9911796707
TMI Blog2015 (12) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... l") in ITA No. 705/CHD/2013 for the assessment year 2009- 10, claiming the following substantial question of law:- Whether on the facts and circumstances of the case, the Ld. ITAT was right in deleting the addition made u/s 145(3) at Rs. 58,28,390/- on account of valuation of closing stock by ignoring the fact that invoking of provisions of Section 145(3) were validly invoked as the assessee had valued the closing stock on LIFO basis as per his previous practice? 2. A few facts necessary for disposal of the present appeal as mentioned therein are that the assessee filed the return of income on 24.9.2009 for the assessment year 2009-10 declaring a total income of Rs. 9,15,800/-. Notice under Section 143(2) of the Act was issued to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of valuation of inventory by the assessee and allowed the cross-objections filed by the assessee against addition of Rs. 1,50,000/- and restored the matter to the Assessing Officer to re-decide the same. Hence, the present appeal by the revenue. 3. Learned counsel for the revenue submitted that the true value of the closing stock could not be ascertained or determined by adopting the LIFO method and, therefore, valuation adopted by the Assessing Officer was justified. He has placed reliance upon the judgment of the Apex Court in Commissioner of Income-Tax v. British Paints India Ltd. (1991) 188 ITR 44 in support of his contention. 4. Controverting the aforesaid submission, learned counsel for the assessee-respondent submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rused the record. The assessee is engaged in the business of sale and purchase of jewellery. The assessee, in order to value its closing stock is following LIFO method which is one of the prescribed method of accounting standards issued by the Institute of Chartered Accountants of India for valuation of inventory. The said method of valuing the closing stock of gold ornaments has been consistently followed by the assessee from year to year. Similar method was followed by the assessee in assessment year 2007-08. The Assessing Officer in assessment year 2007-08 had made an addition of Rs. 32,08,977/- on account of valuation of closing stock of gold ornaments. The Tribunal in ITA No. 1378/Chd/2010 relating to assessment year 2007-08 in DCIT Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led before her, gave her findings in para 5.2 of the appellate order, which are reproduced hereunder:- "5.2. I have carefully considered the submissions filed by the appellant, it was informed that the AO has accepted the calculation error in the closing stock valuation and has rectified the same by passing order u/s 154 dated 30.06.2010 vide which the difference in stock stand reduced from Rs. 32,08,977/- to see that during the A.Y. 2003-04, 2005-06 and 2006-07 assessment for which was completed u/s 143(3), the method of valuation of closing stock has been accepted by the AO including by the AO who has passed the assessment order for the year under appeal. Therefore, the AO cannot reject the method of valuation of closing stock which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee having consistently employed the same method of valuation of closing stock and AO having no questioned the same and in fact having accepted it in the previous assessment years, it is held that the method of valuation of closing stock could not be rejected. Therefore, the addition made by the AO which by her order of rectification u/s 154 stands reduced to Rs. 19,45,073/- on account of difference in valuation of closing stock is deleted. This ground of appeal is allowed." 6. A bare perusal of the findings of CIT(A) reveals that on the basis of the doctrine of consistency in relation to method of calculation of inventory as also the decision of the jurisdictional High Court in assessee's own case, she recorded findings in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be discarded by the departmental authorities on he view that he should have adopted a different method of keeping accounts or of valuation. (4) The concept of real income is certainly applicable in judging whether there has been income or not, but, in every case, it must be applied with care and within their recognized limits. (5) Whether the income has really accrued or arisen to the assessee must be judged in the light of the reality of the situation. (6) Under section 145 of the Act, in a case where accounts are correct and complete but the method employed is such that in the opinion of the Income-tax Officer, the income cannot be properly deduced therefrom, the computation shall be made in such manner and on such basis as t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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