TMI Blog2017 (6) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... essee in a particular year as a necessary corollary, the same methodology would have to be applied for the purpose of computation of the opening stock for that year also. The issue being absolutely clear, perhaps the Tribunal on its own, could also have provided for it while disposing of the Tax Appeal itself whether specifically so argued by the assessee or not. When the assessee therefore applied for rectification at that stage, at least, the Tribunal could have accepted the request of the assessee. The Tribunal therefore, committed the serious error in rejecting the rectification application on the ground that no such argument was advanced at the time of hearing of the appeal. Thus impugned order of the Tribunal dated 09.02.2012 is set aside. Petitioner's request for rectification of the Tribunal's order dated 30.04.2008 is granted to the extent of directing that valuation of the opening stock of polished diamonds of the assessee for the assessment year 2003-04 shall be done on the same basis as the Assessing Officer has applied for the purpose of valuation of the closing stock of that year. - SPECIAL CIVIL APPLICATION NO. 9990 of 2012 - - - Dated:- 5-6-2017 - MR. AKIL KUR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any basis. In case, there is no stock register, which only cautions the assessing officer against the falsity of the returns made by the assessee. He cannot say that merely because there is no stock register the account books must be falls. But at the same time, the keeping of a stock register is of great importance because that is a means of verifying the assessee's accounts by having a quantitative tally. If in any case, after taking into account the absence of a stock register coupled with other materials, it is felt that correct profits and gains cannot be deduced from the accounts, resort to the first proviso can be bad. This view was held by the Hon'ble Apex Court in the case of S.N.Namasivayiam Chettiar v. CIT (1960) 38 ITR 579. In this case, the Hon'ble Supreme Court referred to Pandit Bros. v. CIT (1954) 26 ITR 159 (Punjab) and observed that the want of stock register was, in that particular case, not a very serious defect because the account books had been found and accepted as correct and disclosed a true state of affairs, and that case did not lay down as a proposition of law that the want of stock register was not such a serious defect as to make the fist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of original appeal. It is this order of the Tribunal the assessee has challenged in this petition. 5. Learned advocate Shri J.P.Shah for the petitioner contended that if the method of valuation of the closing stock was to be changed, the same must reflect in valuation of the opening stock, failing which, the assessee would be subjected to tax on income which had not accrued. He placed heavy reliance on the decision of the Supreme Court in case of British Paints India Ltd. (supra). He also relied upon the decision of Delhi High Court in case of Commissioner of IncomeTax v. Mahavir Alluminium Ltd. reported in (2008) 297 ITR 77 (Delhi). He submitted that merely because a contention was not raised, would not be the ground for the Tribunal to reject the rectification application. He submitted that the principle that the closing stock and opening stock must be valued on same principles is so clearly and firmly established that the Tribunal on its own ought to have provided for the same while rejecting the assessee's appeal and accepting the Revenue's methodology of valuing the closing stock. 6. On the other hand, learned counsel Shri M.R.Bhatt for the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income tax purpose, each year is a self contained unit. While doing so, it was observed that; It is a wellrecognised principle of commercial accounting to enter in the profit and loss account the value of the stockintrade at the beginning and at the end of the accounting year at cost or market price, whichever is the lower. As stated by the Lord President in Whimster and Co. v. CIR [1925] 12 TC 813, 823 (C. Sess.): 9. In the decision in case of Mahavir Alluminium Ltd. (supra), Division Bench of Delhi High Court observed that where there is change in valuation at one end, then there must be necessarily a corresponding change at the other and otherwise a true profit could not be reflected. The Court referring to the decision of Privy Council in case of CIT v. Ahmedabad New Cotton Mills Co. Ltd. reported in AIR 1930 PC 56 and the circular of the CBDT dated 23.12.1998 further observed as under: 16. We are of the opinion that in the present case, there is no question of any double benefit being given to the assessed. Paragraph 23.13 of the guidance note itself makes it clear that whenever any adjustment is made in the valuation of inventory, this will ..... X X X X Extracts X X X X X X X X Extracts X X X X
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