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 3181995, for the assessment years 199091 and 199293. 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. 199091, 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. 199293, 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 1121993, 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 18121990 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 17/1891989, 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 1531995. 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 311991, 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 en