Judgment :- Bhaskar Bhattacharya, J. This appeal is at the instance of an assessee and is directed against an order dated March 21, 2001, passed by the Income-tax Appellate Tribunal, “D” Bench, Calcutta, in appeal bearing ITA No.327 (Kol) of 1996 for the Assessment Year 1992-93. Being dissatisfied, the assessee has come up with the present appeal. The facts giving rise to filing of this appeal may be summed up thus: a) The assessee is a private limited liability company within the meaning of the Companies Act, 1956 and carries on the business of fabrication of iron and steel structurals. b) The assessee carries on the fabrication activity in respect of raw materials such as M.S. Angles, channels, plates, joists etc. provided to it by its customer, namely, Larsen & Toubro Ltd., on job-work basis. c) According to agreement between the assessee and the said customer, after completion of the work, the assessee is required to return the finished materials and unused raw material, the respective quantities of which were reconciled by the said customer. A specified percentage was allowed as process-loss depending upon the quantity of finished materials returned and in the event the assessee did not return the entire unused raw materials, the said customer had the right to purchase the quantity not returned from the market and debit the assessee for the same at the specified rates. d) According to the assessee, a substantial quantity of raw materials supplied by the said customer was lost at the assessee’s factory due to several thefts which took place during the financial years 1990-91 and 1991-92. Because of the repeated thefts during the financial year 1991-92 relevant to the Assessment Year 1992-93, the assessee took out insurance cover. e) As and when thefts were discovered, the assessee lodged complaints with the local police station. On some occasions, according to the assessee, persons armed with weapon entered the factory at night and took away the materials forcibly and sometimes they even hurled bomb. e) As and when thefts were discovered, the assessee lodged complaints with the local police station. On some occasions, according to the assessee, persons armed with weapon entered the factory at night and took away the materials forcibly and sometimes they even hurled bomb. The Bally police station issued a notice under Section 173(2)(II) of the Cr.P.C. to the assessee confirming FQT No.19 dated 5th March, 1994 under Section 379 of the I.P.C. Subsequent to taken out insurance cover, the assessee also lodged claim with the insurance company although no amount was received against the claim lodged with the insurance company for the thefts which had taken place during the Assessment Year 1992-93. f) During the Assessment Year 1991-92, the assessee had to purchase steel materials costing Rs.8,79,765/- in order to make goods the shortfall in the quantify of raw materials required to be returned to the said customer. The said amount was claimed by the assessee as a deduction in its income-tax assessment for the Assessment Year 1991-92. But the Assessing Officer disallowed the said claim. Being aggrieved the assessee preferred an appeal before the Commissioner of Income-tax (Appeals) who allowed the claim of the assessee. The Department preferred an appeal before the Tribunal against the order of the Commissioner of Income-tax (Appeals) for the Assessment Year 1991-92 and the same was pending at the time of preferring the present appeal. g) During the Assessment Year 1992-93, according to the assessee, it had to incur a sum of Rs.4,57,777/-in order to make good the shortfall in the quantity of raw materials required to be returned to the said customer. Out of the said amount, a sum of Rs.2,17,905/- was allegedly incurred by the assessee to purchase materials for return to the said customer and the said customer raised a debit note on the assessee for the balance sum of Rs.2,39,872/-. h) Although the assessee in the assessment proceeding for the Assessment year 199293 duly submitted all the relevant documents relating to the loss of the materials, correspondence with the customer, complaints lodged with the police and the report of the police, etc. in support of its claim for deduction of the said amount of Rs.4,57,777/-the Assessing Officer disallowed such claim. h) Although the assessee in the assessment proceeding for the Assessment year 199293 duly submitted all the relevant documents relating to the loss of the materials, correspondence with the customer, complaints lodged with the police and the report of the police, etc. in support of its claim for deduction of the said amount of Rs.4,57,777/-the Assessing Officer disallowed such claim. i) Being dissatisfied, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals) who by an order dated November 13, 1995 decided the same in favour of the assessee with a direction upon the Assessing Officer to examine as to whether the debit advice of the said customer was in respect of the same items which were purchased by the assessee by way replacement of materials of the said customer. It was directed by the said Appellate Authority that if the items were found to be the same, then the deduction of only Rs.2,17,905/-was to be allowed and if not, then the entire amount of Rs.4,57,777/- was to be allowed. j) The Assessing Officer thereafter made the requisite enquiry and was satisfied that the items purchased by the assessee by way of replacement of materials of the said customer and those covered by the debit note raised by the said customer were different and accordingly allowed the entire amount of Rs.4,57,777/-. k) Against the order dated November 13, 1995, the Revenue preferred an appeal before the Tribunal and the Tribunal by the order impugned in this appeal set aside the order passed by the Commissioner of Income-tax (Appeals) and restored the order of the Assessing Officer. Being dissatisfied, the assessee has come up with the present appeal under Section 260A of the Act. A Division Bench of this Court at the time of admission of this appeal formulated the following substantial question of law: “Whether the Tribunal was justified in holding that the assessee was not entitled to deduction in respect of the sum of Rs.4,57,777/- incurred by it for making good the shortfall in the materials required to be returned to Larsen & Toubro Ltd. and the finding of the Tribunal is perverse?” Mr. Poddar, the learned Senior Advocate appearing on behalf of the assessee, laboriously contended before us that the Tribunal below committed substantial error of law in holding that the theft alleged by the assessee was not a genuine one and even if so, there was Insurance coverage as it appears from the Assessing Officer’s order and, therefore, the Tribunal was of the view that when the theft appeared to be not genuine, there was no question of allowing the claim of the assessee. According to Mr. Poddar, the aforesaid finding is based on no material and rather contrary to the materials on record, as the police report shows that the theft articles were not recovered and there is no indication in the police report that the allegation of theft was a concocted one. According to Mr. Poddar, in the absence of any material indicating that the allegation of theft was a fabricated one, the Tribunal below committed substantial error of law in disbelieving the allegation of theft. Mr. Poddar, therefore, prays for setting aside the order passed by the Tribunal and for restoration of the order of the Commissioner of Income-tax (Appeals). Mr. Bandopadyay, the learned counsel appearing on behalf of the Revenue, has, on the other hand, opposed the aforesaid contention of Mr. Poddar and has supported the order passed by the Tribunal. According to Mr. Bandopadyay, the Tribunal below on the basis of materials on record having accepted the finding recorded by the Assessing Officer, this Court should not interfere with such finding of fact arrived at by Tribunal. Mr. Bandopadyay, therefore, prays for dismissal of the appeal. Therefore, the only question that arises for determination in this appeal is whether the Tribunal below committed substantial error of law in reversing the finding of the CIT (A) and holding that there was no theft of the materials as alleged by the assessee. It appears from the order of the Assessing Officer that after considering the submission of the assessee, he was of the view that the fact that the assessee had to purchase items from open market and return back the goods to Larson and Toubro does not prove the genuineness of the claim of the assessee that it suffered loss by theft. But as regards the allegation of theft, he considered the various correspondence between the assessee and the police authority and ultimately held that “all these letters marked D-1 to D-6 do not prove conclusively that there was goods theft to the tune of Rs. 4,57,777/-.” In our opinion, by the mere finding that the assessee could not conclusively prove that there was theft of goods claimed, the Assessing Officer could not turn down the claim of the assessee. In order to disbelieve the claim, the Assessing Officer must arrive at a definite finding from the materials on record that the allegation of the assessee was false; otherwise, there was no justification of discarding the claim on the ground that the allegation was not conclusively proved. We fail to appreciate what he meant by the expression “conclusively”. The finding must be arrived at on the basis of materials on record by relying upon the rule of preponderance of probability. Thus, the Assessing Officer demanded a higher standard of proof of the allegation of theft than that required under the law of the land. On appeal, the CIT (A) set aside the order of the Assessing Officer and passed direction upon the Assessing Officer to examine as to whether the debit advice of the M/s. L & T was in respect of the same items which were purchased by the assessee by way of replacement of materials of the said customer. It was directed by the said Appellate Authority that if the items were found to be the same, then the deduction of only Rs.2,17,905/- was to be allowed and if not, then the entire amount of Rs.4,57,777/- was to be allowed. On appeal before the Tribunal at the instance of the Assessing Officer, the Tribunal did not feel the necessity of the discussing the evidence in details about the claim of loss of materials but held that in the last two assessment years also, the assessee made the similar claims which were allowed and thus, looking at the modus operandi of the assessee, it was unable to accept the case of the assessee as genuine. We are of the view that the aforesaid finding of the Tribunal is a perverse finding of fact which is not based on evidence but merely on surmise and conjecture. We are of the view that the aforesaid finding of the Tribunal is a perverse finding of fact which is not based on evidence but merely on surmise and conjecture. We are unable to accept the finding of the Tribunal that because in the previous two years, similar type of theft occurred, this time, the incident should be described as a concocted one. It appears that in last two Assessment years, the finding was that the allegation of theft was genuine and such finding has attained finality and the Revenue accepted such position. Thus, it is absurd to suggest, that there cannot be further theft in a subsequent year when in the last two years there were similar theft of materials. We are of the opinion that there was no justification for the Tribunal to disbelieve the allegation of theft from the materials on record. We have gone through the records and are of the opinion, that no contrary materials have been placed to justify the finding that the allegation of theft was a concocted one. There is no finding either of the Police or of the Insurance Company brought on record to disbelieve the allegation of theft. The fact that the police could not recover the goods or that the guilty persons were not punished cannot go against the claim of the assessee because for the inability of the police to recover the stolen goods or to find out the culprit, the assessee cannot suffer. It is not a case where the report of the police is that the allegation of theft is baseless. We, therefore, set aside the finding of the Tribunal below and restore the one passed by the CIT (A) on the aforesaid issue and direct the Assessing Officer to act accordingly. The appeal is, thus, allowed by answering the formulated question in the negative against the Revenue. In the facts and circumstances, there will be, however, no order as to costs.