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2022 (2) TMI 1152 - HC - Income TaxDifference in stock valuation - valuation of the closing stock - LIFO or FIFO method - assessee unlawfully followed the Last In First Out (LIFO) method of accounting for valuation of closing stock in violation of the accounting Standard-2 - survey action conducted under Section 133A of the Act in the business premises of the assessee - HELD THAT:- We find that the assessing officer could not have based his conclusion solely on the alleged admission of the director of the assessee during the survey operations Directive issued by the CBDT is a straight answer to the contention advanced by the learned standing counsel. Thus, if the report of the survey team is eschewed, then it has to be seen as to in what manner the assessing officer could have completed the assessment. The crux of the issue revolves around the valuation of the closing stock. The revenue faults the assessee for not adopting the FIFO method. The tribunal has considered the correctness of the submission and pointed out that the assessee has consistently adopted the LIFO method which has been accepted by the assessing officer in all the previous years and in the assessee’s own case in the respect of the assessment year 2009-10, the matter travelled upto the tribunal and the method of valuation of closing stock adopting LIFO method was approved. Therefore, the tribunal concluded that consistency has to be maintained in the matter. Learned counsel for the appellant would vehemently contend that in terms of the statutory rule, the accounting standard as prescribed under the rule ought to have been followed. The learned counsel submits that it is mandatory for the assessee to follow the Accounting Standard –2 in terms of the relevant rules from the year 1999 and the relevant rules of the year 2006 is applicable. It is an admitted case that the assessee has been continuously adopting the LIFO method which has been accepted by the revenue for all the earlier assessment years and in respect of the assessment year 2009-10, the matter travelled upto the tribunal and the manner of valuation of the closing stock done adopting LIFO method was approved. Therefore, in our considered view, the tribunal was right in affirming the order passed by the CIT(A). An identical issue came up for consideration in the case of Commissioner of Income Tax vs. Sharad Mohanlal Shah [2018 (11) TMI 1331 - GUJARAT HIGH COURT] wherein it was held that the assessee therein was following the LIFO method and the CIT(A) therein as well as the tribunal concurrently held that such method was already recognised in law and in any case consistently followed in several orders and, therefore, the appeal filed by the revenue was dismissed. The Special Leave Petition filed before the Hon’ble Supreme Court was dismissed as reported in [2019 (7) TMI 1113 - SC ORDER] - Decided against revenue.
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