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TMI Blog2014 (4) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer on account of under valuation of stock by adopting FIFO method, as clinching evidences regarding unaccounted purchases were found during the course of search action". 2.1 Facts of the case, in brief, are that the assessee is proprietor of M/s. Ranka Jewellers, Karve Road and M/s. Vastu Exports engaged in the business of manufacture and trading in Gold and Silver ornaments, Bullions and Diamond Jewellery. A search action u/s.132 of the Income Tax Act was carried out in the business premises of the assessee and the residential premises of the Directors and various other persons forming part of Ranka group from 24-10-2002 onwards. In response to the notice u/s.158BC the assessee filed return of income on 30-09-2003 declarin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explain as to why the value of closing stock as per books should not be enhanced by following the FIFO method. The assessee submitted that it is following average cost method regularly which has been accepted by the Department. It was argued that the method of valuation has already been disclosed to the Department in the regular returns and hence the issue is out of the purview of Chapter XIVB. It was further contended that both the closing stock and opening stock should be valued on the same line and hence effect will be negligible. 3. However, the Assessing Officer was not satisfied with the explanation given by the assessee. He observed that during the course of search at the business premises of Ranka Jewellers, Karve Road gold jewell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g stock at that rate. This method was being followed regularly and the same was being accepted by the department in the past. During the course of assessment proceedings, the A.O. held that the average cost method followed by the assessee is not correct and the assessee should have followed the FIFO method for valuing the stock. The A.O. was thus of the view that the closing stock should be valued as per the closing purchase rate in the month of March by adopting the FIFO method. Accordingly he held that there was under value of stock as per books by Rs. 22,06,664/-. Accepting the main submission of the assessee that addition is made beyond the scope of block assessment, the Learned CIT(A) has deleted the addition. 31. In support of the g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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