TMI Blog1986 (8) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... declared the value of closing stock of gold jewellery of 18507.59 gms. at Rs. 12,71,808. The ITO obtained monthwise purchases and sales, details of opening stock and details of closing stock. From those particulars he valued the closing stock at Rs. 13,58,527. Rejecting the valuation of closing stock of the assessee, he made an addition of Rs. 86,519 for the assessment year 1981-82. Similarly for the assessment years 1983-84 and 1984-85 he made additions of Rs. 29,320 and Rs. 1,44,941, respectively. But for the assessment year 1982-83 as per the ITO's valuation the value of the closing stock was less than the value admitted by the assessee by Rs. 348. The details of the working of the value of closing stock for all these years is given in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner (Appeals) gave a finding that the assessee had consistently followed the above system of valuation of its closing stock year after year. Considering that the assessee's procedure of valuation does not result in any understatement of income and that it had been followed by it consistently for over 15 years, be held that no modification of the valuation of the closing stock was called for. Thus, he accepted the valuation of the closing stock of the assessee for all these years and allowed the assessee's appeals. 4. Aggrieved by the order of the Commissioner (Appeals), the revenue preferred the present appeals. At the time of hearing, the departmental representative relied on the orders of the ITO and urged for their upholding. The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had been following a particular method of valuing the closing stock and that method had been accepted by the department for several years, the department is not entitled to disturb the same method. Reliance is placed on the following decisions : Order of the Tribunal, Bombay Bench in Fourth ITO, Film Circle, v. R.R. Enterprises 25 Taxes and Planning 57, IAC v. Sant Ram Mangat Ram [1986] 26 Taxman 91 (Chd. - Trib.), IAC v. Cosmopolitan Trading Corpn. [1985] 14 ITD 327 (Jp.) (SB) and CIT v. Margadarsi Chit Funds (P.) Ltd. [1985] 155 ITR 442 (AP). 5. We have considered the rival submissions. The High Court in the case of Concordia Corpn. Ltd. v. CIT [1952] 22 ITR 344 (Trav.-Coch.) held that the assessee has the option to decide as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee flows from the provisions of section 145 of the Income-tax Act, 1961. It is, therefore, imperative that before rejecting the system of accounting followed by the assessee, the ITO must refer to the inherent defect in the system and record a clear finding that the system of accounting followed by the assessee is such that correct profit cannot be deduced from the books of account maintained by the assessee." [Emphasis supplied] In the present case, the Commissioner (Appeals) in the course of his order explained the system of accounting of the closing stock followed by the assessee and gave a finding that this system has been consistently followed by the assessee in valuing the closing stock year after year. The assessee's contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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