COMMISSIONER OF INCOME TAX Vs. PUKHRAJ WATI BUBBER

JUDGEMENT

(1.) FOLLOWING question of law has been referred for the opinion of this Court by the Tribunal, Amritsar Bench, Amritsar, "Whether on the facts and in the circumstances of the case, the Tribunal was right in confirming the order of the AAC for directing the ITO to allow deduction of Rs. 2,64,795, embezzled by one Shri Kishore Hemani as trading loss for the asst. yr. 1985 -86, without considering the fact that Shri Kishore Hemani was never an employee of the assessee -

(2.) THE assessee claimed deduction on account of embezzlement by Kishore Hemani, who was representative of the assessee for recovering the sale proceeds. The said Hemani collected the amount from the customers but did not pay in the Court of competent jurisdiction by the investigating agency. The claim was disallowed by the AO on the ground that the assessee failed to lead evidence that Hemani was authorised by the assessee to make collection. On appeal, the appellate authority allowed the claim of the assessee for the following reasons : (ii) Payments received by Hemani were encashed through two fictitious firms; (iii) The embezzled amount was liable to be treated as trade loss for the asst. yr. 1985 -86.

(3.) ON appeal by the Revenue, the Tribunal upheld the view taken by the appellate authority relying upon judgment of the Hon'ble Supreme Court in Associated Banking Corporation of India Ltd. vs. CIT (1965) 56 ITR 1 (SC).