1925 (1) TMI 3

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....g for the reports from Calcutta and Jalpaiguri. It appears from the order of the Assistant Commissioner of Income Tax that after making his assessment he noted that assessment would be made on receipt of, the reports from the Income Tax Authorities at Calcutta and Jalpaiguri as heretofore. 2. The assessee appealed against the assessment to the Assistant Commissioner, who, while reducing the assessment on the business at Purnea, enhanced the assessment as a whole by including the income derived from the branch businesses in Calcutta and Jalpaiguri. Three items were included in arriving at this enhanced sum, viz., a sum of Rs. 25,000 which had been embezzled by a gamashta in Calcutta, a sum which was excluded from assessment by the Calcutt....

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....zlement is deductible. 5. Murray and Carter's Guide to Income Tax Practice, Ninth Edition, page 263; A loss by reason of embezzlement by an employee used to be looked upon as a loss by stratagem and not one connected with, or arising out of, trade, and it used to be said that the amount could not be deducted. Such a loss, however, is now for income-tax purposes deemed an expense of the year in which it is written off in the books"; and Shilling's Dictionary of Income Tax and Super Tax Practice, Fifth Edition, page 231: If a loss by embezzlement can be said to be necessarily incurred in carrying on the trade it is allowable as deduction from profits. In an ordinary case it springs directly from the necessity of deputing cert....

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....horities in Calcutta and Jalpaiguri reporting to him. It is argued that the so-called enhancement made by the Assistant Commissioner on appeal is illegal on three grounds: (1) Section 34 expressly provides for the assessment of sources of income that have escaped assessment by the Income Tax Officer; and, where there is an express provision of law applicable to the circumstances of the case, that procedure ought to have been followed. (2) By the procedure adopted by the Assistant Commissioner in assessing on appeal the income from the businesses at Jalpaiguri and Calcutta the assessee has lost the right of appeal on questions of fact relating to these sources of income. (3) By Section 31, the Assistant Commissioner in disposing of an appeal....