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Income Tax Appellate Tribunal, “SMC-A” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA
O R D E R
Per Shri A.K. Garodia, Accountant Member
This appeal is filed by the assessee and it is directed against the order of ld. CIT (A), Mysore dated 28.09.2017 for Assessment Year 2012-13.
The grounds raised
by the assessee are as under. “1. The order of the learned Commissioner of Income tax (Appeals) is opposed to law, facts, weight of evidences, probabilities and circumstances of the case.
2. The learned Commissioner of Income tax (Appeals) erred in upholding the disallowance made by the Assessing Officer of a sum of Rs. 5,00,000/- being cash loss in transit, as expenditure not relatable to the previous year relevant for the assessment year 2012-13, since the appellant was following mercantile system of accounting.
3. The learned CIT(Appeals) erred in not observing that the Assessing Officer had not doubted the genuineness of the loss of cash, but only harped on the year of allowability.
4. The learned CIT (Appeals) ought to have an given opportunity to demonstrate that the amount lost in transit related to business activity only, instead of summarily dismissing the appeal. The order of the CIT(Appeals) is opposed to principles of natural justice.
5. The learned CIT(Appeals) failed to appreciate that as long as the complaint filed before the Police Authorities are not withdrawn, the State would keep the case alive and the question of irrecoverability certificate from the Police does not arise.
6. The learned CIT(Appeals) should have exercised the power vested in him to address the Police Authorities about the genuineness of the claim and the status of the case, as he has powers coterminous with that of the Assessing Officer.
7. The learned CIT(Appeals) failed to appreciate that the appellant was exploring the possibility of recovering the amount from the culprits through the Police and once he lost hopes wrote off the amount from the books of account at his discretion as a matter of prudence.
8. The learned CIT(Appeals) failed to realise that the cash loss in transit was a trading loss and not a prior period expenditure to justify invoking mercantile system of accounting to disallow the claim.
9. The learned CIT(Appeals) did not discuss the merits of the judicial precedents quoted before him and how they are distinguishable.
The appellant denies the liability to pay interest u/s 234A, 234B and 234C interest levied by the Assessing officer in the order of assessment.
11. The grounds of appeal
may be read as not without prejudice to one another.
12. The appellant craves leave to add, delete, substitute any of the grounds before the hearing of the appeal.
13. For these and other grounds that may be taken at the time of hearing, the appellant prays that the order of CIT(Appeals) be set aside, addition made by the Assessing Officer be deleted and the assessing officer be directed to accept the income returned, in the interest of justice.”
Brief facts are that it is noted by AO in page 2 of the assessment order that the assessee in arriving at business profit of Rs. 4,10,666/- has debited a sum of Rs. 5,00,000/-, which is said to have been lost in the earlier previous year while carrying money. He further noted that it was stated that the said sum was not claimed in the earlier previous year. But the same was claimed in the present year because in spite of all efforts taken, the assessee found that there was no chance of realising the same and therefore, it was decided to write off the same during the present year. The AO disallowed the claim on this basis that the loss admittedly does not happen in the present year and therefore, it is not allowable in the present year. Being aggrieved, the assessee carried the matter in appeal before CIT (A) but without success. Now the assessee is in further appeal before us.
In the course of hearing, the ld. AR of assessee fairly agreed that the facts noted by AO in the assessment order are admitted facts and there is no mistake in the facts noted by AO in the assessment order that the loss was incurred on 24.12.2009 relevant to Assessment Year 2010-11 and not in the present year i.e. Assessment Year 2012-13. He placed reliance on the following judgements in support of his claim that this should be allowed as deduction in the present year. These judgements are as under. A) Ramchandar Shivnarayan Vs. CIT (111 ITR 263 (SC)) B) CIT Vs. P.V. Gore & Co. (143 ITR 922 (BOM)) C) Jitmal& Sons Vs. ITO (11 TTJ 0160 (IndoreTrib) D) DCIT Vs. Indian Railway Finance Corporation Ltd. (33 CCH 200 Del Trib.) E) Silicon Graphics Systems (I) (P) Ltd. Vs. DCIT (106 TTJ (Del) 1153)
The ld. DR of revenue supported the orders of authorities below. He also submitted that none of these judgements cited by the learned AR of the assessee is applicable in the present case.
I have considered the rival submissions. I find that the dispute to be decided in present case is as to whether the loss incurred in Assessment Year 2010-11 can be allowed in present year in the facts of the present case because no basis has been shown by assessee which prompted the assessee to claim the loss in the present year. As per the assessee, the investigation by police is still going on and the case had not been closed by the police and therefore, it cannot be conclusively said that the amount in question is irrecoverable. In the light of these facts, I now examine the applicability of various judgements cited by ld. AR of assessee.
The first judgement cited by ld. AR of assessee is the judgement of Hon’ble Apex Court rendered in the case of Ramchandar Shivnarayan vs. CIT (supra). In that case, the dispute was this as to whether the loss of money because of theft is allowable as business loss or not if such loss is incurred in course of business operation and it was held that such loss is allowable as business loss. In the present case, the dispute is not this as to whether the loss in question is business loss or not or whether same is allowable or not. The dispute in present case is this whether loss is allowable in present year i.e. Assessment Year 2012-13 when the loss has occurred in Assessment Year 2010-11. Hence this judgement is rendering no help to assessee in the present case.
The next judgement cited before me is judgement of Hon’ble Bombay High Court rendered in the case of CIT Vs. P.V. Gore & Co. (supra). In this case also, the dispute was this as to whether the loss of cash in course of carrying of cash by the partner of the assessee firm from the shop to his home is allowable as business loss or not. Hence it is seen that in that case also, this was not the dispute that whether the loss incurred in one year is allowable in a different year and therefore, this judgement of Hon’ble Bombay High Court is also not applicable in the present case.
The third judgement cited before me is the Tribunal order rendered in the case of Jitmal & Sons vs. ITO (supra). In that case also, the issue in dispute was whether the loss of money in transit is allowable as business loss or not. In that case, the partner of the assessee firm was robbed of cash while carrying cash from shop to home at night and there was a routine practice of carrying money home because there was no safe in shop. Hence it is seen that in that case also, this was not the dispute that the loss incurred in one year is allowable in subsequent year. Hence this judgement is also not applicable in the present case.
10. The fourth judgement cited before me is the Tribunal order rendered in the case of DCIT vs. Indian Railway Finance Corporation Ltd. (supra). In that case, the issue in dispute was regarding allowability of brought forward expenditure being interest liability for earlier years on bonds issued by the assessee-company and disallowed by the AO as prior year expenditure. In that case, the issue was decided in favour of the assessee on this basis that the liability was determined and it crystallised in the year in question on the basis of maintaining accounts on the mercantile basis. Hence it is seen that in that case, the liability in question had crystallised in the present year but in the present case, it is not shown that loss on theft of cash has crystallised in the present year because no material was brought on record in support of this contention. Hence, this Tribunal order is also not rendering any help to the assessee in the present case.
The fifth and last judgement cited before me is the Tribunal order rendered in the case of Silicon Graphics Systems (I) (P) Ltd. Vs. DCIT (supra). In that case, it was held that if in respect of taxable liability, payment is claimed by the party from the assessee in a later year and the dispute is settled in that year then the same is settled in the later year than it is allowable in the year in which it is settled even if it relates to an earlier year. Hence it is seen that in that case also, the issue was decided in favour of the assessee on this basis that liability has crystallised in the present year but I have already seen that it is not shown in the present case that the loss claimed has crystallised in the present year. Hence, this Tribunal order is also not applicable in the present case.
As per above discussion, it is seen that none of the judgements cited before me is helping the assessee and therefore, I find no reason to interfere in the order of CIT (A).
In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on the date mentioned on the caption page.