TMI Blog1979 (12) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... which came to be accepted under s. 143(1) with little modification inasmuch as the computed income amounted to Rs. 22,620. 3. Subsequently, the assessment was reopened under s. 143(2)(B) on the ground that the income had been under-assessed as the closing stock had not been valued at the market rate. According to the ITO, the method of valuation of the closing stock adopted by the assessee was at market rate whereas the assessee contended that it was following on ad-hoc method for valuing its closing stock and it was neither the precise cost price nor the market price. The assessee's case, however, was that it was following a consistent method for the last so many years and, therefore, there was no occasion to interfere with the trading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the purchases which therefore, was necessarily out of opening stock. The assessee pointed out that if the sale of 553 gms of jewellery from the old stock was deducted out of the total sales of 1298 gms in the year 745 gms was sold out of the purchases of 841 (847) gms made in the year under appeal. 6. To understand the assessee's contention and the case, a close look at the trading account as also sale and purchases of the first nine months of the year would be necessary. A copy of the trading account and details of purchases and sales of the first 9 months has been given to us at pages 4 and 5and is reproduc4ed bellow which clearly supports the assessee's case as regards the valuation of the closing stock:- Asst. yr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory of the case in the following graphical chart, we shall notice the pattern of closing stock valuation in the earlier years and the fact that the closing stock valuation as on 31st day of March, 1974 averaging Rs. 263 is in conformity with the earlier pattern as follows:- Asst. year. Average cost Sale rate Rate of C. Stock . Rs. Rs. Rs. 1971-72 16 20 18.5 1972-73 18.3 20.4 20 1973-74 21 28 23 1974-75 25.5 39 26.3 7. We have reproduced page 5 of the assessee's paper book to show that the entire closing stock has not been valued @ Rs. 26.3 per gm. but 3017gms.of old jewellery was valued at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO clearly misdirected himself in adopting the value of the closing stock in the assessee's case at market rate and the assessee's method of valuation was in conformity with the earlier years, pattern of closing stock as also in conformity with the other jewellers. Therefore the AAC's approach in the case has been correct that there was no under valuations of stock at all. On such view of the matter, we dismiss the Revenue's appeal. While deciding this appeal, we have closely perused the orders of the ITO and the AAC and the evidence placed before us in the form of copies of trading accounts and other evidence filed before the ITO and the AAC as also the ITO's notice under s. 143 (3) and the assessee's reply thereto. 10. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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