allow th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e earlier year. Therefore the assessee debited such amount to the employee account after crediting the account of respective parties. The assessee also submitted that such embezzlement of fund pertains to Financial Year 2002-03 and 2003-04. 2.1 However, the AO was of the view that deduction on account of embezzlement of the fund can be claimed in the previous year in which such embezzlement was crystallized. Moreover, the AO was of the opinion that this amount of embezzlement was discovered in the earlier previous year. Therefore the same cannot be allowed as a deduction in the year under consideration. Accordingly, he disallowed the same and added to the total income of the assessee. 3. The aggrieved ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground raised by the appellant to this extent is dismissed. Being aggrieved by the order of the ''Ld.CIT (A)'' the assessee is in appeal before us. 5. The Ld.AR, before us, filed a paper book running from pages 1 to 37 and submitted that the assessee had claimed the deduction in the year under consideration on rational that the amount became irrecoverable from the employee. Thus the impugned amount was written off in the year under consideration. 5.1 The Ld.AR, alternatively also submitted that a direction should be issued to the Revenue to allow the claim of the assessee for the deduction in the relevant years in which such embezzlement was discovered/crystalized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in the earlier years, but the assessee did not claim the deduction for the same till date as it was hopeful of recovering the same amount from the employee. In the year under consideration, the assessee has lost its hope for the recovery of the amount from the employee. Therefore the assessee has written off such amount as bad debt in the year under consideration. In our considered view, it is the decision of the assessee to hold the amount as irrecoverable from the employee. The Revenue cannot enter into the shoes of the assessee and direct him to claim the deduction of such amount in the year in which the embezzlement was discovered/crystalized. 8.2 We also note that the case-law referred by the authorities belo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred an appeal to the ''Ld.CIT (A)''. The assessee before the ''Ld.CIT (A)'' submitted that the amount of bonus/commission was paid to the employe which was claimed as an expenditure. A such there was no documentary evidence justifying that assessee has paid such amount of bonus/commission in place of profits/dividends. However the ''Ld.CIT (A)'' disregarded the contention of the assessee and confirmed the order of the AO by observing as under: 3.4.1 The facts of the case and the submission are considered. The auditor in his report clearly stated that these payments are purely customary in nature. The appellant has simply said that the auditor didn t mean that the same w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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