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TMI Blog2019 (9) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal: ''1. The order of the CIT(A) is contrary to law and facts of the case. 2.The ld.CIT(A) erred in deleting the addition towards concealed Gross Profit in Gold and Silver of Rs. 7,20,59,374/-. 2.1 The ld.CIT(A) erred in holding that the presumption of the AC that realizing the value of gold jewellery at gross weight of the jewellery as against the net weight of the gold component in the said jewellery and the presumption with respect to the purity of gold jewellery that equates all jewellery at the same purity have robbed the legitimacy for reworking the Gross profit of the assessee on any revised method of valuation 2.2 The ld. CIT(A) ought to have appreciated that Weighted average method is only an improvement over the histo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in GP is attributed on a turnover of 31CR, whereas the actual turnover is 353.23 Cr. The order of the Ld CIT(A) has lost its orientation and is prejudiced by a mistaken notion about the value of GP in relation to the turnover. The order of the Ld CIT(A) as such is erroneous and is inherently biased due to the mistaken notion on the assessee's turnover and GP. 2.8 The ld.CIT(A) erred in holding that the department cannot make unsubstantiated additions when the Act provides sufficient procedures and tools to unearth evidences and bring concealed incomes for taxation. 2.9 The ld. CIT(A) failed to note that valuation of stock is an integral part of the assessment. Anomalies in valuation have to be explained, and there is no need to fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase are as under: The Respondent-assessee namely M/s. Khazanchi Jewellers Pvt Ltd is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of manufacturing & trading in gold and silver jewellery. The return of income for the AY 2011-12 was filed disclosing total income of J56,25,840/-. Against the said return of income, the assessment was completed on 28.03.2014 u/s.143(3) of the Income Tax Act, 1961 (in short ''the Act'') at total income of J15,05,49,619/-. After receipt of the assessment order, the assessee preferred an petition before the ld. Principal Commissioner of Income Tax (in short ''the ld. PCIT'') under the provisions of Section 264 of the Act praying that the Assessing Officer wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above observations, the Assessing Officer had proceeded with the estimation of gross profits by holding that value of closing stock was suppressed by the assessee taking note of the fact that value of closing stock of the gold ornaments is only J1,150/- per gram which does not give true picture of the profit earned by the assessee. Therefore, the Assessing Officer had proceeded to estimate the closing stock by adopting average weighted method as against the LIFO method adopted by the Respondent-assessee. Accordingly made an addition of J7,20,59,374/- by alleging suppression of value of closing stock. 5. Being aggrieved, an appeal was preferred before ld. CIT(A), who vide impugned order allowed the appeal of the assessee by holding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Constructing Co. vs. ITO, New Delhi in ITA No.3167/Del/2010, dated 16.10.2015 for the assessment year 2007- 2008. 8. We heard the rival submissions and perused the material on record. The issue in the present appeal revolves around addition on account of alleged suppression of value of closing stock. On perusal of the assessment order, it is clear that Assessing Officer arrived at the estimated value of the closing stock on the ground that value of closing stock shown by the assessee is at J1,150/- per gram which is very low. The assessment order also shows that assessee had filed detailed explanation as to how he arrived at the value of closing stock at J1,150/- per gram as set out by the Assessing Officer vide page 11 & 12 of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases of CIT vs. British Paints India Ltd, 188 ITR 44 and United Commercial Bank vs. CIT, 240 ITR 355. It is equally settled principle of law that assessee's method of accounting cannot be rejected as improper merely because it gave him benefit in certain years or because according to the Assessing Officer another method is preferable. Reliance can be placed on the decision of Hon'ble Andhra Pradesh High Court in the case of CIT vs. Margadarsi Chit Funds (P) Ltd, 155 ITR 442 and the decision of Hon'ble Supreme Court in the case of United Commercial Bank (supra), the courts had also laid down that lower rate of gross rate cannot be a reason to reject method of accounting adopted by the assessee. Reliance can be placed on the decision of H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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