TaxTMI 
TaxTMI 
1980 (2) TMI 52
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....cluding profit and loss account and the balance-sheet. By letter dated 10th September, 1969, the assessee claimed a loss of Rs. 60,000 on the ground that the books were maintained by the previous secretary against whom a case is pending in the court of law ; on checking, it was found that there was no deposit with M/s. Tata Iron and Steel Company and Hindustan Steel, Ltd., whereas there was a deposit (security) of Rs. 10,000 with M/s. Indian Iron and Steel Company as against Rs. 20,000 shown in the balance-sheet. It may be pointed out that in the balance sheet a sum of Rs. 30,000 was shown as deposit with Tata Iron and Steel Company and a sum of Rs. 20,000 was shown as deposit with Indian Iron and Steel Company. The assessee also produced c....
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....efore the ITO giving the details of the amount so embezzled and thus, claimed that the said amounts be allowed as expenditure. The AAC rejected the claim of the assessee. The assessee filed I.T.A. No. 535/1970-71, pertaining to the assessment year 1965-66, and I.T.A. No. 3121/1971-72, pertaining to the assessment year 1969-70. Both the appeals were dismissed by the Tribunal by its consolidated order of the 26th November, 1979. On a reference application having been made by the assessee, the Tribunal has referred the following two questions of law to this court for its opinion : " 1. Whether the Tribunal has rightly held that, on the material on record, the assessee has failed to prove the embezzlement of Rs. 60,000 and Rs. 2,61,....
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....essee. Nor has Shri D. D. Mehta been examined by the assessee to prove so. Again, the report of the auditors merely points out the discrepancies in the accounts of the assessee. It does not fix the responsibility for embezzlement, if any, on Shri D. D. Mehta, or any other employee. Thus, on the material on record, it is difficult to hold that any losses had, in fact, arisen to the assessee on account of embezzlement by any of its employees. Again, there is no material on record to hold that the alleged embezzlement of the relevant amounts occurred in the respective assessment years or that the amounts became irrecoverable in these years. The losses claimed by the assessee cannot, therefore, be allowed in the assessment year in question. ....
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.... of the accused is not necessary to prove the loss. If the assessee is able to place relevant material before the authorities for proving the loss irrespective of the fact whether the accused charged of embezzlement has been convicted or not the authorities cannot refuse to consider the material by observing that the conviction of the person accused of embezzlement, has not been recorded. In the present case, the assessee produced its balance-sheets, audit report, copy of the first information report, copy of the letter dated 10th September, 1969, of the assessee along with its enclosure. The Tribunal observed that there was only suspicion against Shri D. D. Mehta and that there was only a charge of embezzlement against him. It was further ....