9911796707
TMI Blog2017 (2) TMI 1513X X X X Extracts X X X X X X X X Extracts X X X X ..... essee's books. 3. It is prayed that the order of Ld. CIT(A) be set aside and that of the AO restored. 4. The appellant craves leave to add or amend any grounds of appeal before the appeal is heard and finally disposed of." 3. The brief facts relating to the case are that the assessee is an individual in the business of retail trade of gold, silver and diamond jewellery. The Assessing Officer for various reasons given in the assessment order rejected the books of account of the assessee and applied 30% gross profit rate to work out its gross profit resulting in a net addition of Rs. 74,17,671/- to its returned income. 4. During the appellate proceedings before the Ld. CIT (Appeals) the assessee made detailed submissions reproduced at para 5.1 of the order of the CIT (Appeals) rebutting every ground raised by the AO for rejecting the books of the assessee. The Ld. CIT (Appeals) after considering the detailed submissions of the assessee held that the Assessing Officer had failed to put-forth any documentary evidence establishing suppression of profits which called for estimation of income by invoking section 145(3) of the Income Tax Act, 1961 (in short 'the Act'). He, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate. He relied upon the decision of Hon'ble Jurisdictional Punjab & Haryana High Court in the case of CIT, Karnal Vs. Om Overseas (2009) 315 ITR 185 (Punjab &. Haryana High Court). Reliance was also placed on the Judgment reported at [2010] 326 ITR 223(Delhi) -Commissioner of Income-Tax vs Smt. Poonam Rani, in the matter. The assessing officer relied on the following decisions of the Supreme Court ie discussed as under: CIT v. British Paints India Ltd (1991) 188 ITR 44 (SC): In this case Appellant who was in the business of manufacture and sale of paints, had valued the Goods in process and finished products exclusively at cost of raw materials totally excluding overhead expenditure. Thus stock in trade was valued at 84.49% of the actual cost resulting in its undervaluation by 15.51%. It was held by the apex court that "any system of according which excludes for the valuation the stock-in-trade, all costs other than the cost of raw material for the goods in process and furnished products, is likely to result in a distorted picture of the true state of the business for the purpose of computing chargeable income." Kachhwala Gems Vs 3CIT 288 ITR 10 (SC): the appellant dealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue has now come up in appeal before us. During the course of hearing, Ld.Counsel for the assessee relied upon the order of the CIT(A) and further on the decision of the I.T.A.T., Chandigarh Bench in the case of DCIT Vs. Vivek Jain Prop. Vijay Jewellers in ITA No.124/Chd/2015 stating that the ITAT in that case had set aside the rejection of Books of accounts for mere non-maintenance of itemwise details of jewellery sold when weightwise detail of all stock purchased and sold was maintained. 6. Ld DR on the other hand supported the order of the AO and stated that in the absence of itemwise record of goods purchased and sold it was no possible to verify the quantity as well as value of stock disclosed by the assessee and hence the books were not reliable to deduce the business income of the assessee and had therefore been rightly rejected by the AO. The Ld DR also stated that the GP rate of 30% applied by the AO was correct since it was based on GP ratio shown by comparable cases. 7. We have heard both the parties and have gone through the order of the I.T.A.T., Chandigarh Bench in the case of Vivek Jain Prop. Vijay Jewellers (supra) wherein the assessee being a jeweller, his books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even to above stock, then some addition automatically follows in the income of the assessee. It is not permissible and is contrary to the decision of Hon'ble Supreme Court in the case of Chainrup Sampatram vs. CIT (1953) 24ITR 481 (SC). The average cost of opening and purchases is also an accepted method of valuation at cost approved by the accounting standards issued by the Institute of Chartered Accountant of India. In the present case, it is further not contested by the Revenue that similar method of accounting was followed by the assessee in earlier year. For all the above reasons, we are of the view that the method of valuation adopted by the assessee was correct and addition made on account of enhancement of value of stock is no justified. The Id. CIT(A) rightly deleted the addition. His action is hereby confirmed. " In this connection, reliance may be made on the decision of ITAT Ahmedabad in the case of Income Tax Officer vs Chokshi Hirachand & Bros. (37 TTJ, 415) wherein it has been held that "when the valuation of closing stock according to the accounting system consistently followed was accepted by the revenue in earlier as well as subsequent assessment year, ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the AO is unsustainable in law and on facts. Therefore, ground no.1 to 4 and is allowed 5. Ground no. 5 and 6(ii) are consequential in nature and A.O. is directed to charge interest as per law. Ground no. 7 is general in nature and, therefore, no comments are made. 6. In the result, appeal is allowed." 7. On perusal of the same, we do not find any infirmity as the reliance has been placed on the order of the I.T.A.T., Chandigarh Bench in the case of Jagdish Chand (supra), a copy of which was also placed on record before us. After going through the same, we see that the facts and circumstances of that case are identical to the facts of the present case and no distinguishing factors being brought to our notice, respectfully following the order of the Coordinate Bench we are inclined to dismiss the appeal of the Revenue." 8. In the said case, the valuation of stock by the assessee by adopting the Weighted Average Cost as against the FIFO method proposed by the Assessing Officer was upheld by the I.T.A.T. since the same was being followed consistently and was in consonance with the method prescribed by the Accounting Standard issued by the Institute of Chartered Account ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
