Income Tax Appellate Tribunal - Ahmedabad
Sasme Co-Operative Society Ltd. vs Income Tax Officer. on 13 January, 1995
Equivalent citations: (1995)53TTJ(AHD)83
ORDER
B. M. KOTHARI, A.M. :
Ground Nos. 1 to 5 raised by the assessee in this appeal are as under :
"1. The learned CIT, Surat has grievously erred in assuming jurisdiction under s. 263 of the IT Act, 1961 without having established the jurisdictional facts.
2. The learned CIT has further erred in framing order under s. 263 of the Act and he ought to have held that there was no error in the assessment order which could be revised within the meaning of provisions of s. 263 of the Act.
3. On the facts and in the circumstances of the case there being no error on record, much less an error which could be said to be prejudicial to the interest of Revenue, the order of the learned CIT, under s. 263 of the Act is bad in law against evidence on record and unwarranted on facts.
4. The learned CIT has further erred in not properly appreciating the explanation of the appellant with special reference to the activities of the appellant society and as such he has erred in directing the Assessing Officer to disallow the loss of Rs. 7,71,083.
5. The learned CIT, on the facts and in the circumstances of the case, ought to have held that the loss of Rs. 7,71,083 for the year under appeal could not be adjudicated upon in isolation de hors the recovery made by the appellant in subsequent year, and taking into consideration both the assessment years together he ought to have held that there was no case for disallowance of the loss for the year under appeal."
2. The learned counsel for the assessee expressed that the assessee does not want to press all these grounds. Hence, ground Nos. 1 to 5 are rejected as not pressed.
3. The learned counsel for the assessee submitted that ground Nos. 6 to 9 relate only to an addition of Rs. 52,053 being the value of stock allegedly not disclosed in the closing stock. He submitted that he would not like to press the question relating to assumption of jurisdiction under s. 263 as raised in ground No. 9, but his only grievance relates to the merit of the point in issue. He submitted that the learned CIT has given a firm finding to the Assessing Officer to add the said sum in the total income of the assessee in para 6(ii) of the order passed by him. Such finding given by the learned CIT on merits are not based on correct appreciation of the facts and evidence submitted before him. The assessee's contention that the deduction in question has rightly been allowed has not been accepted by the learned CIT on the ground that short material received in the quantity of goods imported by the assessed is not allowable on account of the fact that the assessee could have claimed the compensation from the insurance company or he could also claim refund from the Bombay Port Trust Authorities or from the foreign suppliers. The learned CIT observed that such a deduction cannot be allowed by way of loss on account of short landing of goods without making any efforts to get the refund thereof. The learned counsel submitted that the reality of the loss in question has not been doubted. The CIT has himself mentioned in the said order under s. 263 that the assessee has furnished a short landing certificate from the Bombay Port Trust Authority. The certificate says that out of 240 packages in the bill entry only 222 packages landed which has resulted in the said loss. The question as to whether the assessee could claim a loss before the insurance company, Bombay Port Trust Authority or the supplier of the goods is exclusively within the dominion of the trader and this aspect of the matter has to be decided from the point of view of a businessman and not from the point of a view of a Revenue authority. He urged that the deduction of Rs. 52,053 should be allowed. He, therefore, submitted that the finding given by the CIT, directing the Assessing Officer to add the amount of Rs. 50,053 should to cancelled.
4. The learned Departmental Representative supported the order passed by the learned CIT.
5. We have carefully considered the submissions made by the learned representatives and have also gone through the order passed by the learned CIT, under s. 263 of the IT Act, 1961. The CIT, in para 6(ii) has mentioned that the various dates mentioned in the certificate of the Bombay Port Trust Authority submitted by the assessee in support of short landing of goods relate to the accounting year relevant to asst. yr. 1984-85. The Bench required the learned counsel for the assessee to submit a copy of the certificate of the Bombay Port Trust Authority submitted before the CIT. He expressed his inability to produce the same, as the same was not available with the learned counsel for the assessee. He was, however, fair enough to contend that in order to decide the question relating to appropriate year of its allowability, the matter may be restored back to the Assessing Officer for this purpose. He, however, submitted that since the reality of the loss in question is not in dispute, the amount in question is apparently allowable in the relevant year, when such loss, in fact had taken place. It is apparent from the order passed by the learned CIT that out of 240 packages mentioned in the bill of entry only 222 packages landed which resulted in loss of the balance quantity of goods. The amount of Rs. 52,053 representing the value of the short landing of the quantity of goods imported is also an undisputed figure. The mere fact that the assessee has chosen not to make a claim against the insurance company or Bombay Port Trust Authority or with the supplier of goods would not be a valid ground for disallowance of the amount in question because such a course of action adopted by the assessee of not resorting to any such proceedings may be based on commercial considerations or at the most it may be a lapse on the part of the management. Tax cannot be levied on account of inefficiency or lapse on the part of the trader. Since the reality of the loss in question has not been doubted or disputed by the learned CIT, the amount in question is allowable as a deduction. But the appropriate year of such a loss can be determined only by examining the relevant entries in the books of accounts and by going through the certificate of the Bombay Port Trust Authority on the basis of which the learned CIT gave a finding that the loss in question relates to asst. yr. 1984-85. In view of the aforesaid discussions, the firm finding given by the learned CIT in the order under s. 263 for making addition of Rs. 52,053 is modified and we direct the Assessing Officer to consider the question relating to appropriate year of its allowability after examining the relevant dates of import/purchase of goods in question and after verifying these facts from the certificate of the Bombay Port Trust Authority submitted before the learned CIT. In case the loss in question can be said to have been incurred in the year under consideration namely asst. yr. 1985-86, the same should be allowed as deduction. In the case that loss pertains to asst. yr. 1984-85, the question of allowing the said deduction in the year under consideration would not arise. In case the Assessing Officer has already passed the fresh assessment order pursuant to order under s. 263 of the CIT and the assessee has preferred any appeal before the CIT(A), these observations may be taken into consideration by the learned CIT(A). If the assessee has not filed any appeal against the fresh assessment order, the Assessing Officer would appropriately modify the fresh assessment made, if any.
6. With these observations, the assessee's appeal is treated as partly allowed for statistical purposes.