Claim for business loss due to theft allowed despite no FIR lodged with Police

Claim for business loss due to theft of cash allowed despite no FIR was lodged with Police Authorities in view of peculiar circumstances and also when Revenue had not suffered

ABCAUS Case Law Citation:
ABCAUS 2635 (2018) (11) ITAT

The appellant assessee was aggrieved by the order of the Commissioner of Income Tax (Appeals) on inter alia confirming the disallowance made by the Assessing Officer on account of loss on account of theft of cash.

The assessee submitted that the amount claimed as loss was stolen out of cash money kept in the factory premises owing to business exigencies. It was explained that no FIR was registered with the police authorities to avoid an atmosphere of fear and uneasiness among the employees given its smallness in the context.

It was contended that the assessee was subjected to tax under the special provisions of Section 115JB of the Act and therefore such business loss had no impact on taxes per se as the tax liability under the MAT provisions stood more than the tax liability as per the normal provisions which was nil.

Thus, it was submitted that under the given facts and circumstances, such disallowance on account of business loss owing to theft was not justified.

The Tribunal examined the issue and observed that the assessee had pointed out existence of sufficient circumstances for bonafides of claim of business loss owing to theft. The assessee had also demonstrated that Revenue had not suffered any loss towards taxation by such claim of the assessee.

The Tribunal found merit in the claim of the assessee notwithstanding absence of FIR for such theft owing to peculiar circumstances.

Accordingly, the relevant ground of the assessee’s appeal was allowed.

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