TMI Blog1989 (11) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... re was difference in rate of silver per kg. worked out by the ITO on the same line as the assessee has stated to have adopted, the ITO was fully justified in revaluing the closing stock and adding the difference to the total income returned." 2. The assessee is a dealer in gold ornaments. The ITO had made the aforesaid additions in the declared income on account of under valuation of closing stock. It has been observed in the assessment order that value of closing stock as per average cost price of purchases made during the year and opening stock whereas the value of closing stock determined by the assessee was lower as compared to valuation calculated on the basis of such average cost price. The ITO accordingly made the aforesaid additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of opening stock of such ornaments. The addition was made by the ITO by calculating the correct value of closing stock on the basis of aforesaid basis of valuation of closing stock stated by the assessee before him. He also read the relevant paragraphs of the assessment order passed by the ITO. He further contended that the CIT(A) has erred in relying upon the judgment of Hon'ble Calcutta High Court in the case of Snow White food Products Co. Ltd. vs. CIT(A) (1982) 29 CTR (Cal) 8 : (1983) 141 ITR 861 (Cal) at page 13 of the Appellate Order. He also submitted that the CIT(A) has not at all considered the directions given by the IAC under s. 144B while deciding the assessee's appeal. In view of detailed reasons given by the ITO in assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther contended that the fact that the assessee had maintained the same method for valuation of closing stock in the past several years has not been disputed by the Department. In fact it is admitted by the IAC in his directions under s. 144B that in the past also the valuation of closing stock was made on the cost was further reduced by certain percentages ranging between 22 per cent to 31 per cent. Keeping this fact in view the IAC in his directions has directed in para 3 that a deduction of 25 per cent in value of the closing stock of the category of gold ornaments known as 22/16 should be allowed. This proves the assessee's contention that the same system of valuation of closing stock was maintained and the Revenue cannot now change the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fact that the assessee is following the same method of valuing the closing stock for last several years is an undisputed fact. It is not the case of the Department that the assessee wants to change the method of valuation, method of accounting from the years under consideration. The CIT(A), therefore, observed that the ITO has no jurisdiction to interfere unless it is specifically pointed out by him that by following the same system of valuation, proper income cannot be deduced therefrom. In the case of the assessee if it is found that they have undervalued any specific item then the same is subject to more profit when the sale thereof is made. The ITO has not found that there has been any manipulation either in the quantum of sale or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot go into the question of continuation of such method. He also observed that in case the figures of value of closing stock adopted by the ITO is to be accepted, the gross profit rate will go to an unimaginable fantastic figure of 51 per cent, 60 per cent and 59 per cent as against the gross profit rate of 12 to 20 percent approximately earned and accepted, in various earlier years in the case of the assessee. In view of such detailed reasons the learned CIT(A) has deleted the additions made by the ITO. The counsel of the assessee also submitted that in all earlier years the income of the assessee has been computed on the basis of book results in which profits were computed by valuing the closing stock in similar manner. Similar basis had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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