GOAN HOTELS & REALTY PRIVATE LIMITED,MUMBAI vs. DCIT 12(2)(2), MUMBAI, MUMBAI

The present appeal preferred by the Assessee is directed against the order dated 31/12/2024 passed by The Commissioner Of Income Tax, Appeal, Kolkata-27 (hereinafter referred to as “CIT(A)”) under Section 250 of the Income Tax Act, 1961 ( hereinafter referred to as “the Act”) whereby the Learned CIT(A) had partly allowed the appeal against the Assessment Order, dated 29/03/2016, passed under Section 143(3) of the Act for the Assessment Year 2013-2014. 2. The Assessee has raised following grounds of appeal:

On the facts and in the circumstances of the appellant company's case and in law, the Learned Commissioner of Income Tax (Appeal) erred in not quashing the assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961. Assessment Year 2013-2014

On the facts and in the circumstances of the appellant company's case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the disallowance of Rs 40,00,223/- made by the Assessing Officer in the impugned Assessment Order on account of write off of fraudulent encashment of cheques disregarding the submissions filed by the appellant company during the course of assessment proceedings.

On the facts and in the circumstances of the appellant company's case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the disallowance of Rs 40,00,223/- on account of write off of fraudulent encashment of cheques which was not debited by the appellant company in the financial year ended on 31.03.2010 i.e., when the encashment of duplicate cheques had actually happened and it was contested against the bank. However, due to lapse of time, the appellant company written off the said loss in the financial year ended on 31.03.2013 relevant to Assessment year 2013-14. 4. On the facts and in the circumstances of the appellant company's case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the disallowance of Rs 40,00,223/- made by the Assessing Officer only due to the reason that the appellant company could not produce copy of FIR/Police Complaint or any details of the investigation proceedings undertaken by the authorities absolutely ignoring the letter dated 06.01.2016 filed by the appellant company with the Senior Police Inspector (EOW) Crawford Market, Mumbai to get a copy of the said complaint.

We have heard both the sides and perused the material on record. The solitary issue that arises for consideration the facts and circumstances of the present case is whether the Assessee is entitled to claim deduction for amount of INR.40,00,223/- claimed to have been written off during the relevant previous year.

On perusal of record at emerges that the Assessee had filed return of income for the assessment year 2013-2014 on 30/11/2013 which was selected for scrutiny. During the assessment proceedings the Assessing Officer noted that Assessee had debited an amount of INR.40,00,223/- Profit & Loss Account. On perusal of the audit report the Assessing Officer noted that the auditor has recorded that: “5.1 The Assessee has debited an amount of Rs.40,00,223/- from its profit & loss account, with respect to loss incurred due to fraudulent encashment of funds. Such fraud was allegedly carried out on the Assessee Company during the F.Y. 2009-10. The auditor's note highlighting the same is given below:

In response to query from the Assessing Officer in relation to the above, the Assessee took a stand that the amount debited to the Profit & Account represented loss incurred by the Assessee due to the fraudulent encashment of cheques. Therefore, the Assessee was directed to produce copy of the First Information Report (FIR)/Complaint filed with the investigating authorities in relation to the alleged fraud. Since the Assessee failed to furnish the aforesaid FIR/Complaint, the Assessing Officer concluded that it was merely a management decision to write off the amount during the current year. The Assessing Officer further noted that even in the bank reconciliation statement filed by the Assessee, the Assessee had not accepted the debits made to the bank account of the Assessee on the alleged encashment of duplicate checks. Therefore, the Assessing Officer rejected deduction of INR.40,00,223/- claimed by the Assessee.

Being aggrieved the Assessee preferred appeal before the Learned CIT(A). Vide Order, dated 31/12/2024, the Learned CIT(A) dismissed the appeal preferred by the Assessee on this issue holding that the Assessee had again failed to produce a FIR/Complaint during the appellate proceedings before the Learned CIT(A).

As a result, Assessee has now preferred the present appeal before the Tribunal.

The primary contention advanced on behalf of the Assessee is that the authorities below had failed to appreciate that the Assessee had placed before the Assessing Officer and the Learned CIT(A) documents to show

Per contra, it was submitted by Learned Departmental Representative that the Assessee had failed to produce relevant documents/details in the form of FIR/Complaint filed by the Assessee to verify that the Assessee were subjected to fraud. The Learned Department Representative reiterated that the Assessing Officer. There was nothing on record to show that the amount was written off in the books of accounts.

On perusal of material on record we find that the Assessee has failed to produce copy of FIR/Complaint filed for reporting fraud of INR.40,00,223/- during the assessment proceedings or during the appellate proceedings before the Learned CIT(A) or before this Tribunal. The current status of the investigation was also not available on record. Though it has been claimed that the INR.40,00,223/- had been written off, the relevant Ledger Account has not been placed on record. At the same time we note that the Assessee had placed before the Assessing Officer, Letter dated 06/01/2016, filed before the Senior Police Inspector (EOW), Crawford Market, Mumbai to obtain copy of complaint. However, the details of complaint and the action, if any, taken against the parties involved is not available on record. Therefore, given the aforesaid factual circumstances, we are of the view that interest of justice would be served in case the issue is set aside to the file of the Assessing Officer for de-novo adjudication after granting the Assessee reasonable opportunity of being heard the Assessee. The Assessee is directed to place before the Assessing Officer, (a) documents/details to establish that the Assessee were subjected to fraud, (b) give the details of the parties involved and the current status of action taken against them and (c) document/ledger account to show the accounting treatment of the amount of INR.40,00,223/- claimed as deduction in the 4 Assessment Year 2013-2014 book of accounts. The Assessing Officer is directed to adjudicate the claim afresh as per law after carrying out such inquiry/verification as the Assessing Officer may deem fit. In terms of the aforesaid Ground No. 1 to 4 raised by the Assessee are allowed for statistical purposes.

In result the present appeal preferred by the Assessee is allowed for statistical purposes.

""थ" / The Respondent. 3. आयकर आयु"/ The CIT

"धान आयकर आयु" / Pr.CIT 5. िवभागीय "ितिनिध ,आयकर अपीलीय अिधकरण ,मुंबई / DR, ITAT, Mumbai 6. गाड" फाईल / Guard file.