Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

The Commissioner of Income-tax, Panchkula Versus Sh. Kuldeep Chand Jain (HUF)

2015 (12) TMI 1067 - PUNJAB AND HARYANA HIGH COURT

Addition made u/s 145(3) on account of valuation of closing stock - ITAT deleted the addition - whether 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? - Held that:- We do not find any merit in the appeal. The assessee is engaged in the business of sale and purchase of jewellery. The Tribunal had noticed that the assessee was following LIFO method for valuing its closing stock from year to year .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng the addition made by the Assessing Officer as 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, recorded findings in favour of the assessee. - ITA No. 165 of 2014 (O&M) - Dated:- 8-9-2015 - MR. AJAY KUMAR MITTAL AND MR. RAMENDRA JAIN, JJ. For The Appellant : Mr. Yogesh Putney, Advocate For The Respondent : Ms. Radhika Suri, Senior Advoate with Ms. Rinku Dahiya, Advocate AJ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he addition made u/s 145(3) at ₹ 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 ₹ 9,15,800/-. Notice u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

order dated 13.12.2011 (Annexure A-1) by making an addition of ₹ 58,29,237/- on account of undervaluation of closing stock. The Assessing Officer observed that the assessee has failed to give any reasonable and justified explanation for not rejecting his books of account and for accepting his method of valuation of closing stock by adopting Last In First Out (LIFO) method. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), Panchkula [hereinafte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

filed by the revenue upholding the deletion of ₹ 58,28,390/- on account of valuation of inventory by the assessee and allowed the cross-objections filed by the assessee against addition of ₹ 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, va .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iate from the method of accountancy being followed by the assessee. The Assessing Officer has failed to show that the true value could not be determined except to urge so. Reference was made to the following judgments:- I. United Commercial Bank v. Commissioner of Income Tax (1999) 240 ITR 355 (SC); II. Commissioner of Income-Tax v. Sant Ram Mangat Ram (2005) 275 ITR 312 (P&H); 5. After hearing learned counsel for the parties, we do not find any merit in the appeal. The assessee is engaged i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aluation of closing stock of gold ornaments. The Tribunal in ITA No. 1378/Chd/2010 relating to the assessment year 2007-08 in the case of the assessee upheld the decision of the CIT(A) deleting the addition made by the Assessing Officer with the following observations:- 10. We have heard the rival contentions and perused 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in ITA No. 1378/Chd/2010 relating to assessment year 2007-08 in DCIT Vs. Shri Kuldeep Chand Jain, HUF, vide order dated 24.04.2012, had held as under: 4. We have carefully perused the rival submissions, facts of the case and relevant record. The brief facts of the case are that the appellant is a wholesale & retail sarafa merchant. The assessee filed return of income on 31.10.2007, declaring income of ₹ 29,20,088/-. A survey u/s 133A of the Act was conducted, on the business premises o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lacs as deemed income. 5. In the course of assessment proceedings, the assessee informed the AO, that LIFO method of accounting was followed in valuation of closing stock. The contention of the assessee was not found acceptable by the AO. The AO referred to A.S.-2, that specifies of only three methods of determining the cost of inventories i.e. specific identification method, FIFO and Weighted average cost method. The AO made an addition of ₹ 32,08,977/- following the weighted average cos .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2,08,977/- 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 consistently followed by the appellant and has also been accepted by the AO in the past. I agree with the appellant that rule of consistently has to be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ordingly, made assessment. This being the position, we do not find any valid ground to accept the argument of Shri Bindal that the method adopted by the assessee for valuation of the stock was legally impermissible and on that account, the additions made by the Inspecting Assistant Commissioner should be restored. In United Commercial Bank v. CIT (1999) 240 ITR 3545, their Lordships of the Supreme Court held that the method which was consistently followed by the appellant bank for valuing the st .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he 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 ₹ 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 decis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

) in deleting the addition of ₹ 58,28,390/- by holding that the assessee had been consistently following the LIFO method of valuation of its inventory. 7. Apex Court in United Commercial Bank's case (supra) dealing with a case of valuation of stock held that a method of accounting adopted by the tax-payer consistently and regularly cannot be discarded by the revenue on the view that different method of keeping accounts or of valuation ought to have been adopted by the assessee. The bro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

et price. (3) A method of accounting adopted by the taxpayer consistently and regularly 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version