B. L. CHHIBBER, A.M. : - (1.) THE first grievance of the assessee in this appeal is that the learned CIT(A) is not justified in conforming the addition of Rs. 2,20,488 on account of loss by theft of ornaments.
(2.) The assessee, an individual, carries on business as a dealer in gold and silver ornaments under the name and style of Mohanlal Varmalidas & Sons. He also undertakes work of manufacture of gold ornaments on job work basis and is also engaged in the purchase of and sale of shares and securities. On 3rd February, 1988, the assessees salesman was returning to Rajkot after a business tour of Ahmedabad and Baroda. During the brief halt at Limbdi Bus Station, out of total gold ornaments of 1027 gms. gold ornaments weighing 569 grams were stolen from his personal belongings kept in the Bus. A police complaint was lodged immediately at the Limbdi Police Station on 3rd February, 1988. The assessee continued to show the above stolen goods as part of his stock-in-trade not only during the said year i.e., asst. yr. 1988-89 but also in subsequent years at the market value. However, during the previous year relating to the assessment year under appeal, the assessee wrote off the value of the ornaments as irrecoverable in his books of accounts on the ground that there was no hope of recovery of the stolen goods. The AO was of the opinion that as the loss pertained to asst. yr. 1989-90, the same was not allowable during the year under appeal. In response to show-cause notice issued by the AO the assessee vide his letter dt. 17th February, 1994, stated that since he had filed police complaint he had not written off the amount in his books as he was awaiting the final outcome of the action taken by the Police Department. He also filed a sworn affidavit deposing therein the events that led to the theft of goods and the action taken by the Police Department. It was further submitted that as soon as the assessee came to know that there was no hope of recovery after a lapse of three years he had to write off the said amount during the year under appeal. The AO was not satisfied with the explanation furnished as according to him the evidence filed by the assessee showed that the theft had taken place on 3rd February, 1988 and the FIR was lodged on the same date and the Police Department had submitted its report on 19th May, 1988 to Judicial Magistrate (First Class) in the same year when the theft had taken place inter alia stating that though the complaint of the assessee was genuine the culprits could not be apprehended. Therefore according to the AO the assessee should not have awaited for three long years before writing off the said amount. Therefore, as the loss pertained to asst. yr. 1989-90, he disallowed the same during the year under appeal.
(3.) ON appeal, the CIT(A) confirmed the action of the AO with the following brief remarks : "I have considered the rival submissions. As rightly pointed out by the AO, the matter had become final in the sense that the police had given the clear findings regarding non-recovery of the stolen ornaments on 19th June, 1988 i.e. in the year relevant to asst. yr. 1989-90 and, therefore, the appellant need not have waited for writing off the amount till the year under appeal. The AOs decision is therefore upheld.";