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2019 (9) TMI 456 - AT - Income TaxAddition towards concealed Gross Profit in Gold and Silver - method of accounting - addition on account of alleged suppression of value of closing stock - AO had proceeded to estimate the closing stock by adopting average weighted method as against the LIFO method adopted by the assessee - HELD THAT:- Assessing Officer had not pointed out any defects in the method of accounting followed by the assessee nor disputed the quantity of purchases and sales. The Assessing Officer only estimated the gross profit by adopting weighted average cost method of the stock only because the profits shown or the value of the closing stock is less. As a part of exercise to arrive at the value of the closing stock, assessee can adopt any of the following method. (i) LIFO (ii) FIFO and (iii) Weighted average cost method. It is normal practice in the business of trading in jewellery to follow LIFO method wherein last bought items were sold first, which results in the value of goods lying closing the stock was shown much less than the prevailing market value. This would enable the assessee to keep accumulating the old jewellery and enable the assessee not to pay tax on appreciated value of the gold , which is permissible under law. Having regard to the ratio decision in the case of United Commercial Bank [1999 (9) TMI 4 - SUPREME COURT] AO is bound to accept this method of accounting preferred by the assessee and he cannot impose another method on the assessee, in the absence of any defects in the method of accounting followed by the assessee. Addition made by the Assessing Officer cannot be sustained in the eyes of law, viewed from any angle - Decided in favour of assessee
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