ACIT, CHENNAI v. S.Kamal Bhndari, CHENNAI

ITA 1068/CHNY/2013 | 2008-2009
Pronouncement Date: 21-10-2013 | Result: Dismissed

Appeal Details

RSA Number 106821714 RSA 2013
Assessee PAN AEEPK6304H
Bench Chennai
Appeal Number ITA 1068/CHNY/2013
Duration Of Justice 5 month(s) 1 day(s)
Appellant ACIT, CHENNAI
Respondent S.Kamal Bhndari, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 21-10-2013
Date Of Final Hearing 08-10-2013
Next Hearing Date 08-10-2013
Assessment Year 2008-2009
Appeal Filed On 20-05-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI [BEFORE DR. O.K. NARAYANAN VICE-PRESIDENT AND SHRI S. S. GODARA JUDICIAL MEMBER] I.T.A.NO.645/MDS/2013 ASSESSMENT YEAR : 2008-09 SHRI S. KAMAL BHANDARI 17/2 VIJAYA COMPLEX VEERAPPAN STREET SOWCARPET CHENNAI 600 079 VS THE ASSTT. COMMISSIONER OF INCOME-TAX BUSINESS RANGE XI CHENNAI [PAN AEEPK 6304 H ] (APPELLANT) (RESPONDENT) I.T.A.NO.1068/MDS/2013 ASSESSMENT YEAR : 2008-09 THE ASSTT. COMMISSIONER OF INCOME-TAX BUSINESS RANGE XI CHENNAI VS SHRI S. KAMAL BHANDARI 17/2 VIJAYA COMPLEX VEERAPPAN STREET SOWCARPET CHENNAI 600 079 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.BALASUBRAMANIAN ADVOCATE DEPARTMENT BY : SHRI T.N.BETGIRI JT.CIT DATE OF HEARING : 08-10-2013 DATE OF PRONOUNCEMENT : 21-10-2013 O R D E R PER S.S.GODARA JUDICIAL MEMBER THESE CROSS APPEALS FILED BY THE ASSESSEE AND TH E REVENUE FOR ASSESSMENT YEAR 2008-09 ARE DIRECTED AGAINST T HE ORDER OF THE I.T.A.NO.645 & 1068/13 :- 2 -: COMMISSIONER OF INCOME-TAX (APPEALS)-IV CHENNAI D ATED 29.1.2013 PASSED IN APPEAL NO. 126/2010-11 IN PROCEEDINGS UN DER SECTION 143(3) OF THE INCOME-TAX ACT 1961 (IN SHORT THE AC T). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE; AN INDIVIDUAL IS A TRADER IN SILVER BULLION AND JEWELLERY. ON 22.9. 2008 HE HAD FILED HIS RETURN DISCLOSING INCOME OF ` 4 23 204/-. THE SAME WAS SUMMARILY PROCESSED. THEREAFTER THE ASSESSING OFFICER FRAME D REGULAR ASSESSMENT MAKING ADDITIONS OF ` 6 97 590/- QUA VALUE OF ALLOYS LIKE COPPER ETC. WEIGHING 37.975 KGS @ ` 18 369/- PER KG. ALONGWITH THE SAME HE HAD ALSO ADDED DIFFERENCE IN VALUATION OF CLOSING STOCK AMOUNTING TO ` 1 29 89 409/-. IN ASSESSEES APPEAL CIT(A) HAS DELETED THE FORMER ADDITION AND PARTLY CONFIRMED TH E LATTER ONE TO THE TUNE OF ` 33 08 997/-. IN THIS BACKDROP BOTH PARTIES ARE I N APPEAL. THE ASSESSEES GRIEVANCE IS THAT THE CIT(A) OUGHT TO HAVE DELETED THE ENTIRE ADDITION OF DIFFERENCE IN STOCK WHEREAS THE REVENUE IS AGITATED ON THE GROUND THAT IN LOWER APPELLATE PROCEEDINGS THE ADDITION ON ACCOUNT OF VALUE OF ALLOYS HAS BEEN WRONGLY DELETED AND THE OTHER ONE QUA DIFFERENCE IN VALUATION OF CLOSING STOCK HAS BE EN WRONGLY RESTRICTED IN PART. I.T.A.NO.645 & 1068/13 :- 3 -: IN THE COURSE OF HEARING BOTH PARTIES VEHEMENTLY PRAY FOR ACCEPTANCE OF THEIR RESPECTIVE APPEALS. 2. FIRST WE COME TO THE COMMON CONTENTION OF THE PARTI ES QUA ADDITION OF ` 1 29 89 409/- QUA DIFFERENCE IN STOCK. THERE IS N O DISPUTE ABOUT THE FACTUAL POSITION THAT THE ASSESS EE HAD DECLARED CLOSING STOCK OF 1185.018 KGS @ COST OR NET REALIZA BLE VALUE; WHICHEVER WAS LESSER. IN SUPPORT HIS PLEA BEFORE THE ASSESSING OFFICER WAS THAT IN PRECEDING AS WELL AS SUCCEEDING ASSESS MENT YEARS HE HAD BEEN FOLLOWING THE VERY METHOD OF COMPUTING THE STO CK. HE SUBMITTED THAT THE METHOD WAS IN ACCORDANCE WITH SE CTION 145A(A)(I) OF THE ACT. HE EXPLAINED THAT IN CASE HE DEVIATE D FROM THE AFORESAID METHOD OF COMPUTING THE STOCK THE SAME MIGHT ADVER SELY AFFECT PROFITS OF THE SUBSEQUENT ASSESSMENT YEAR. THE ASS ESSING OFFICER DID NOT AGREE TO THE ASSESSEES SUBMISSIONS. IN H IS OPINION THE ASSESSEE HAD TO COMPUTE THE STOCK AS PER NET REALIZ ABLE VALUE I.E MARKET PRICE INSTEAD OF THE COST OR NET REALIZATION VALUE WHICHEVER WAS LESSER. WHILE HOLDING SO THE ASSESSING OFFICER RE FERRED TO FORM 3CD; COLUMN 12(A) SUBMITTED BY THE ASSESSEE. THEREAFT ER HE TOOK INTO CONSIDERATION THE WEIGHT OF ALLOYS LIKE COPPER ETC. USED IN MAKING THE JEWELLERY WEIGHING 37.975 KGS AND COMPUTED THE VALU E OF THE STOCK AT I.T.A.NO.645 & 1068/13 :- 4 -: ` 2 09 54 673/-. SINCE THE ASSESSEE HAD DECLARED V ALUE OF THE STOCK AT ` 79 65 264/- THE DIFFERENCE OF ` 1 29 89 409/- STOOD ADDED IN HIS INCOME . 3. IN ASSESSEES APPEAL THE CIT(A) HAS FIRST DISCUSS ED ALL THREE METHODS OF VALUING THE STOCK I.E LIFO (LAST I N FIRST OUT) FIFO (FIRST IN FIRST OUT) AND AVERAGE PRICING METHOD. THEREAFTER HE CONCLUDES AVERAGE PRICE METHOD AS THE MOST SUITABLE METHOD FOR THE COMPUTATION OF STOCK. ACCORDINGLY THE CIT(A) HAS ADOPTED AVERAGE PRICING METHOD AND RESTRICTED THE ADDITION TO ` 33 08 997/- ONLY WHICH LEAVES BOTH PARTIES AGGRIEVED. 4. WE HAVE HEARD BOTH PARTIES IN DETAIL AND PERUSED TH E CASE FILE. UNDISPUTEDLY THE ASSESSING OFFICER IN THE INSTANT CASE HAS NOT SPECIFICALLY REJECTED THE CONTENTION OF THE ASSESS EE THAT VALUATION OF THE STOCK IN QUESTION HAS BEEN COMPUTED CONSISTENTL Y BY FOLLOWING THE COST OR NET REALIZATION VALUE WHICHEVER WAS LESSER. NEITHER THE ASSESSING OFFICER NOR THE CIT(A) HAVE HELD THAT TH E COMPUTATION OF THE ASSESSEE BY HOLDING THAT THE METHODOLOGY ADOPT ED IS CONTRARY TO THE PROVISIONS CONTAINED IN THE STATUTE I.E SECTION 145A(A)(I) OF THE ACT. RATHER THE ASSESSEE HAS BEEN VEHEMENTLY CONTENDING THROUGHOUT THAT THE VALUATION AT COST OR NET REALIZATION VALUE WHIC HEVER LESSER HAS I.T.A.NO.645 & 1068/13 :- 5 -: BEEN RESORTED TO IN PRECEDING AS WELL AS SUCCEEDING ASSESSMENT YEARS. IN THESE CIRCUMSTANCES WE HARDLY SEE ANY REASON TO DEVIATE FROM THE CONSISTENT PRACTICE FOLLOWED BY THE ASSESSEE. WHI LE HOLDING SO WE DRAW SUPPORT FROM THE STATUTORY PROVISION WHICH SPE CIFICALLY IMPLIES THAT THE VALUATION OF STOCK HAS TO BE COMPUTED IN A CCORDANCE WITH THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASS ESSEE. IN OUR VIEW FOR THE SAKE OF MAINTAINING CONSISTENCY IT I S NECESSARY THAT THE METHOD OF VALUATION ADOPTED BY THE ASSESSEE AT COS T OR NET REALIZATION VALUE WHICHEVER LESSER HAS TO BE ACCEPTED. HENC E WE HOLD THAT THE AUTHORITIES BELOW HAVE WRONGLY HELD THAT THE STOCK HAS TO BE VALUED AT MARKET PRICE BY THE ASSESSING OFFICER AND AVERAGE P RICE BY THE CIT(A). IN THESE CIRCUMSTANCES WE ACCEPT THE CONTENTIONS O F THE ASSESSEE AND REJECT THOSE ADVANCED BY THE REVENUE. CONSEQUE NTLY THE RELEVANT GROUND IN ASSESSEES APPEAL IS ACCEPTED W HEREAS IN REVENUES APPEAL IT STANDS REJECTED. SINCE THERE IS ONLY ONE SUBSTANTIVE GROUND IN ASS ESSEES APPEAL I.T.A.NO.645/MDS/2013 STANDS ACCEPTED. 5. NOW WE COME TO THE SECOND GROUND OF THE REVENUE CHALLENGING THE CIT(A)S ACTION IN DELETING THE ADD ITION OF ` 6 97 590/- QUA THE VALUE OF ALLOYS(SUPRA). WE MAKE IT CLEAR THAT NO PAPER BOOK I.T.A.NO.645 & 1068/13 :- 6 -: HAS BEEN FILED BY THE REVENUE TO POINT OUT AS TO HO W THE FINDINGS OF FACTS RECORDED BY THE CIT(A) ARE CONTRARY ON RECOR D. IN THE COURSE OF ASSESSMENT THE ASSESSING OFFICER HAD MADE THE ADDI TION OF THE AFORESAID WEIGHT OF ALLOYS LIKE COPPER ETC. IN ASS ESSEES INCOME BY ADOPTING THE RATE OF ` 18369/- KG ON THE GROUND THAT IN THE PROFIT & LOSS ACCOUNT THE SAME HAD BEEN DEBITED WITHOUT AS SIGNING ANY VALUE AND SIMILARLY IN THE CLOSING STOCK AS WELL NO VAL UE WAS FORTHCOMING. THE CIT(A) IN HIS ORDER REFERS TO COMMON BUSINESS PRACTICE IN THE JEWELLERY TRADE WHEREIN THE ALLOYS ARE USED IN MANU FACTURING ORNAMENTS. THEREAFTER HE OBSERVES THAT SINCE THE ASSESSEE DID NOT ASSIGN THE VALUE OF THE ALLOYS IN PROFIT & LOSS ACC OUNT THE SAME WAS CORRESPONDINGLY NOT VALUED IN THE CLOSING STOCK. T HE CIT(A) FINDS THE SAID ACTION OF THE ASSESSEE IN THIS REGARD AS JUST IFIABLE. BEFORE US APART FROM RAISING HALF-HEARTED PLEA THE REVENUE N OWHERE QUOTES ANY JUDICIAL PRECEDENT OR ANY OTHER EVIDENCE TO CONTROV ERT THE FINDINGS OF THE CIT(A). THEREFORE WE SEE NO REASON TO RESTORE THE ADDITION OF VALUE OF ALLOYS IN QUESTION. THE RELEVANT GROUND I N THE REVENUES APPEAL STANDS REJECTED. 6. AS A RESULT THE ASSESSEES APPEAL IS ALLOWED WHER EAS THAT FILED BY THE REVENUE IS DISMISSED. I.T.A.NO.645 & 1068/13 :- 7 -: ORDER PRONOUNCED ON MONDAY THE 21 ST OF OCTOBER 2013 AT CHENNAI. SD/- SD/- ( DR. O.K. NARAYANAN) VICE-PRESIDENT (S. S. GODARA) JUDICIAL MEMBER DATED: 21 ST OCTOBER 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR