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2016 (2) TMI 307 - GUJARAT HIGH COURT

2016 (2) TMI 307 - GUJARAT HIGH COURT - TMI - Reopening of assessment - valuation of stock questioned - Held that:- As during the original scrutiny assessment, the issue of valuation of stock had been examined at length. We may recall that the assessee is engaged in the business of jewelery. During a survey operation conducted on 3.2.2010, unaccounted cash was found and difference in stock in the books and physical verification were revealed. During the assessment proceedings, there was consider .....

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fficer now to reopen the assessment on the question of correct methodology for valuation of such stock would only be in the nature of change of opinion and not permissible as reiterated by the Supreme Court in case of Commissioner of Income Tax v. Kelvinator of India Ltd. reported in (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) - Decided in favour of assessee - SPECIAL CIVIL APPLICATION NO. 14884 of 2015 - Dated:- 2-2-2016 - MR. AKIL KURESHI AND MR. MOHINDER PAL FOR THE PETITONER : MR B S SOPARKA .....

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sons recorded by him for issuing the impugned notice which read as under : The assessee is engaged in the business of manufacturing and trading of gold, silver, diamond ornaments, metal and precious stones. The assessee company filed its return of income for the AY 201011 on 10/07/2010 deleting total income of ₹ 3,32,65,740/. The assessment was finalised under section 143(3) on 8/2/2013 and determining income at ₹ 3,43,00,670/. A survey u/s. 153A was conducted in the case of assessee .....

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survey report that the above findings was confronted to the assessee in his statement on oath during survey, which was admitted by the assessee and has agreed to pay tax on the same. However, as per the survey report, the assessee has requested to value the excess/unaccounted stock on average purchase price at ₹ 1326 per gram instead of market value of stock as on the date of survey. The value of excess/unaccounted stock on average purchase price was worked out at ₹ 3,50,53,922/. Sub .....

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ashion and most of the rime the ornaments remain unsold. Hence the stock may contain old stock. The contention of the assessee was accepted and unaccounted/excess stock was estimated at average purchase price. Scrutiny of stock records revealed that the valuation in the stock between physical stock and stock as per books was due to the fact of excess stock of ₹ 26.112 kg of 22 carat gold ornaments valuing to ₹ 4,63,15,560/( at ₹ 1730 per gram) and excess stock of 0.992 kg of 24 .....

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ng market rate at ₹ 1730/per gram could not be accepted as date of purchase of the above unaccounted/excess stock was not available and in the absence of the same, the valuation was required to be made at prevailing market price(i.e. ₹ 1130/per gram). For instance, considering that during the year under consideration, the assessee might have purchased the unaccounted stock of ornaments along with the accounted stock, the valuation was required to be made at bare minimum of 1528.842 p .....

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equired to be valued at ₹ 5,09,30,260/as against valuation adopted of ₹ 3,50,53,992/. This being not done resulted into undervaluation of stock of ₹ 1,58,16,338/( ₹ 5,09,30,260/less ₹ 3,50,53,922/). Therefore, I have reason to believe that income has escaped assessment for AY 201011 to the tune of ₹ 72,85,095/has escaped assessment and accordingly assessment is required to be reopened u/s.147 of th IT Act 2. Counsel for the petitioner submitted that the entire .....

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