Income Tax Appellate Tribunal - Chandigarh
Asstt. Cit vs Shivalik Woollen Mills (P) Ltd. on 26 June, 2003
Equivalent citations: (2004)86TTJ(CHD)473
ORDER
D.R. Singh, J.M. The revenue has filed these two appeals against the two separate orders of the Commissioner (Appeals)(C), Ludhiana, dated 31-8-1995, for the assessment years 1990-91 and 1992-93.
2. Both these appeals filed by the revenue were heard on the same date and since the issue involved in the ground of appeals is based on identical facts, therefore, these are disposed of through this consolidated order for the sake of convenience.
3. In ITA No. 1424/Chd/1995 : Asst. yr. 1990-91, the revenue has taken the following effective ground :
1. That on the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in deleting the addition of Rs. 21,39,950 made in the trading account after giving a finding that no theft has been committed in respect of stock worth Rs. 51,02,069.
4. In ITA No. 1426/Chd/1995 : Asst. yr. 1992-93, the revenue has taken the following effective ground :
1. That on the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in allowing the claim of loss of Rs. 51,02,069 debited as insurance claim rejected in the profit & loss a/c.
5. Briefly stated, the relevant and material facts for the disposal of the issue involved in the grounds of appeals of the revenue are that in response to the notice under section 148 of the Act, issued on 11-2-1993, the assessee filed its return declaring Nil income. The assessee derived income from manufacturing and sale of shoddy yarn and from trading of M.S. rounds and also from the job work done on account of drawing and straightening of M.S. round and bright steel bars.
5.1. A search and seizure operation was carried out under section 132 of the Act at the business premises of the assessee on 18-12-1990 and certain books of accounts and other papers were seized. From the consolidated profit & loss a/c, the assessing officer noticed that sales and labour earned have increased suitably but the GP for the year under consideration has fallen by more than 6 per cent. The assessing officer requested the assessee to substantiate reasons for fall in the GP. In reply, the assessee submitted that at the beginning of the manufacturing season, there had been a theft at the factory premises of the assessee on 17/18-9-1989, in which loss of woollen rags, etc. valued at Rs. 51,02,069 was suffered by the assessee and on account of this loss of raw material, there was a fall in the G.P. rate. According to the assessing officer, the assessee's reply was neither convincing nor tenable taking into account the factors like increase in the sales and labour earned as compared to the last year. So, the assessing officer made an addition of Rs. 12 lacs on account of low GP as compared to last year, on estimate basis to which the assessee agreed vide his letter dated 15-3-1995. During the year under consideration, the assessing officer further noticed that the assessee has shown a sum of Rs. 51,02,069 as claim receivable in Annex. G to the balance sheet under the head current assets, loans and advances'. The assessee informed the assessing officer that the claims receivable were on account of theft. The assessing officer requested the assessee to furnish a copy of the FIR in respect of the theft and a copy of the claim filed with the insurance company. The assessee did not furnish any information in this regard to the assessing officer despite various opportunities. Hence, the assessing officer made direct enquiries from the insurance company by issuing summons under section 131 of the Act. The United India Insurance Co., vide their letter dated 3-1-1991, informed the assessing officer that the assessee's claim of Rs. 51,02,069 has been rejected on the ground that the claim made by the assessee was fraudulent.
This rejection of insurance claim of the assessee by the United India Insurance Co. was based on the reports of M/s Mehta & Adamsey, Surveyors (P) Ltd,, M/s Thapar Srinivasan & Kapoor (P) Ltd., Joint Surveyors and M/s O.P. Taneja & Co. surveyors, assessors and investigators.
5.2 The surveyors and investigators of M/s O.P. Taneja & Co., for the rejection of the false claim of the assessee, furnished a detailed report which was based on the statement of Shri Sunil Maria, M.D., Shri J. Banerjee, technical advisor and Shri Rai Singh, supervisor, all employees of the assessee and also after making enquiries from various persons near and around the subjected premises and after considering the various other aspects which have been mentioned in detail in the order of the assessing officer.
5.3 The other surveyors M/s Mehta & Adamsey and M/s Thapar Srinivasan & Kapoor (P) Ltd. also reached at the same conclusion that the claim of the assessee was not credible, after recording the statements of the various persons including enquiries from chowkidar Shri Dharam Singh of the factory, namely M/s Narang Metagraphics located just opposite the assessee's mill across the road and after considering whether such huge material can be loaded in those trucks by the thieves during, that short period within which the alleged theft is said to have been committed by practically carrying out exercise of loading of trucks with the material which was alleged to have been stolen. The result of that exercise has been mentioned in detail in the order of the assessing officer on the basis of which the surveyors reached the conclusion that this kind of material involved in the theft cannot be loaded by the thieves in the trucks and stolen away form the premises of the assessee. Thereafter, in the order of the assessing officer, the observations of the surveyors and investigators on the basis of which they rejected the claim of the assessee has been summarised as under :
(i) That the insured have not produced the documents/records even after the repeated requests meaning thereby that the records are not proper and they are hiding the facts for the reasons best known to them.
(ii) No clue about this theft was available i.e., where about of the trucks which carried the stolen goods, inspite of efforts of the police alongwith the insured's staffe of making enquiries from the nearby octroi posts, railway crossings, police nakas, etc. immediately after the occurrence.
(iii) The enquiries made from the persons near and around the factory premises of M/s Shivalik Woollen Mills, i.e., subjected premises revealed that none of these persons have heard any noise of trucks or had any knowledge about the theft and had there been any incident of the nature, these persons must have heard the noise of large number of persons loading the trucks, etc. as the day was Sunday and being holiday of the industrial area, there was no other noise of production, etc. from the other factories situated nearby.
(iv) The exercise of loading a few trucks with similar material as alleged to have been stolen by the surveyors revealed that such a large quantity of the material (2,50,000 kgs) cannot be carried out in the time span of 71/2 hours in trucks as claimed by the insured.
(v) Even before alleged theft there was shortage of stocks worth Rs. 23,26,032.
(vi) This operation will require about 42 truckloads each having a driver and no information is available about the hiring of such a large number of trucks inspite of enquiries made.
5.4 The surveyors also observed in their report that the assessee has claimed stock-in-hand worth Rs. 81 lakhs before the mishap but as per records of the assessee, the assessee can be holding stock worth Rs. 57,95,219 out of which the stock saved is worth Rs. 27,92,143 and thus the shortage would come to about Rs. 23,26,032 even before the alleged mishap. The assessing officer proposed to the assessee as to why a sum of Rs. 73,41,165 be not treated as its income on account of sale of stock of Rs. 51,02,069 outside the books of account and no deduction would be allowable to the assessee as all the trading expenses have already been accounted for in the trading account. If the assessee has incurred any expenses for the sale of stock, the assessee should produce the evidence thereof and only then deduction for selling expenses could be given. The assessee submitted that on the night of 17th/18-9-1989, theft of stock worth Rs. 51,02,069 has taken place and there is no question of assessee's selling the same outside the books of account. The assessing officer held that the assessee's reply is neither convincing nor tenable and on the basis of surveyor's report, it has been held that no theft of stock has taken place and the entry with regard to claim receivable is fictitious entry and this represents cash available with the assessee. According to the assessing officer that since the assessee has not debited, this amount of Rs. 51,02,069 in the profit & loss a/c for the year under consideration but has shown as its claim receivable in the balance sheet, no allowance on account of this entry of Rs. 51,02,069 was made in the assessment order for the year under consideration.
5.5 So far as the assessee's contention that GP rate of 6 per cent should be applied on the wholesale basis of his turnover is concerned, the same cannot be accepted as according to the assessing officer, the assessee is not dealing with the item on a wholesale basis but on retail basis and thus the assessing officer has worked out the accretion on account of GP earned on the sale of alleged stock of Rs. 51,03,069 outside the books of account, as under
Rs.
'Opening stock of M/s Shivalik Woollen Mills (P) Ltd.
1,00,63,830 Add : Purchases 85,31,181 1,85,95,011 Less Closing stock i/c claim receivable worth Rs. 51,02,069 75,36,922 Balance 1,10,58,089 Sales : Rs. 1,59,11,046 On the consumption of raw material of Rs. 1, 10, 58,089 the sales are to be to the tune of Rs. 1,59,11,046. On the consumption of stock of Rs. 51,02,069, the sale works out to Rs. 73,41,165. On this turnover of Rs. 73,41,165 the GP rate of 29.15 per cent is applied keeping in view the GP rate for the assessment years 1989-90, 1990-91 and also the surrender of the assessee on account of decline in the GP for the assessment year 1990-91 as compared to the assessment year 1989-90 as mentioned above. At the rate of 29.15 per cent the GP works out to Rs. 21,39,950. The assessing officer, therefore, made an addition of Rs. 21,39,950 towards the income of the assessee on account of GP earned by the assessee on the sales of stock alleged to have been stolen.
5.6 During the assessment year 1992-93, the assessee filed its return of income declaring loss of Rs. 24,01,137. The assessing officer noticed that during the year under consideration, the assessee has debited a sum of Rs. 51,02,069 in the profit & loss a/c under the head 'insurance claim rejected'. The assessing officer asked the assessee to furnish a copy of the insurance claim filed, a copy of the insurance company's order rejecting the claim and also to show-cause as to why this claim be not disallowed when the insurance company had rejected their claim. The assessee did not file any reply to these queries of the assessing officer. The assessing officer pointed out to the assessee that the claim of the assessee was rejected by United India Insurance Co. vide its letter dated 3-1-1991, on the ground that it was a fraudulent claim as the department had in its possession the reports of the surveyors in which they have reported that the claim made by the assessee was false and it recommended rejection of the claim made by the assessee. The assessing officer also observed that even if it was presumed, though not considered, that assessee's claim was genuine then also the claim was not allowable as it did not pertain to the year under consideration, i.e., assessment year 1992-93, because the claim was rejected by the insurance company on 1-1-1991. In response to these observations and the queries issued by the assessing officer, the assessee vide its letter dated 28-2-1995 has stated that the reply had been already filed vide their letter dt. 4-2-1995 and no going through this reply of the assessee dated 4-2-1995, the assessing officer observed that the assessee in its letter has not replied anything regarding the rejection of the claim of the assessee by the insurance company, treating it as fraudulent. However, in the last para of its letter, the assessee has stated that no doubt insurance company had rejected the assessee's claim vide its letter dated 3-1-1991, but on the receipt of letter of the assessing officer, the assessee approached the Dy. Finance Minister and also made a separate representation to the Chairman, United India Insurance Co., on 9-1-1991, to reconsider the assessee's claim. It was also mentioned by the assessee that the assessee's representation was rejected by the Dy, Finance Minister vide its letter dated 3-5-1991 and on the basis of communication and loosing all hopes of this insurance claim being allowed at the administrative level, the assessee debited it to the profit & loss a/c and simultaneously the assessee has challenged the order of the United India Insurance Co. in the court of law and in the event of insurance claim being allowed by the department and paid by the insurance company, it would be shown as income in the relevant period. The assessing officer after considering this reply of the assessee was of the opinion that this reply of the assessee was neither convincing nor tenable because the United India Insurance Co. had finally rejected the claim of the assessee on 3-1-1991 and the representation thereafter could not by any stretch of imagination be called as continuation of consideration of assessee's claim by the insurance company.
The assessing officer also noticed from the letter of the Dy. Finance Minister dated 3-5-1991, referred to by the assessee, that the company had repudiated the claim based on police reports as also on the investigations carried out by the surveyors and as the claim was found to be not payable as per terms and conditions of the insurance policy. With these observations, the assessing officer came to the conclusion that the assessee's claim does not pertain to the year under consideration because it was finally rejected by the United India Insurance Co. on 3-1-1991 and hence not allowable in the year under consideration. The assessing officer further observed that since the insurance company vide its letter dated 3-1-1991, has rejected the assessee's claim treating the same as fraudulent on the basis of surveyors' reports including other enquiries made by them, so the entry of the claim shown by the assessee in its balance sheet for the assessment year 1990-91 was fictitious entry and represented cash available with the assessee and so he disallowed the claim of the assessee in the profit & loss a/c amounting to Rs. 51,02,069 and added it towards the income of the assessee on the basis of his detailed observations made in the order.
5.7 Aggrieved, the assessee impugned the addition of Rs. 21,39,950 for the assessment year 1990-91 before the Commissioner (Appeals) and submitted that on the night of 17/18-9-1989, theft of stock worth Rs. 51,02,069 has taken place and there was no question of assessee's selling the same outside its books of account. The assessee further submitted that when this claim of the assessee was illegally rejected by the insurance company, the assessee had challenged the same in the court of law. In the alternative, the assessee argued that even if some addition was liable to be made, the same can be made on the basis of the sale of raw material on wholesale basis and the profit thereon is not more than 5 per cent. As such the profit would work out to Rs. 25,510. The assessee further submitted that since the assessee has not debited this amount of Rs. 51,02,069 in the profit & loss a/c for the assessment year under consideration but has shown as its claim receivable in the balance sheet, no disallowance on account of this entry of Rs. 51,02,069 can be made in the assessment order for the year under consideration when the same is being disallowed in the assessment of the assessee for the year 1992-93 in which the assessee has debited the same in its profit & loss a/c.
5.8. Regarding theft, the assessee submitted before the Commissioner (Appeals) that theft came to the notice of the management in the morning of 18-9-1989 and immediately an FIR was lodged with the police and intimation was sent to the Divisional Manager, United India Insurance Co. and the State Bank of India, because the assessee was enjoying hypothecation limit from the State Bank of India. The assessee also brought to the notice of the Commissioner (Appeals) that initially the Police department registered a case against the assessee under section 182 of the IPC and when the action of the police was challenged in the court of Judicial Magistrate Ludhiana, the Judicial Magistrate vide its order dt, 20-3-1990, hold that "as a result of my above discussions, no case under section 182 of the IPC is made against both the accused and the accused are, therefore, discharged." This order of the Judicial Magistrate was accepted by the Police department and thereafter he directed the SHO to register a case and the same was registered on 4-5- 1990. It was also submitted on behalf of the assessee before the Commissioner (Appeals) that the enquiries were entrusted to C/A staff, Ludhiana, who informed the Police Station, Ludhiana, that search of the culprits was continued but the enquiry has been closed by the police authorities because the theft was untraceable. The assessee also made representation to the Member of Planning Commission who write to the Dy. Finance Minister for settlement of the insurance claim but the insurance company vide its letter dated 3-1-1991, expressed its inability to pay the insurance claim on the ground that the'claim was false and till date, the matter is before the court and the assessee is pursuing the matter to obtain the general claim from the insurance company In that case even the State Bank of India to whom the stock lost had been hypothecated, was also made a party to the suit and the matter is still pending before the civil Court. It was further contended before the Commissioner (Appeals) that the assessing officer while rejecting the claim of the assessee has ignored the fact that the case has been registered by the Police department which on the basis of subsequent enquiries has filed a report that the theft was untraceable but the assessing officer has only gone by the report of the surveyors inasmuch as he only relied on one aspect that the insurance company has rejected the claim of the assessee and the claim made by the assessee is fictitious. Thus summarising its arguments before the Commissioner (Appeals), the assessee submitted that as the FIR has been registered by the police authorities after the Judicial Magistrate First Class, Ludhiana, held that the case against the assessee filed by the police authorities under section 182 of the IPC was not maintainable, so the claim of the assessee cannot be rejected by the department when even the Police department has registered FIR and the same has not been held as false. It was also contended that the finding of the insurance company cannot be said to be the conclusive evidence justifying (sicrejecting) the claim of the assessee and since theft has been noted to be untraceable by the Police department which itself proves that there was a theft and consequent to the theft, there was huge loss to the assessee, hence according to the assessee, its claim has been wrongly rejected by the insurance company, The assessee also placed reliance on the decision of the Punjab & Haryana High Court in the case of Punjab Steel Stock Holders Syndicate Ltd. v. CIT (1980) Tax 58(3)-31 wherein the Punjab & Haryana High Court has held that it is not essential that there should be culmination of proceedings. in conviction of the accused for claim of loss in theft. Further, it has been held that even if the accused is acquitted, still if proper evidence is led before the police authorities, the loss had to be allowed, It was further stated that as per the decision of the Third Member in the case of CIT v. S.S. Ratanchand & Bholachand (HUF) (1994) 206 ITR 72 (MP) (Tribunal's supplement) wherein there was difference of opinion among the Members of the Bench and the case was referred to Third Member and the Hon'ble President of Tribunal observed that until or unless the FIR was false, it could not be said that the loss has not taken place. 'In the present case, the police authorities have not held that the FIR is false but have closed proceedings on the ground that culprits were untraceable. It is stated that after giving detailed decision of the Third Member of the Tribunal, the facts of the assessee's case are identical to the facts available (sic -before) the Tribunal i.e. (1) There was availability of stock with the assessee by quantitative tallies submitted to the various authorities and the assessing officer has also not raised any doubt about the same.
(2) The police has closed the case being untraceable.
(3) The civil suit filed by the assessee is still pending and the assessee has incurred large expenses in the payment of court fee.
Learned counsel for the assessee submitted before the Commissioner (Appeals) that under these circumstances, the loss claimed by the assessee should be directed to be allowed. Learned counsel for the assessee further made a reference before the Commissioner (Appeals) to the decision of Hon'ble Madhya Pradesh High Court in the case of CIT v. Durga Jewellers (1988) 37 Taxman 261 (MP) wherein it was held :
"In the instant case the second FIR was lodged by the assessee on 22-9-1974, indicating the extent of properties which had not yet been recovered. This indicated that the assessee was still hopeful of the recovery being made even of the remaining properties. The final report was made by the police on 21-11-1974. Consequently it could not be said that the assessee was unjustified in entertaining the hope that the unrecovered properties would also be recovered till 21-11-1974. On the final report being made, the assessee finally came to know that there was no or at any rate, little chances of recovery. Since 21-11-1974, fell within the assessment year 1976-77, the claim for the deduction was rightly allowed by the Tribunal in the assessment year 1976-77."
5.9 During the course of hearing, the Commissioner (Appeals) called the report of the assessing officer regarding the availability of the stock as on 17-9-1989, as also details of stock as available after the theft and also to correctly verify the quantity as well as the value of the stock alleged to have been stolen. The assessing officer submitted his report before the Commissioner (Appeals) and the Commissioner (Appeals) after considering all these submissions of the assessee as well as report of the assessing officer and other material placed before him, observed that in the current assessment year, it cannot be said that the assessee has included any stock value on account of alleged theft. Therefore, even while holding that the stock has been sold outside the books of account, the assessing officer has not reduced the addition as worked out at Rs. 21,39,950 by amount of stock value so shown at Rs. 51,02,069 as included in the closing stock by the assessee. If such stock is alleged to have been sold, the same could not be available in the closing stock and, therefore, the figure to that extent would need to be reduced and to that extent, profit of the assessee would also get reduced. He further observed that the gross rate of profit at 29.15 per cent has been taken by the assessing officer but it was not clear whether the said rate of profit was in respect of the yarn trading account or it includes profit in respect of trading of M.S. rounds as well as the job work receipts because as per the details given by the assessee, loss of stock was only in respect of the raw material as also the goods manufactured from the raw material as required for shoddy yarn. Therefore, apparently valuation made by the assessing officer does not appear, to be correct.
5.10 Regarding the theft, the Commissioner (Appeals) after taking all the facts and circumstances of the case into consideration, and also after taking into account the disturbed conditions in the State of Punjab during the relevant period when the alleged theft took place i.e., September, 1989, observed that it appears doubtful that even the chowkidar in the factory premises across the road would really bother to know as to what was happening outside or inside the premises of others. He further observed that if the theft has taken place, then the persons involved were not expected to make noise as in the normal course and so according to the Commissioner (Appeals), these circumstances taken into considerations by the surveyors create suspicion about the genuiness of the claim but the said report cannot be made basis for deciding the issue under consideration because the matter in this respect is sub-judice and final decision is not available. Moreso, when the police authorities have not given any finding that the FIR lodged by the assessee was false and so it cannot be said that the claim of the assessee was not genuine.
The Commissioner (Appeals) further observed that when search and seizure operation was carried out by the department and documents have been seized, there was not finding even by the assessing officer that there is any evidence available to show that any stocks have been sold outside the books of accounts and so the presumption made by the assessing officer in this regard was not valid. With these observations, the Commissioner (Appeals) held that the addition made at Rs. 21,39,950 was neither on the basis of proper working nor there was any evidence to show that the assessee has sold any stocks outside the books of accounts and accordingly he deleted the impugned addition of Rs. 21,39,950 made by the assessing officer.
5.11 Challenging the disallowance of claim of loss of Rs. 51,02,069 by the assessing officer for the assessment year 1992-93, learned counsel for the assessee submitted before the Commissioner (Appeals) that the assessee had been pursuing the matter with the Chairman, United India Insurance Co. and with the Dy. Finance Minister and the assessee had all hopes to receive the insurance claim at the administrative level. It was only when all such hopes did not materialise, the assessee debited the said claim to the profit & loss a/c and as the said entries were bona fide entries and in accordance with the decision of the Hon'ble Supreme Court in Associated Banking Corpn. of India Ltd. v. CIT (1965) 56 ITR 1 (SC) in which it has been held that so long as there is a reasonable prospect of recovery of the amounts, trading loss in a commercial sense cannot be deemed to have resulted, and the same view was taken by the Bombay High Court in Jokhiram Ramchandra v. CIT (1966) 61 ITR 693 (Bom) and also by the Calcutta High Court in an identical case of Calcutta Iron & Engineering Co. (P) Ltd. v. CIT (1993) 69 Taxman 546 (Cal). In that case there was even delay in lodging the report with the police and insurance company had not accepted the claim of the assessee but the Hon'ble High Court had allowed the claim following the decision of the Hon'ble Supreme Court in Calcutta Iron & Engineering Co. (P) Ltd. v. CIT (supra), and so the loss claimed by the assessee in the assessment year 1992-93 should have been allowed.
5.12 After considering these submissions of the assessee, the Commissioner (Appeals) observed that it was not clear from the order of the assessing officer as to how and on what basis he came to the conclusion that the alleged fictitious entries in respect made in the balance sheet for the assessment year 1990-91 represented the cash available with the assessee because apparently the entries suggest that it represented the amount receivable and certainly not the cash available with the assessee. So in the opinion of the Commissioner (Appeals), the assessing officer has misdirected himself in this regard. Also placing reliance on his order for the assessment year 1990-91, the Commissioner (Appeals) observed that for assessment year 1990-91, the assessee has not written off such loss and the value of the stock alleged to have been stolen and the claim thereof is receivable, has been noted in the total value of the closing stock of the assessee and so the said alleged stolen stock has been included in the trading account of the assessee and as such has entered into the computation of income for the said assessment year. He further noted that for the said assessment year, the assessee has shown equivalent amount receivable from insurance company and it is the said amount receivable which has been written off by the assessee during the current accounting period. So, the said transaction becomes a transaction of writing off of a bad debt as per provisions of section 36(2) of the Act with effect from 1-4-1989. Allowing of such bad (debt) is to be considered when it has been written off by the assessee or for an earlier assessment year. Even though the said debt has been written off by the assessee during the current accounting period, the assessing officer has allowed it neither for the current assessment year nor for any earlier assessment year and so the action of the assessing officer in this respect is contrary to the provisions of section 36(2) of the Income Tax Act. Thus, the Commissioner (Appeals) concluded that as bad debt claimed by the assessee should have been allowed for the current assessment year as it has been written off during the previous year and even otherwise it can be said that it was only after receipt of Dy. Finance Minister's reply that the assessee dame to the conclusion that it would not receive its claim at administrative level and so there was no hope to receive any claim and hence, writing off of the business loss even during the current amounting period was fully justified and allowable to the assessee. Ultimately, the Commissioner (Appeals) directed the assessing officer to allow the claim of loss of Rs. 51,02,069 debited as Insurance claim, to the assessee.
5.13 Before us, learned Departmental Representative for the revenue has filed written submissions and also advanced oral arguments but mainly contending in both that the assessee has not been able to place on record such evidence to prove that any theft of the alleged goods has taken place from the premises of the assessee because even the details of the stolen goods supplied by the assessee could not be verified from his books. On the contrary, first police report was against the assessee due to which case under section 182 of IPC for lodging a false complaint with the police was registered against the assessee though, of course, in the same case the assessee was discharged by the Judicial Magistrate and laster on, the police also registered a FIR on the basis of the complaint of the assessee regarding the theft but again in its ultimate report (as per p. 55 of the paper book II of the assessee), no clues of the theft were available with the police, so, ultimately the police closed the case. But the fact remains that even from the enquiries/investigations conducted by the police, no positive evidence of theft or recovery of theft articles was made by the police. Similarly, two independent surveyors of insurance company in their independent reports, after making independent inquiries, have clearly mentioned that no theft has taken place from the premises of the assessee and the claim of the assessee was fraudulent. Thus, after accepting these reports, the insurance company rejected the claim of the assessee vide letter dated 3-1-1991. Learned departmental Representative for the revenue further contended that as this letter suggests the rejection of the claim of the assessee finally, so the assessee's making further representation to the Chairman, United Insurance Co. or the Dy. Finance Minister in the hope that his claim would be allowed, was meaningless because even that claim was rejected by the letter dated 3-5-1991, of the Dy. Finance Minister. He further contended that though the assessee has filed a case before the civil court against the rejection of the claim by the insurance company, after affixing a court fee but as far as this Tribunal is concerned, this filing of the suit by the assessee in the civil court does not establish before the Tribunal that any theft has taken place on the premises of the assessee till such time this claim of the assessee is finally decided in its favour by the Court. According to the learned Departmental Representative, as far as this Tribunal is concerned, which is independent final fact-finding authority it has to look into the evidence presently filed before it by both the parties and after considering, the same, it has to come to an independent conclusion as to whether any theft has taken place or not. In that regard, an the evidences filed before the Tribunal clearly prove that no theft possibly could have taken place from the premises of the assessee. On the contrary, there is no evidence to suggest the commission of theft from the premises of the assessee except the FIR lodged by the assessee with the police in respect of commission of theft and also the suit filed by the assessee in the civil court against the rejection of its claim by the insurance company. Finally, the learned Departmental Representative for the revenue has submitted that as no theft has taken place at the premises of the assessee and the assessee has made a false claim before the insurance company so the assessing officer in his well reasoned order has rightly made the impugned addition in assessment year 1990-91 and in assessment year 1992-93 and has rightly rejected the claim of loss of Rs. 51,02,069 due to theft debited as insurance claim by the assessee.
5.14 On the other hand, learned authorised representative for the assessee reiterated the arguments made before the Commissioner (Appeals) by drawing the attention of the Bench to the various documents like correspondence with the insurance company and the Dy. Finance Minister, etc., statements of different persons recorded by the surveyors, affidavit, copy of the stock statement, etc. demanded by the surveyors and supplied by the assessee, details of vouchers, letter to S.S.P., discharge report of the Judicial Magistrate, the letter on the basis of which FIR was registered, letter of the chairman on the basis of which another surveyor was appointed by the insurance company and letter dated 3-1-1991, written by the insurance company to the assessee rejecting its claim, affidavit given by the assessee in the court and also the proof that the assessee while approaching the court has affixed the court fee, the submissions made to the CIT as well as the written submissions filed by the assessee in response to those filed by the learned Departmental Representative before the Tribunal. Learned authorised representative for the assessee also placed reliance on Associated Banking Corpn. of India Ltd. v. CIT (supra), order of the Tribunal passed in the case of this very assessee in CIT v. Durga Jewellers (supra), Jokhiram Ramchandra v. CIT (supra), Calcutta Iron & Engineering Co. (P) Ltd v. CIT (supra), CIT v. Carbon Industries (P) Ltd. (2003) 259 ITR 373 (Mad), Laxmi Ginning & Oil Mills v. CIT (1971) 82 ITR 958 (P&H), CIT v. Tulsi Ram Karam Chand (1964) 52 ITR 180 (P&H), North Arcot Distt. Co-operative Supply & Marketing Society v. CIT (1987) 165 ITR 623 (Mad) and 9 TLR 363 in support of the fact that when the claim of the assessee was finally rejected by the letter dated 3-5-1991, of Dy. Finance Minister, the assessee has rightly in the assessment year 1992-93, debited in its books of accounts as loss of Rs. 51,02,069 as insurance claim and claimed deduction which has been wrongly disallowed by the assessing officer and has been rightly allowed by the Commissioner (Appeals). Lastly, placing strong reliance on the reasoning given in the order of the Commissioner (Appeals), learned authorised representative for the assessee contended that the Commissioner (Appeals) in his well reasoned order, has rightly deleted the impugned addition in the assessment year 1990-91 and has also rightly allowed the loss of the insurance claim of the assessee in assessment year 1992-93.
5.15 We have considered the rival contentions of both the parties, perused the records and carefully gone through the evidence relied upon by both the parties before the Bench, the case law as well as the orders of the tax authorities below. In order to dispose of both these appeals filed by the revenue, we are required to settle for following issues :
(i) Whether any theft has been committed from the premises of the assessee in respect of the stock worth Rs. 51,02,069 ?
(ii) In case our findings to para (i) above is in negative, then whether the addition of Rs. 21,39,950 in the trading account made by the assessing officer/deleted by the Commissioner (Appeals), was justified ?
(iii) Whether the assessee is entitled to claim a loss of Rs. 51,02,069 debited as 'insurance claim rejected' in the profit & loss a/c in the assessment year 1992-93 ?
5.16 Firstly, we shall take up issue No. (i) mentioned hereinabove in respect of theft involved in the instant case of the assessee. The main thrust of arguments of the assessee before us is that whatever best on the part of the assessee was required to be done after the commission of theft, was done by the assessee by lodging a report with the police. It was also contended that firstly, the assessee's claim was found to be non-genuine by the police and so it lodged a case against the assessee under section 182 of the IPC but later on when this complaint of the assessee was quashed by the Judicial Magistrate, the case was subsequently ordered to be registered with police regarding the commission of theft and ultimately the police submitted a report that the theft was untraceable'. In order to show the genuineness of his claim, the assessee has placed reliance on various correspondence either with the Police department or with the other higher authorities even despite rejection of the claim of the assessee by the insurance company. In support of its contention that once the claim of the assessee by any of the authorities of the police is not found to be false despite lodging of report of the assessee with the police, the allegation of commission of theft of the assessee cannot be treated as false. In this regard, in support of its contention, it placed reliance on the decision of the Punjab & Haryana High Court in the case of the Punjab Steel Stock Holders Syndicate Ltd. v. CIT (supra) wherein their Lordships observed that :
"In a given case, even if the person, who is accused of embezzlement is acquitted, still if proper evidence is led before the authorities, the authorities are bound to consider the material with a view to find out if the loss is proved or not. The observation of the Tribunal that no director or any other witness appeared before the Income Tax Officer was not relevant as the resolution of the Board of Directors was placed on record. Moreover, it is not necessary for the assessee to prove that the embezzlement was done by a particular employee. If the loss by way of embezzlement is proved, the assessee is entitled to claim set off. It is well-settled that if the loss is not known and it comes to be known during a particular assessment year, the adjustment can be claimed in the assessment year when it came to be known. The case was sent back to the Tribunal to be decided afresh,"
Another case relied upon by the learned authorised representative for the assessee in support of his contention was Shri Ram Hari Ram v. Dy. CIT (1994) 206 ITR 71 (Del)(TM)(AT) in which on a reference, the Third Member agreeing with the AM held :
"that it could not be said that the FIR lodged with the police was not sufficient to prove the loss. In all cases of loss, the first thing that the owner of the articles lost was required to do under the law was to report to the police to enable the police to initiate investigation and recover the lost articles by taking such action as was open to the police. If the police were unable to trace the culprit or recover the articles, it could not be said that the lodgement of the FIR was not sufficient to prove the loss". In this very case, it was further held that "unless the FIR was false, it could not be said that the loss had not taken place."
Lastly, he also placed reliance on the decision of the Madhya Pradesh High Court in the case of CIT v. Durga Jewellers (supra).
5.16 On the other hand, department's argument is mostly based upon the point that the assessee, except lodging its claim of theft with the police, has not been able to prove from any positive evidence on record that any such theft of the alleged stock worth Rs. 51,02,069 has been committed from the premises of the assessee. Whereas on the other hand, when the assessee lodged a complaint with the insurance company, they conducted enquiries through two independent surveyors of the insurance company, and in their independent reports and after making independent enquiries, they have clearly mentioned by analysing all the possibilities of theft, that no theft has taken place from the premises of the assessee and so the claim of the assessee was fraudulent. it mean that the department has placed strong reliance on the final report of the insurance company whereby coming to the conclusion that no theft has taken place in the premises of the assessee, they have rejected the claim of the assessee by informing the assessee vide their letter dated 3-1-1991.
5.17 The cases relied upon by the learned Departmental Representative for the assessee are distinguishable on facts because in all those cases relied upon by the learned authorised representative for the assessee, there was only one set of evidence i.e., there was allegation of commission of theft, lodging of report of the theft with the police and lastly, the police not finally reporting that the assessee has lodged false FIR or that the alleged claim of commission of theft of the assessee was false. Whereas in the instant case of the assessee, in addition to defects mentioned hereinabove and appearing in the cited cases, there is another set of evidence wherein the insurance company, on the claim of loss lodged by the assessee before them, after conducting detailed enquiries through two surveyors, reached a positive conclusion that no alleged theft has taken place involving the stock in question from the premises of the assessee and so, the assessee's claiin was false and fraudulent.
5.18 In these circumstances, the Tribunal being a final fact-finding authority, has to come to its own conclusion after analysing the above arguments as well as evidence placed on record by both the parties, whether any theft has taken place or not. We have already mentioned that in this case, the assessee lodged an FIR relating to the commission of theft pertaininu to the stock of the assessee and the same was finally reported to be untraceable by the police. It means that the assessee has not given any positive evidence regarding the commission of theft from the premises of the assessee. Whereas, on the contrary, when a claim of loss on account of this theft was lodged by the assessee with the insurance company, they conducted independent enquiries. "he first enquiry was conducted by M/s O.P. Taneja & Co. Investigators. They recorded the statements of Sh. Sunil Maria, M.D. of the assessee, Shri J. Banerjee, technical advisor of the assessee, Shri Rai. Singh, supervisor of the assessee. They also made enquiries from various persons near and around the premises of the assessee who claimed to be eye witnesses of the occurrences. In the enquiries, from the statement of witnesses, it appeared that the theft was committed on 17-9-1989, which was Sunday, between 8/8.30 P.M. and continued upto 4 A.M. on 18-9-1989. The number of trucks used for the purposes of taking out the stolen goods were about 25 to 30 and all the trucks were without number plates which carried away the alleged stock. They also mentioned in their report that the chowkidar and supervisor were bolted inside the guest house and the incidence was reported to the police at about 6.30 A.M. on 18-9-1989, and the ASI reached the factory premises at about 6.45 A.M. and the police officials alongwith other staff of the assessee, went to nearby octroi post, railway crossings, police nakas, railway godowns in search of the goods but they could not find any clue of the theft. They then concluded that in these circumstances explained by the persons of the assessee, examined by the investigators, no such incidence took place. They further observed that even despite their demand, the assessee did not care to produce the documents/records for verification and so they were of the opinion that the records were not properly maintained by the assessee or they were hiding the facts for the reasons best known to them.
5.19 Thereafter, the second surveyors M/s Mehta Padamsey (P) Ltd. conducted second enquiry and recorded the statements of various persons. They enquired from Shri Dharam Singh, chowkidar of the factory namely M/s Narang Petragraphic located just opposite the assessee across the road which is only 40 ft wide and in his statement, he informed the surveyors that he was on duty in the night of 17-9-1989, from 8 P.M. onwards. He was not slept before 10 P.M. He did not see any unusual movement of trucks when he was awake between 8 P.M. and 10. P.M. He did not hear any noise of opening of the gate of the assessee, movement of trucks though the distance from the assessee's factory and the place of duty of Shri Dharam Singh, chowkidar, was hardly 50 ft. He further stated that in the stillness of night i.e., Sunday when it was an industrial holiday, in case there had been any movement of trucks, he would have definitely heard the sound. But he neither heard any noise nor any such sound. These surveyors also tried to carry out the exercise of loading the trucks with the material of the assessee in order to come to the conclusion whether the culprits could take away about 2,50,000 kgs of material in a time span of about 7 1/2 hours. They also noticed that on average, a truck can carry 6,000 kg. and so in order to carry out this entire operation, the thieves would require about 42 trucks for loading and since the witnesses have stated that only 25 to 30 trucks were involved, so they came to the conclusion that in such a short span of time, it was not possible for the thieves to carry away the stock of the assessee in the manner claimed by the witnesses of the assessee. They also observed in their report made to the insurance company that the assessee has claimed a stock-in-hand worth Rs. 81 lacs before the mishap but as per calculations made by the surveyors on the basis of record supplied by the assessee, the assessee was only holding the stock worth Rs. 57,95,219 out of which stock worth Rs. 27,92,143 were saved, which shows that there was shortage of stock worth Rs. 23,26,012 even before the reported mishap.
5.20 From these discrepancies and possibilities analysed by these surveyors and investigators after recording the statements of the witnesses, they have come to the conclusion that no theft has taken place from the premises of the assessee.
5.21 Learned authorised representative for the assessee has not been able to point out any serious flaws in these two independent reports of the surveyors and investigators before whom the assessee has not produced the documents/records even after their repeated requests and they had made their best efforts by enquiring from the persons near and around the factory for coming to the conclusion as to whether any theft has taken place and on examining these persons in details and even after carrying out the exercise of loading and unloading, they have specifically come to the conclusion that no theft has taken place at the premises of the assessee.
5.22 From the excerpts mentioned in the order of the assessing officer from the reports of the surveyors and investigators, we have also carefully looked into the relevant portion of the report appearing in the order of the assessing officer and found that their detailed reports after proper examination of witnesses and after even carrying out the exercise of loading and unloading, have rightly come to the conclusion that no theft has taken place from the premises of the assessee.
5.23 We have already mentioned that learned authorised representative for the assessee has neither pointed out any serious defects in the reports of these surveyors nor gave any reasons for rejecting the reports of these surveyors/investigators and so, in these circumstances, we are of the opinion that there is no point with us to reject the detailed reports of these surveyors/investigators wherein they have come to the conclusion that no theft has taken place from the premises of the assessee. We are further of the opinion that since the assessee has not led any positive evidence to prove contrary to the enquiry reports of these two independent surveyors/investigators, it is not possible for us to reject the enquiry reports of these surveyors submitted to the insurance company merely because the assessee had lodged an FIR regarding the commission of theft which has not been found to be false by the police authorities or because the assessee has been seriously persuing this matter with the higher authorities or has filed a civil suit against the rejection of claim of the assessee by the insurance company.
5.24 For the reasons stated above, we have come to the conclusion that from the reports of these surveyors/investigators, it stands established that no theft has been committed from the premises of the assessee in respect of the alleged stock worth Rs. 51,02,069. Accordingly, issue No. (i) is decided against the assessee and in favour of the revenue.
5.25 Now, we shall take up issue No. (ii) in order to see whether the assessing officer was justified in making the addition of Rs. 21,39,950 in the trading account of the assessee. On going through the order of the assessing officer, we find that in his order he has observed that the assessee was not dealing with the items of stock on wholesale basis but was dealing on retail basis and so, by detailed working, as given in the order of the assessing officer the assessing officer reached a conclusion that keeping in view the GP rate for the assessment years 1989-90 and 1990-91, a GP rate of 29.15 per cent was to be applied.
5.26 Even before us, learned counsel for the assessee has made alternate submission that in case the claim of the assessee for loss on account of theft is not accepted, the addition of this account should be sustained by taking the sales on wholesales basis. We are unable to accept such a submission of the assessee for the simple reason that the assessee has not adduced any evidence to show that the goods were sold on wholesale basis. Moreover, the assessee has been selling the manufactured goods on retail basis. Therefore, it is reasonable to conclude that the assessee must have manufactured goods out of raw materials worth Rs. 51,02,069 and then sold the manufactured goods. Therefore, the assessee's submission that only a nominal profit of 0.6 per cent be applied by treating the sales as of raw materials, is devoid of any merit. Nobody would sell the goods in the open market just with a view to earn marginal profit of 0.5 per cent. Accordingly, such submissions of the assessee are rejected.
5.27 Now the next question requires to be decided is about the quantum of addition liable to be made on this account. As discussed above, the assessee had not claimed the loss of Rs. 51,02,069 in the assessment year under reference. Such claim was made in the assessment year 1992-93. In the assessment year under reference, the assessee has included a sum of Rs. 51,02,069 in the closing stock as 'claim receivable'. Since the claim of loss due to theft has not been accepted by us, inclusion of a sum of Rs. 51,02,069 in the closing stock as 'claim receivable' is not correct. Therefore, the presumption is that the assessee has manufactured goods out of such raw materials and sold the same in the o en market. On the basis of purchases and the opening stock, the assessing officer has come to the conclusion that the assessee must have manufactured goods worth Rs. 73,41,165 out of stock of Rs. 51,02,069 and accordingly he has worked out the addition by applying the GP rate of 29.15 per cent on the value of the goods manufactured worth Rs. 73,41,165 without analysing its effect on the trading account. We feel that the value of the goods manufactured should be worked out by applying the same ratio of goods manufactured out of the raw materials accounted for in the books of account of the assessee. Out of such value of manufactured goods, the amount of Rs. 51,02,069 shown in the closing stock should be reduced. The balance amount will be liable to be included for addition. In addition to the same, the GP on the sales is also required to be added.
The assessing officer has adopted the GP rate of 29.15 per cent which, in our opinion, is not correct. In this case, the assessee had shown GP at the rate of 6 per cent as mentioned at p. 2 of the assessment order. However, it is not known whether such GP rate was shown on the entire receipts including the labour charges amounting to Rs. 3,36,30,847 or only on goods manufactured and sold. Further, we find from p. 2 of the assessment order that the assessing officer had made tile trading addition of Rs. 12 lacs on account of low GP and such addition was agreed to by the assessee. Since we do not know whether such addition was made only on account of goods manufactured and sold or in respect of the entire receipts of Rs. 3.35 crores, we are unable to correctly work out the GP rate accepted by the assessing officer by including the agreed addition of Rs. 12 lacs. Thus, we are of the opinion that the GP rate by including the addition of Rs. 12 lacs on account of goods manufactured and sold, requires to be recomputed and addition on account of undisclosed sales of goods manufactured out of the stock of Rs. 51,02,069 also requires to be computed at the same GP rate as applied on the disclosed sales. In the light of these facts, we consider it fair and reasonable to set aside the order of the Commissioner (Appeals) and direct the assessing officer to recompute the addition in accordance with our observations made hereinabove in this order after allowing reasonable opportunity to the assessee.
5.28 Thus, from the above discussions, it is clear that two additions are liable to be made i.e., one on account of value of goods manufactured and by utilising the stock of Rs. 51,02,069 and reducing therefrom an amount of Rs. 51,02,069 and further GP on the sales of items manufactured out of the closing stock of Rs. 51,02,069. However, as per the ground of appeal, the revenue has disputed only addition of Rs. 21,39,950. Therefore, if the net result of the addition, as per our findings recorded hereinabove in this order, exceeds a sum of Rs. 21,39,950, the addition should be restricted only to an amount of Rs. 21,39,950 as the assessee cannot be placed in worst position than what he was before filing of the present appeal. We order accordingly. This ground of appeal is also treated as allowed.
5.29 Now, we shall take up the last issue i.e., issue No. (iii), wherein we are required to see whether or not the assessee is entitled to claim loss of Rs. 51,02,069 debited as insurance claim in the profit & loss a/c in assessment year 1992-93. In issue Nos. (i) and (ii), we have already given a finding that no theft has been committed at the premises of the assessee in respect of the alleged stock worth Rs. 51,02,069 and we have also raised a presumption against the assessee in this very order that the assessee has manufactured goods out of such raw material and sold the same in the open market and thus sustained the addition of Rs. 21,39,950 against the assessee and so, on the basis of these findings, the loss claimed by the assessee does not survive and on the face of it, this issue is required to be decided against the assessee. However, we would also like to consider in this order that even if it is presumed that the assessee's claim of loss was genuine, then whether the same is allowable in the assessment year 1992-93 as claimed by the assessee because it has not been disputed by the assessee that the insurance company has rejected the insurance claim of the assessee against this loss suffered by the assessee on 3-1-1991.
5.30 On going through the facts of the case, it is clear that in fact the United India Insurance Co. has finally rejected the claim of the assessee on 3-1-1991 and so, the pursuance of the matter by the assessee against the rejection of the claim by the insurance company at administrative level, was immaterial because the insurance company has already finally rejected the claim of the assessee. It means once the insurance company has finally rejected the claim of the assessee on 3-1-1991, the assessee was only entitled to claim the same in the assessment year 1991-92 but the same has not been done so by the assessee and so, none else is to be blamed for the same except the assessee himself. We are also of the opinion that in the words of the assessee, that if on the final rejection of the claim of the assessee, the assessee has debited the loss in the profit & loss a/c in the assessment year 1992-93, still the same cannot entitle the assessee for deduction in assessment year 1992-93, because the claim of the assessee as per the assessee's rejection of claim through letter dated 3-5-1991, of Dy. Finance Minister, i.e., the same has been rejected at administrative level only, but the same has not been adjudicated by the civil court because the assessee has itself mentioned that against the rejection of claim by the insurance company, it has filed a suit against the same which means that rejection of claim of the assessee, in the words of the assessee, has still not been finalised which means that if we consider the arguments of the assessee, then since rejection of claim has not been finalised, the assessee could not claim the same as loss in assessment year 199293. In the case of the assessee decided by the Tribunal, Chandigarh Bench, in assessment year 1989-90, supra, the facts were that fire broke out in the factory premises of the assessee on 17-8-1986, which resulted in loss to stock and building. The assessee quantified the loss of stock as Rs. 54,01,000. The assessee had lodged a claim with the insurance company and after consideration of the claim of the assessee by the insurance company there was a deficiency of Rs. 13,43,945 being short claim received from the insurance company and this amount was claimed as a loss in the assessment year 1989-90. The assessee raised similar pleas before the Tribunal as raised before us but the Tribunal rejected the claim of the assessee made in assessment year 1989-90 by making following observations in its order :
"The first issue needs to be considered is whether such claim can be allowed for the assessment year under reference though the same did not accrue or raised in the assessment year under reference. In the case of CIT v. Mysore Spinning & Manufactured Co. Ltd. (cited supra) and rephed upon by the learned departmental Representative for the revenue, the Hon'ble Supreme Court has held that the amount s-oent and incurred in the accounting year was allowable in that year if the expenditure was incurred for the purpose of the assessee's business. In the case of Mysore Spinning & Manufacturing Co. Ltd. v. CIT (cited supra) and relied upon by the learned departmental Representative for the revenue, Bombay High Court has held that in order that an expenditure may be allowable in a particular year, it is not necessary that the expenditure must be one required for the purpose of carrying on business or earning of the profits of that year. The expenditure incurred to meet the liability of the business accruing to that year, is allowable. These judgments are with reference to allowance of expenditure in the year in which liability is either accrued or crystallised, though these do not relate to the issue of loss as claimed by the assessee. Their Lordships of Punjab & Haryana High Court in the case of CIT v. Tulsi Ram Karam Chand (1964) 52 ITR 180 (P&H) have held that loss suffered on account of goods lost in transit should be treated as loss in the previous year when the goods had been lost irrespective of the fact that suit was instituted and a compromise was reached in the subsequent assessment year. In the case of Laxmi Ginning & Oil Mills v. CIT (1971) 82 ITR 958 (P&H), the Hon'ble Punjab & Haryana High Court has held that the loss suffered on account of goods sold could be claimed in the year when it was suffered. If as a result of the litigation, it was found entitled to less amount than the amount claimed, difference could be included in the assessee's income for the year when the final decision oil agation was made. In the case of North Arcot Distt. Co-operative Supply & Marketing Society Ltd. v. CIT (1987) 165 ITR 623 (Mad), Madras High Court has held that the unless the assessee writes off the deficiency in stock in the year of accounting it cannot be treated as a loss in stock and deduction cannot be claimed for the same. In this case also the loss of account of stock and building was reduced/written off in assessment year 1987-88 i.e., when the fire broke out but the same was not claimed in that assessment year. Thus, as per the legal position discussed above, the assessee could claim such loss in the year when fire broke out irrespective of the fact that the assessee had lodged such claim with the insurance company and was expecting payment. Even if we consider that the quantum of loss was not determined and accepted by the insurance company for the assessment year 1987-88 when such claim was passed and settled in the assessment year 1988-89 and even payment for the same had been received in that year, the amount in question could have been claimed in the assessment year 1988-89. In any case, the liability had neither arisen nor quantified in the assessment year under reference and, therefore, the assessee would not be entitled to claim the same in the assessment year 1989-90. As regards the assessee's contention thai disallowance was not made on the basis that impugned loss did not relate to the assessment year under reference, we are of the view that the same is without any merit. The assessing officer had disallowed the claim on account of other reasons even though he had not made disallowance on the ground that the loss did not relate to the assessment year under reference. But this being a legal issue which goes to the very root of the disallowance, the same can be raised before us. Therefore, we reject such submissions. As regards the reliance of the assessee on the decision of the Tribunal, Chandigarh Bench, in the case of Gulabi Sarees Centre, the same is distinguishable from the facts of the present case as the assessing officer had not recorded any finding about the genuineness of the loss by the assessee. Therefore, the ratio of the decision would not be applicable to the present case."
5.31 The facts of the case decided by the Tribunal are somewhat identical to the facts of the instant case of the assessee and so in order to maintain the consistency in the approach of the Bench, we are required to follow our own decisions which are on identical facts and on identical issue. In this case, the Tribunal has placed reliance on various decisions of the jurisdictional High Court of Punjab & Haryana and has also distinguished the case in North Arcot Distt. Co-operative Supply & Marketing Society Ltd. v. CIT (supra) relied upon by the assessee before us and have also considered in the case of CIT v. Tulsi Ram Karam Chand (1964) 52 ITR 180 (P&H), in the case of Laxmi Ginning & Oil Mills v. CIT (supra), in this very order while deciding the issue under consideration before the Tribunal. We have also taken into consideration 252 ITR 373 (Mad) (sic) in the case of CIT v. Carbon Industries (P) Ltd., relied upon by the learned authorised representative and find that in this case the assessee has filed its return for assessment year 1985-86 and in the computation of its income, had taken into account a sum of Rs. 1,46,950 as damages and losses paid to railways, and in that case, the Tribunal has allowed the claim of the assessee because though the supplies were made in the earlier years, the amount was deducted by the railways in the bills passed for payment in the previous year relevant to assessment year under question and hence the same was held deductible by the Tribunal and on reference, their Lordships upheld the order of the Tribunal. These facts are entirely distinguishable from the facts of the instant case of the assessee because in that case, the amount was quantified by the railways when they passed the bills for payment and deducted the same, whereas in the instant case the claim of the assessee was rejected by the insurance company in the year relevant to assessment year 1991-92. Similarly, we find that the facts of the CIT v. Mahindra Sintered Products Ltd. (1986) 161 ITR 692 (Bom) are also distinguishable facts of the instant case of the assessee.
5.32 Hence, for the reasons stated above and relying upon the decision of the Tribunal in the case of the assessee passed in assessment year 1989-90, supra, we are of the considered opinion that once the assessee's claim of Rs. 51,02,069 has been rejected by the insurance company on 3-1-1991, the same should have been claimed by the assessee in the assessment year 1991-92 but the same has not been done by the assessee. Hence, the assessee is not entitled to claim this loss and consequent deduction for the same in the assessment year 1992-93, and accordingly it is held that the assessee is not entitled to claim deduction/allowance in respect of Rs. 51,02,069 as loss debited in the profit & loss a/c as 'insurance claim rejected'. Accordingly, issue No. (iii) is decided in favour of the revenue and against the assessee.
5.33 As a result of our findings on issue No. (iii) given hereinabove in this order, the respective grounds of appeal taken by the revenue for the assessment year 1992-93 in ITA No. 1425/Chd/1995, are allowed.
6. In the result, both the appeals filed by the revenue are allowed.