TMI Blog2018 (6) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction cannot be accepted - thus dismissed. Under valuation of closing stock of diamond jewellery - Held that:- Assessee has not furnished any details to substantiate its claim that the purchases and sales shown in the stock statement include diamond jewellery set in gold and platinum and opening and closing stock consist of only lose diamond - thus to provide an opportunity to the assessee to justify the valuation of closing stock of diamond jewellery we restore the issue to the AO for fresh adjudication after due opportunity of being heard to the assessee - allowed for statistical purpose. - ITA no.5415/Mum/2016 - - - Dated:- 8-6-2018 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER For The Assessee : Shri Anant N. Pai For The Revenue : Shri V. Vidhyadhar ORDER PER SAKTIJIT DEY, J.M. Aforesaid appeal by the assessee is against order dated 30th June 2016, passed by the learned Commissioner (Appeals) 24, Mumbai, for the assessment year 2012 13. 2. In grounds no.1 and 2, assessee has challenged disallowance of ₹ 3,15,069, under section 43B of the Income Tax Act, 1961 (for short the Act ). 3. Brief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. In course of proceedings before him, the learned Commissioner (Appeals) on perusing the details available in the assessment record found that the stock summary submitted by the assessee for the period 1st April 2011 to 31st March 2012 revealed grave anomaly in the value of closing stock of diamond jewellery. He found that as per the statement of closing stock submitted before the Assessing Officer the opening stock of diamond jewellery (Ct) was 1260.780 ct. valued at ₹ 4,91,70,420 at an average rate of ₹ 39,000 per carat. The purchase of diamond jewellery during the year of 1107.540 carat was shown at ₹ 9,53,86,780 at an average rate of ₹ 86,124=90 per carat. Sales of diamond jewellery of 966.300 carats was shown at ₹ 8,74,29,629 at the average rate of ₹ 90,478=76 per carat. Whereas, the closing stock of 1402.020 carat of diamond jewellery has been valued at ₹ 5,61,47,718 at an average rate of ₹ 40,042.58 per carat. The learned Commissioner (Appeals) observed, how the closing stock of diamond jewellery can be valued at ₹ 40,042=58 per carat as against purchase price of ₹ 86,124=90 per carat. The learned Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t can be seen that in course of appellate proceedings, learned Commissioner (Appeals) on examining the assessment records found that as per the stock statement submitted by the assessee before the Assessing Officer there was discrepancy in valuation of closing stock of diamond jewellery. He found that while purchases and sales of diamond jewellery have been shown at a much higher value, however, the closing stock of diamond jewellery has been shown at a lesser value. Thus, prima facie, he was of the view that there was under valuation of closing stock requiring enhancement of assessment. Therefore, in consonance with the power conferred under section 251(2) of the Act the learned Commissioner (Appeals) issued a show cause notice to the assessee to explain why the assessment should not be enhanced. It is also evident, in response to the show cause notice the assessee submitted its reply and after considering the reply of the assessee learned Commissioner (Appeals) decided the issue. Thus, from the aforesaid facts it is very much clear that while enhancing the assessment learned Commissioner (Appeals) has acted strictly in accordance with the statutory mandate as provided under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hod of accounting followed by the assessee. The learned Authorised Representative submitted, the purchase figures include cost of item other than diamond like gold, platinum etc. This fact has not been appreciated by the learned Commissioner (Appeals). In support of his submissions, the learned Authorised Representative placed reliance on certain invoices filed before us. Thus, it was submitted there is no undervaluation of closing stock as suggested by the learned Commissioner (Appeals). 14. The learned Departmental Representative strongly relied upon the observations of the learned Commissioner (Appeals). 15. We have considered rival submissions and perused materials on record. As could be seen from the impugned order of the learned Commissioner (Appeals), on verifying the stock statement submitted by the assessee before the Assessing Officer he has concluded that the valuation of closing stock of diamond jewellery at the average rate of ₹ 40,042=58 per carat is on a much lower side considering the fact that the purchase of diamond jewellery have been shown at average rate of ₹ 86,124=90 per carat. It is further evident, the learned Commissioner (Appeals) statin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck with supporting evidences. As could be seen, the undervaluation of closing stock was made an issue only at the first appeal stage and was never examined by the Assessing Officer. Therefore, to provide an opportunity to the assessee to justify the valuation of closing stock of diamond jewellery we restore the issue to the Assessing Officer for fresh adjudication after due opportunity of being heard to the assessee. It is open to the assessee to furnish further evidence, if required, in support of its valuation of closing stock. Since, in the peculiar facts of the present case we have restored the issue to the Assessing Officer for fresh adjudication, it is not necessary to deal with the case laws cited before us. With the aforesaid observations, this ground is allowed for statistical purposes. 16. In ground no.5, the assessee has made a without prejudice claim of giving consequential effect to the opening stock of diamond jewellery of the subsequent year, if the enhancement in the value of closing stock is upheld in the impugned assessment year. 17. In view of our decision in ground no.4, raised by the assessee, this issue is also restored back to the file of the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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