COMMISSIONER OF INCOME TAX Vs. PARMANAND MAKHAN LAL

JUDGEMENT

(1.) A statement of the case has been submitted by the Income-tax Appellate Tribunal, 'B' Bench, Patna, on the following question of law, which has been referred for the opinion of this court under Section 256(1) of the , I.T. Act, 1961 (hereinafter to be referred to as " the Act"):

(2.) THE facts are not in controversy. THE assessee deals in grains and groceries. THE assessee sent the munim, Shri Shib Paul, to Ranchi on September 12, 1969, with cash amounting to Rs. 10,025 for making purchase of some grocery articles and for making payment of some outstanding dues to some of the constituents. THE munim made certain purchases from various firms and sent the same to the assessee by truck on September 20, 1969. According to the assessee, the munim, Shri Shib Paul, informed that he would be coming back shortly and when he did not turn up on September 30, 1969, the assessee contacted the parties at Ranchi and learnt that payments were not made to them. THE assessee lodged a report with the police on October 2, 1969, after he came back from Ranchi where he had gone personally to find out the whereabouts of the munim. On these facts, the assessee claimed before the ITO that the said loss should be allowed as a trading loss as the amount in question had been embezzled by the munim. THE ITO did not accept the contention as, in his opinion, the assessee had not made any reasonable effort to find out the whereabouts of the munim and recover the amount from him. THE assessment order of the ITO forms part of the statement of the case as annex. A.

(3.) WE thus have no hesitation in answering the question in the affirmative, in favour of the assessee and against the Revenue. WE, accordingly, hold that, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the loss of Rs. 10,025, which was taken away by the munim, was a trading loss incidental to the business. The assessee should be entitled to the costs--hearing fee at Rs. 250.