The Commissioner Of Income Tax, Dhanbad v. The Dhanbad Central Co-Operative Bank Ltd

IN THE HIGH COURT OF JHARKHAND AT RANCHI----- Tax Appeal No. 20 of 2012 ----- The Commissioner of Income Tax, Dhanbad ............Appellant Versus The Dhanbad Central Co-operative Bank Ltd. ............ Respondent ----- CORAM : HON'BLE THE CHIEF JUSTICE HON'BLE MRS. JUSTICE JAYA ROY For the Appellant: Mr. Deepak Roshan, Advocate Ms. Rupa Kumari, AdvocateFor the Respondent: Mr. Krishna Murari, Advocate ----- Order No.07 Dated, 15th April, 2013 Heard learned counsel for the parties. 2.The Assessing officer vide assessment order dated 21.12.2009 held that, Section 145 of the Income Tax Act provides that either cash or mercantile system of accounting has to be followed and therefore, there is no scope of realising income in cash and expenses in mercantile system. The Assessing officer then held that, since provisions are not allowable and the assessee has claimed separately by a provision for bad and doubtful debts as per Section 36(i) of the Income Tax Act, 1961 an amount of Rs.2,59,02,596/- is added to the total income of the assessee. 3.However, the C.I.T. (A) as well as the I.T.A.T. observed that the accounts is maintained as per the guidelines issued by the R.B.I. and Section 45(ii) of the R.B.I. Act starts with non obstante clause which overrides other laws. The C.I.T. (A) as well as the Tribunal followed the decision of Delhi High Court in case of C.I.T. Vs. Vasisth Chay Vyapar Ltd. & Ors. 330 ITR 440 (Del.) (2011) and held that the issue is covered by the decision of Delhi High Court. Learned counsel for the appellant could not distinguish the ratio of the decision of Delhi High Court. 4.In view of the said decision, the C.I.T.(A) and the I.T.A.T. accepted the method of accounting of the assessee and which was in accordance with the Instruction No.9949 of the Reserve Bank of India and therefore, addition was deleted. 5.In view of the above reasons, we are of the considered opinion that on this point, no question of law is involved. 6.The another issue raised is arising out of the some embezzlement by which the assessee suffered some loss for which an F.I.R. was also lodged and the investigation was also done by the bank officers. The I.T.A.T. relied upon the C.B.D.T. Circular which provides that loss due to embezzlement by an employee, the same should be treated as accidental to the business and this loss should be allowed as deduction for the year in which it is discovered. The I.T.A.T. after relying upon the judgment of the Gujrat High Court delivered in the case of Dinesh Mills Ltd. Vs. C.I.T. reported in (2002) 254 ITR 673 (Guj.) and judgement of Allahabad High SI/Anit Court delivered in the case of Harijan Evam Nirbal Varg Avas Vs C.I.T. reported in (1998) 229 ITR 776 (All.) observed that the loss on account of theft be treated as business loss. 7.We do not find any illegality in the order passed by the Tribunal and no question of law is involved in this appeal. 8.Hence, this appeal is dismissed. (Prakash Tatia, C. J.) (Jaya Roy , J.)