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TMI Blog2024 (7) TMI 1369X X X X Extracts X X X X X X X X Extracts X X X X ..... of stock by an employee and others amounting to Rs. 1,32,14,143/- and had filed the return of income on 30.09.2011, declaring total loss of Rs. 34,53,774/-. 3. The ld. Assessing Officer ('A.O.' for short) required the assessee to explain the loss claimed on account of embezzlement of stock. In response, the assessee had filed reply along with FIR filed by the assessee against the employee who was involved in the embezzlement. One FIR was with regard to theft of Rs. 9,50,000/- which was made on 29.09.2010 and thereafter the figure of theft was enhanced to Rs. 1,32,18,143/- after the assessee had tallied the entire stock. It was also informed that the stolen goods have not been recovered till the date of lodging of report and, hence, assessee had no option but to reduced it from the stock and debit to P& L Account. It was further informed that the Police thereafter had made enquiry and it has been informed that there are some recovery which has been made by the Police but still the assessee was not able to quantify and value the same as the recovered goods still could not get into the possession of the assessee. The assessee has also filed interim report of the Police Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Police along with the details of the theft made by the employee, Shri Sanjay N. Kadam and others alongwith the exact description of the jewellery which included cut and polished diamond, gold bar, golden chain and molding. All these details are also mention before the M.M. Court in criminal complaint case filed supra. The ld. A.O. has even written a letter to the Police Inspector on 17.03.2014 to ask what happened further in the FIR report. In response, the Police department had filed a letter/reply dated 18.03.2014, providing the copy of the FIR's and the entire information as well as the charge sheet report. The reply/report of the Police Inspector which reached before the A.O. belatedly has been placed in the paper book from pg. nos. 68 to 75. Now, once the FIR has been filed by the assessee quantifying the details of embezzlement of the theft; and Police has confirmed the said FIR; and also intimated that, after the enquiry charges have been framed against the concerned persons and charge sheet has been filed and the matter is pending before the Metropolitan Magistrate; along with the part of the recovery of the amount and jewellery, then we do not find any reason to di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, weight wise, amount wise, design wise and set wise carat of gold and carat of diamond of several items like earring, pendant, ring, necklace, ct wise gold used in particular jewellery white gold items, chain, bracelet, locket, mangalsutra, etc. Since the stock is varying from size and design it was taking lot of time. In the process it took around 10 days in filing second FIR. The doubt of the Ld AO is nothing but her assumption that why it took 15 days to lodge compliant which cannot be the reason for treating genuine loss as non genuine. The doubt of the Ld AO is without any cogent reason. The Ld AO's contention that assessee did not produce corresponding purchase invoice giving the value of item embezzled. Here it is pertinent to bring to your honour's notice that appellant firm is manufacturing these items by purchasing Gold and Diamond separately. After melting the gold and fixing the diamond of various size and carats it gets the final product size wise and design wise. Hence the question of producing corresponding purchase bill and its value in the case of appellant does not arise. Here it is further pertinent to bring to your honour's notice that the item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was an actual embezzlement. All these explanation and material on record proves beyond doubt the loss of jewellery/ stock claimed by the assessee and we reject the finding and the reasoning given by the authorities below. Accordingly, we hold that the loss claimed by the assessee during the year on account of embezzlement of stock of Rs. 1,32,14,143/- is allowed and disallowance made by the AO is deleted. Accordingly, the appeal of the assessee is allowed. ITA No. 4177/Mum/2023 (Assessment Year: 2012-13) 8. In the grounds raised by the assessee in A.Y. 2012-13, the issue pertains to the addition on account of bogus purchases of Rs. 53,84,050/- by treating the entire purchases made by few parties as 'unexplained'. The brief facts are that the assessee had declared income of Rs. 92,69,088/- in the return of income filed on 18.07.2012. Later on, the ld. A.O. received information from the DGIT (Investigation), Mumbai pursuant to the search and survey action on Shri Rajendra Jain group on 03.10.2013, wherein the report based on information on portal of Maharashtra VAT department about few dealers providing bogus bills, deduced that the assessee has taken accommodation entries from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition could not have been made u/s. 69C of the Act. The Hon'ble Bombay High Court in the case of PCIT vs. Ashwin Purshotam Bajaj [2023] (ITA No.576 of 2018 vide order dated 12.07.2023) held that section 69 is not applicable to such bogus purchases and only profit has to be added and their Lordships have also held that, once the sales have not been doubted against the said purchases and there is no dispute regarding the quantitative details of stock as per books then the ld. A.O. cannot add the entire purchase and only GP rate is to be applied. Similar view has also been taken by the Hon'ble Bombay High Court decision in the case of PCIT vs. Rishabhdev Technocable Ltd. (ITA) No.1330 of 2017 vide order dated 10.02.2020. Moreover, we find that in case of the assessee for A.Y. 2007-08, 2008-09 and 2009-10, this Tribunal vide order dated 13.11.2017 had applied GP rate of 3% over and above the GP rate declared by the assessee. Accordingly, in the facts and circumstances of the case, the gross profit of 3% is applied over and above the GP rate declared by the assessee on the bogus purchase of Rs. 53,84,000/-, which works out to Rs. 1,61,520/-. Accordingly, the assessee gets part r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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