2023 (9) TMI 609 - ITAT SURAT

Valuation of closing stock - Re-estimating addition to the value of closing stock particularly when the AO had not rejected books - HELD THAT:- We note that it was not necessary to reject the books of accounts of the assessee. Hence assessing officer was right in not rejecting the books of accounts. AO noticed that some details were not filed or annexed with tax audit report, as noted by CIT(A), therefore AO made addition. On appeal by the assessee, we note that CIT(A) has provided enough relief to the assessee based on the audited books of accounts of the assessee.

CIT(A) after taking into account correct valuation methodology and policy as per accounting standards, ICDS and prevailing accounting customs, has deleted almost 50% addition made by the assessing officer.

We note that there is no any purchase by the assessee during the year, and the sale made by the assessee is out of opening stock only. In the closing stock, only the opening stock items were there, hence assessing officer has rightly caught the mistake of the assessee for under valuation of closing stock. We note that CIT(A) made the computation of closing stock by adopting average rate per carat, which is a superior approach as compared to the approach adopted by assessing officer.

We accept the above approach adopted by CIT(A). However, we do not find any further superior approach, than the approach so adopted by CIT(A), because CIT(A), by following accounting standards, ICDS and accounting principles, granted the partial relief to the assessee.

Thus, in our opinion, the assessee does not deserve further relief on the basis of the plea that assessing officer ought to have rejected books of accounts to make addition on account of under valuation of closing stock. On a careful reading of the order of CIT(A) the findings thereon, we do not find any valid reason to interfere with the decision and findings of the CIT(A), hence we dismiss the appeal of the assessee. Assessee not applicable on the facts of present case. Rejection of entire books of account was not warranted, when the AO find fault in the valuation of stock only. Appeal filed by the assessee is dismissed