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2017 (11) TMI 2019 - ITAT CHANDIGARHIntroduction of jewellery as stock in trade in the proprietorship concern of the assessee - assessee HUF has introduced raw gold and silver in its capital account - parent HUF of the assessee HUF had declared the jewellery in the VDIS Scheme 1997 accepted by the Income Tax Authorities and a certificate of acceptance was duly issued in favour of the assessee - HELD THAT:- Old and silver assets were declared by Babu Ram & Sons in the VDIS 1997 and due tax was paid thereupon. There was no question of doubting the occupation / possession of the assets in the hands of the declarants. Further, the assessment year under consideration is assessment year 2010-11, whereas, admittedly the wealth tax returns were filed pertaining to the assessment years 2001-02 to 2006-07 which have been duly accepted, hence, the holding the assets by the parent HUF, Babu Ram & Sons HUF cannot be doubted for the year under consideration. As in the case of ‘CIT Vs. Kanchan Bhalla’ [2010 (7) TMI 124 - DELHI HIGH COURT] has held that just because the jewellery was not found in the earlier searches, it cannot be said that non-existent jewellery had been declared in the VDIS scheme, 1997. That it was not open to the Assessing officer to question existence of the said jewellery. That it had been declared under the VDIS scheme. No justification on the part of the lower authorities in making the addition on this issue and the same is accordingly ordered to be deleted. Advances received from customers - unexplained receipts - Assessee explained that during the course of trading of jewellery, advance from customers were received against supply to be made in future, which is a normal business practice - HELD THAT:- It is an admitted fact that the assessee had shown advances from customers. All the advances have been made through banking channels. In the subsequent years, the sales have been booked and the profit has been offered for taxation. In these circumstances, we find no justification on the part of the lower authorities in making the impugned additions as unexplained receipts. The addition made by the lower authorities on this issue are also directed to be deleted. This issue is accordingly decided in favour of the assessee. Addition of closing stock - discrepancy in the valuation of stock - HELD THAT:- CIT(A) after considering the submissions of the assessee observed that there was force in the arguments of the assessee. He further observed that it was a settled position of law that the method of valuation regularly followed by the assessee could not be tinkered with in the absence of any findings that there were inherent discrepancies because of which it was not possible to determine the correct income of the assessee. AO has not pointed out as to what was the discrepancy in the method of valuation adopted by the assessee. AO simply applied another method of valuation rejecting the method of valuation adopted by the assessee consistently for the past so many years which has also been accepted in the earlier assessment years. We, therefore, do not find any infirmity in the order of the CIT(A) on this issue and the same is upheld.
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