ACIT Cir, 2, v. Sanspareils Green Lands Pvt, Ltd,

ITA 2108/DEL/2008 | 2003-2004
Pronouncement Date: 11-03-2011 | Result: Dismissed

Appeal Details

RSA Number 210820114 RSA 2008
Bench Delhi
Appeal Number ITA 2108/DEL/2008
Duration Of Justice 2 year(s) 9 month(s) 13 day(s)
Appellant ACIT Cir, 2,
Respondent Sanspareils Green Lands Pvt, Ltd,
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 11-03-2011
Date Of Final Hearing 11-02-2011
Next Hearing Date 11-02-2011
Assessment Year 2003-2004
Appeal Filed On 29-05-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C NEW DELHI) BEFORE SHRI R.P. TOLANI JUDICIAL MEMBER AND SHRI K.G. BANSAL ACCOUNTANT MEMBER I.T.A. NO.2108/D/2008 ASSESSMENT YEAR : 2003-04 ASSTT. C.I.T. VS. M/S SANSPAREILS GREELANDS CIRCLE-2 (P) LTD. 28/32 VICTORIA PARK MEERUT MEERUT. PAN NO.AACCS 2788N (APPLICANT) (RESPONDENT) APPELLANT BY : SMT. MONA MOHANTY SR. DR RESPONDENT BY: S/SHRI J.M. CHADHA & SANAJAY SOOD CAS. ORDER PER K.G. BANSAL: AM: IN THIS APPEAL THE REVENUE HAS TAKEN ONLY ONE GROUND TO THE EFFECT THAT THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF `30 77 25 2/- MADE TO THE TOTAL INCOME BY THE ASSESSING OFFICER. SIX REASONS HAVE BEEN MENT IONED FOR THE FAILURE OF THE LEARNED CIT(A) TO APPRECIATE THE FACTS IN CORRECT PERS PECTIVE WHICH ARE AS UNDER:- A)COST OF PRODUCTION AS THE BASIS FOR VALUATION OF STOCK WAS NOT PROPERLY EXPLAINED BY THE ASSESSEE. A) MATHEMATICAL BASIS OF VALUATION OF WORK IN PROGRESS W AS NOT GIVEN AND NO STOCK REGISTER HAS BEEN MAINTAINED BY THE ASSESSEE IN RESPECT OF SEMI-FINISHED GOODS. 2108-2008-SG 2 B) VALUATION OF STOCK OF ENGLISH CRICKET BATS WAS NOT P ROPER TAKING INTO THE QUALITY AND CORRESPONDING RATE. C) VALUATION OF PACKING MATERIAL WAS GIVEN AFTER ITS CON SUMPTION. D) QUALITY-WISE COST OF ITEMS OF CLOSING STOCK WAS NOT G IVEN. E) NO PROPER JUSTIFICATION WAS GIVEN BY THE ASSESSEE IN RESPEC T OF DECLARING THE VALUE OF STOCK TO THE BANK AT `1052.86 LA KHS AGAINST STOCK OF `978.14 LAKHS DECLARED IN THE BALANCE SHEET AS ON31.03.2003. 2. IN THE ASSESSMENT ORDER IT IS MENTIONED THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING SPORTS ITEMS. T HE RETURN WAS FILED ON 31.10.2003 DECLARING TOTAL INCOME OF `1 93 59 560/-. IN THE COURSE OF SCRUTINY OF THE CASE IT WAS FOUND THAT THE STOCK DECLARED TO THE BA NK IN CONNECTION WITH AVAILING OF CREDIT FACILITIES WAS HIGHER THAN THE STOCK DECLARED IN THE ACCOUNTS. THE DIFFERENCE IS ON 31.03.2003 WERE FOUND TO BE AS UNDER:- AS PER BANK AS PER BOOKS DIFFERENCE FINISHED GOODS 3 16 30 000 2 92 56 430 23 73 570 WORK IN PROGRESS 89 45 000 85 81 305 3 63 695 (OR SEMI FINISHED) RAW MATERIAL 6 31 29 000 5 89 28 040 42 00 000 PACKING MATERIAL 15 82 000 10 47 827 5 34 1 73 10 52 86 000 97 81 362 74 72 398 2108-2008-SG 3 2.1 IN VIEW OF THE DISCREPANCIES THE ASSESSEE WAS REQUIRED TO SUBSTANTIATE THE CLOSING STOCK SHOWN AT `97 81 362/- AND WAS INFORMED THAT IN CASE OF FAILURE TO DO SO THE BOOKS OF ACCOUNT ARE LIKELY TO BE REJECTED. THE A SSESSEE SUBMITTED THE EXPLANATION AS OVERLEAF:- I) THAT GROSS PROFIT HAS INCREASED FROM 21.55% TO 24.14 % THIS YEAR FROM IMMEDIATELY PRECEDING ASSESSMENT YEAR AND THAT GROSS PROFIT APPLIED IN 1996-97 WAS DELETED BY THE CIT(A ). II) THAT APPLICATION OF PROVISION OF SECTION 145(3) PROV IDES THAT WHERE THE ASSESSING OFFICER IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF ACCOUNT OR WHERE THE METHOD OF ACCOUNTING PROVIDED IN SUB SECTION (1) OR ACCOUNTI NG STANDARD AS NOTIFIED SUB SECTION (2) ARE NOT REGULARLY F OLLOWED THE ASSESSING OFFICER MAY TAKE AN ASSESSMENT IN THE MAN NER PROVIDED IN SECTION 144 IN THE INCOME-TAX ACT. III) THAT THE ASSESSEE COMPANY HAS REGULARLY BEEN MAINTAINING ACCOUNT BOOKS. IV) THAT THE ASSESSEE COMPANY HAS BEEN ENJOYING CREDIT FACILITY FROM STANDARD CHARTERED BANK AND SUBMITTING THEIR MONTH LY STATEMENT OF STOCK BY 20 TH OF THE FOLLOWING MONTHS. V) THAT THE STOCK OF DIFFERENT ITEMS AS AFORESAID AT `1052. 86 LACS SHOWN TO THE BANK WAS ON ESTIMATE BASIS AND WAS ON HIG HER SIDE IN ORDER TO KEEP THE BANK SATISFIED AS THERE WAS OUTSTANDING BANK LOAN OF `2896.24 LACS AS ON 31.03. 2003. VI) THAT ON THE OTHER HAND QUANTITIES OF DIFFERENT TYPES OF STOCKS IN THE BALANCE SHEET AT `978.14 LACS ARE AS PER LEDGER MAINTAINED BY THE ASSESSEE ON DAY TO DAY BASIS AND THAT VALUATION OF EACH ITEMS OF STOCK OF FINISHED GOODS IS AS PER SALES INVOICES RAW MATERIALS PACKING MATERIAL OF ITEMS AT DIFFERENT STAGES OF PRODUCTION SINCE THE WHOLE PROCESS OF VALUATION OF CLOSING STOCK INVOLVE 40 TO 50 DAYS. 2108-2008-SG 4 2.2 ON EXAMINATION OF THE BOOKS OF ACCOUNT AND THE SUB MISSIONS OF THE ASSESSEE THE ASSESSING OFFICER NOTED SIX POINTS WHICH REQUIRED RE JECTION OF BOOKS OF ACCOUNT AND ESTIMATION OF THE BOOK PROFITS. FINALLY AN ADDI TION OF `61 54 504/- WAS MADE TO THE BOOK RESULTS. SINCE THE ASSESSEE WAS ENTITLED THE DEDU CTION U/S 80HHC @50% OF THE BUSINESS PROFIT THE EFFECTIVE ADDITION TO THE TOTAL INCOME WAS ONLY 1/2 OF THE AFORESAID AMOUNT. FOR THE SAKE OF READY REFERENCE T HE FINDINGS OF THE ASSESSING OFFICER ARE REPRODUCED BELOW:- FROM THE ABOVE DISCUSSION IT MAY BE SEEN THE ASSESSEE HAS NEITHER PROVIDED THE REQUIRED DETAILS NOR BASIS OF VALUATION GIV EN & THE BOOKS OF ACCOUNTS SUFFER FROM THE FOLLOWING SERIOUS DEFECTS:- I) COST OF PRODUCTION THAT COULD HAVE BEEN MADE BASIS FOR VALUATION OF STOCK WHICH HAS NOT BEEN GIVEN. IN THE MANUFACTUR ING ACCOUNT THE ASSESSEE COMPANY HAS ALSO DEBITED AN AMOUNT OF `4 28 15 658/- BEFORE WORKING OUT THE GROSS PROFIT OF `6 98 43 504/- FOR WAGES EPF CONTRIBUTION. PF CONTR IBUTION BONUS EXGRATIA FACTORY POWER MACHINERY HIRE ETC. APAR T FROM CONSCRIPTION OF IMPORTED CANE FOR `92 40 795/- MAINLY USED IN PRODUCTION OF CRICKET BATS HUGE QUANTITY OF LEATHER & CLOTH. PROPORTIONATE COST WAS REQUIRED TO BE ADDED IN THE VALUAT ION OF CLOSING STOCK OF FINISHED GOODS. II) MATHEMATICAL BASIS OF VALUATION OF ITEMS OF WORK IN P ROGRESS HAS NOT GIVEN ALTHOUGH ACCORDING TO THE CO. HAD STOCK REGI STER FOR EACH ITEM OF RAW MATERIAL TAKEN TO PRODUCTION & RECEIVED A FTER PRODUCTION. III) THE WORKING GIVEN FOR VALUATION OF STOCK OF ENGLISH KASHMIR BATS IS ON THE BASIS OF THREE SALE BILLS OF LOWER RATE OF THE TWO ITEMS WHEREAS THE SALE PRICE TAKEN FROM SALE BILLS AS DISCUSSED ABOVE ARE ON HIGHER SIDE. THE VALUATION WAS REQUIRED TO BE DONE TAKING INTO QUALITY WISE PRODUCTION OF EACH ITEM. 2108-2008-SG 5 IV) THE VALUATION OF PACKING MATERIAL HAS BEEN GIVEN AFTER I TS CONSUMPTION. THE LARGE QUANTITY OF FINISHED GOODS LYI NG IN THE STOCK COULD NOT BE SAID TO ALL UNPACKED ITS VALUATION WAS NECESSARY TO BE TAKEN IN THE VALUATION OF PACKING METHOD. V) QUALITY WISE COST OF ITEMS THAT REMAINED IN THE CLOSING STOCK HAS NOT BEEN DONE. VI) NO PROPER JUSTIFICATION HAS BEEN FURNISHED THAT STOCK G IVEN IN THE BANK IS INCORRECT VIS-A-VIS STOCK AS PER BOOKS OF ACC OUNTS. IN THE TRADING ACCOUNT BEFORE WORKING THE GROSS PROFIT AT 24 .14% THE ASSESSEE COMPANY HAS CREDITED AN AMOUNT OF `29.27 934/- AGAINST NIL AMOUNT LAST YEAR COMPRISING OF COST OF G OODS REPLACED AT `5 48 086/-. COST OF GOODS PROMOTION AT `16 41 272/- AND FREE SALES AT `7 38 576/-. THEIR CORRESPONDING ENTRIES AR E DEBITED IN THE PROFIT AND LOSS ACCOUNT AND NOT IN THE T RADING ACCOUNT. THIS HAS IMPACT TOWARDS INCREASE IN GROSS PROFIT 0.25% (G.P. ON SALE OF 29 23 00 034/- IS 23.89%). THE DIFFERENCE BETWEEN THE STOCK SHOWN TO THE BANK AND AS PER BOOKS OF ACCOUNT AS GIVEN ABOVE IS `74 72 398/- SALE AFTERMAT HS. FOR THE REASONS IS DISCUSSED ABOVE THE STOCK VALUATION AS SHOWN BY THE ASSESSEE IS NOT CORRECT AND COMPLETE & WARRANTS APPLICATI ON OF PROVISIONS OF SECTION 145(3) OF THE INCOME-TAX ACT. IN THE CASE OF THE ASSESSEE GROSS PROFIT SHOWN IN EARLIER ASSESSMENT YEARS ARE 33.51% IN SALES OF `1151.56 LACS IN ASSESSMENT YEAR 1995-96 AND 2 8.31 ON SALES OF `2070.55 LACS IN ASSESSMENT YEAR 96-97 & 24.40 ON S ALES OF `2121.46 LACS IN ASSESSMENT YEAR 2000-01. RATE OF GRO SS PROFIT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IS APPLIED AT 26% O N TOTAL TURNOVER OF `29 23 00 034/- RESULTING INTO INCREASE IN GROSS PROFIT BY `61 54 504/- (`7 59 98 008/- - `6 98 43 504/-). AM OUNT OF `61 54 504/- IS ACCORDINGLY ADDED TO THE INCOME OF THE ASSESSEE SUBJECT TO DEDUCTION U/S 80HHC OF THE INCOME-TAX ACT. PENALTY PROCEEDINGS U/S 271(1)(C) ARE INITIATED SINCE THE ASSESSEE C OMPANY HAS BEEN FOUND TO HAVE UNDER VALUED CLOSING STOCK. 3. THE MATTER WAS AGITATED IN APPEAL BEFORE THE LEARNED C IT(A). IT WAS INTER- ALIA SUBMITTED THAT THE REGULAR BOOKS OF ACCOUNT WERE MA INTAINED. THESE HAVE BEEN 2108-2008-SG 6 MENTIONED IN PARAGRAPH 3 OF THE IMPUGNED ORDER. IT WAS FURTHER SUBMITTED THAT THE STOCK WAS DECLARED TO THE BANK ON AN ESTIMATE BASIS. IN THE BOOKS THE ASSESSEE HAS BEEN VALUING THE STOCK ON THE FOLLOWING BASIS:- I) FINISHED GOODS AS PER SALE INVOICES OF THE MONTH OF APR IL FOLLOWING THE PREVIOUS YEAR; II) RAW MATERIALS AND PACKING MATERIALS AS PER PURCHASE BIL LS; & III) SEMI-FINISHED GOODS BY ADDING ESTIMATED EXPENDITURE TO THE COST OF THE GOODS. 3.1 IT WAS FURTHER SUBMITTED THAT VERY METHOD HAS BEEN EMP LOYED IN THIS YEAR AND THE STOCK AS PER LEDGER HAS BEEN QUANTIFIED AND VALUED THEREA FTER AS ABOVE. IT WAS ALSO SUBMITTED THAT THE ASSESSING OFFICER HAS NOT POINT ED OUT TOWARDS ANY DISCREPANCY IN THE BOOKS OF ACCOUNT. THEREFORE NO ADD ITION SHOULD HAVE BEEN MADE BY REJECTING THE BOOKS ON ACCOUNT OF DIFFERENCE BETW EEN ESTIMATED STOCK FURNISHED TO THE BANK AND ACTUAL STOCK AS PER BOOKS VA LUED ON THE BASIS OF METHOD REGULARLY IMPLIED BY THE ASSESSEE. THE LEARNED CIT(A) CONSI DERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE HIM. HE CAME TO THE CONC LUSION THAT THE STOCK HAS BEEN VALUED BY THE ASSESSEE ON THE BASIS OF THE METHOD REGULARLY EMPLOYED FOR ITS VALUATION. NO OTHER DISCREPANCY HAS BEEN POINTED OU T BY THE ASSESSING OFFICER. THE GROSS PROFIT RATIO DECLARED BY THE ASSESSEE IS IN LINE WITH THE RATIO OF EARLIER 2108-2008-SG 7 YEARS. THEREFORE HE DELETED THE ADDITION. HIS FINDINGS A RE CONTAINED IN PARAGRAPH 4 WHICH IS REPRODUCED OVERLEAF:- 4. I HAVE CAREFULLY PERUSED AND CONSIDERED ALL THE RELEVANT FACTS AND CONTENTIONS ON RECORD AND HAVE ALSO CONSIDERED THE PAST RECORDS OF THE APPELLANT. 4.1 I AM CONVINCED THAT THE APPELLANT HAS REGULARLY MAINTAI NED PROPER BOOKS OF ACCOUNT INCLUDING STOCK LEDGER PRODUCTION RECORD AND ASSESSEES ACCOUNTS HAVE BEEN ACCEPTED CONSISTENTLY IN THE PAST. THIS IS ALSO ON RECORD THAT /THE TURNOVER AS WELL AS PROFIT HAVE INCREASED YEAR AFTER YEAR . 4.2 THE APPELLANT HAS FOLLOWED REGULARLY AND CONSISTENTLY T HE METHOD OF VALUING ITS STOCK OF FINISHED GOODS AT SELLING RATE PREVAILING ON THE BASIS OF SELLING RATE OF PERIODS SUBSEQUENT TO THE CLOSING DATE OF THE YEAR. FU RTHER IT HAS CONSISTENTLY VALUED ITS STOCK OF RAW MATERIAL AND STOC K OF SEMI-FINISHED GOODS AT COST. 4.3 AS THIS METHOD OF VALUATION HAS BEEN ACCEPTED IN PAST; T HIS CARRIES A STRONG FORCE ON THE GROUND OF CONSISTENCY. I AGREE WITH THE A PPELLANTS SUBMISSIONS. 4.4 ON THE OTHER HAND I FIND THAT THE OBJECTIONS RAISED BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER ARE WITHOUT MUCH LOGIC AND SUBS TANCE AND SOMETIME DO NOT MAKE ANY SENSE. NEITHER HE HAS POINTED OUT ANY S ERIOUS DEFECTS BY WAY OF DIFFERENCE IN FIGURES OF PURCHASE SALES OR EXPENSES OR ANY UNRECORDED SALE OR ANY OTHER SERIOUS DEFECTS IN BOOKS OF A CCOUNTS. THE ASSESSING OFFICER HAS ALSO NOT POINTED OUT AS TO WHAT COULD HAVE BEEN CORRECT METHOD OF VALUATION OF STOCK OF FINISHED GOODS AND RAW MATERIAL. 4.5 TO CONCLUDE BRIEFLY I AGREE WITH ALL THE CONTENTIONS RAI SED BY THE APPELLANT AND HOLD THAT THE ASSESSING OFFICERS ACTION OF REJECTI NG THE BOOK RESULT IS NOT LEGALLY TENABLE. 4.6 I ALSO FIND THAT THE GP RATE FOR THE CURRENT YEAR IS WEL L IN CONFORMITY WITH AND RATHER BETTER THAN PAST YEARS FIGURES. 4.7 THUS THE ENTIRE ADDITION MADE BY WAY OF GP IS FOUND TO BE WITHOUT ANY SOUND REASONS AND HENCE IS DELETED. 2108-2008-SG 8 4. BEFORE US THE LEARNED DR REFERRED TO THE FINDINGS OF THE ASSESSING OFFICER IN RESPECT OF THE DISCREPANCY IN THE STOCK DECLARED TO THE BAN K VIS-A-VIS THE INVENTORY FROM THE BOOKS. SHE ALSO REFERRED TO THE FINDINGS OF ASSES SING OFFICER THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE BOOKS OF ACCOUNT NEED TO BE REJECTED AND THE GROSS PROFIT COMPUTED AT 26% OF THE TURN OVER. FURTHER SHE REFERRED TO THE FINDINGS OF THE LEARNED CIT(A) IN WHICH THE DISCREPANC Y IN THE STOCK AS AFORESAID WAS NOT DISCUSSED AT ALL. THEREFORE IT WAS ARGUED THAT EITHER THE ORDER OF THE ASSESSING OFFICER MAY BE RESTORED OR THE MATTER MAY BE REFER RED TO THE LEARNED CIT(A) FOR RECONSIDERATION OF THE MATTER. 4.1 IN REPLY THE LEARNED COUNSEL FOR THE ASSESSEE FURNISHED THE DETAILS OF GROSS PROFIT RATIO FOR VARIOUS YEARS FROM ASSESSMENT YEARS 19 94-95 TO 2008-09 AND THE ACCEPTANCE OR OTHERWISE THEREOF IN ASSESSMENT PROCEEDINGS OR APPEALS. IT WAS HIS CASE THAT THE STOCK STATEMENT HAS TO BE FURNISHED TO THE B ANK SOON AFTER THE CLOSE OF THE YEAR ON 31 ST MARCH. THIS STATEMENT IS FURNISHED ON AN ESTIMATED BAS IS AS THE BOOKS ARE NOT READY FOR PREPARING FINAL STATEMENT BY TH AT TIME. SUBSEQUENTLY THE STOCK IS VALUED ON AN EXACT BASIS FOLLOWING THE REGULAR METHOD OF ACCOUNTING. THEREFORE THERE IS BOUND TO BE SOME DIFFERENCE BETWEEN THE TWO S TATEMENTS OF THE STOCK. THIS HOWEVER DOES NOT MEAN THAT THE BOOK RESULT S ARE NOT ACCEPTABLE. THE ASSESSEE HAS BEEN MAINTAINING REGULAR BOOKS OF ACCOUNT AN D HAS BEEN THE VALUING 2108-2008-SG 9 STOCK ON A REGULAR METHOD. THE ASSESSING OFFICER HAS N OT POINTED OUT TOWARDS ANY DISCREPANCY IN THE MAINTENANCE OF THE BOOKS OF ACCOUNT. IN VIEW THEREOF THE BOOKS OF ACCOUNT CANNOT BE REJECTED. SINCE THE STOCK HAS ALSO BEEN VALUED ON REGULAR METHOD AND ITS VALUATION HAS BEEN JUSTIFIED NO ADDITIO N CAN BE MADE ON ACCOUNT OF THE DISCREPANCY IN THE TWO STATEMENTS. THE BOOK RESULTS S HOWN BY THE ASSESSEE IN THIS YEAR ARE BETTER THAN THE RESULTS IN THE IMMEDIATELY P RECEDING YEAR AS WELL AS IMMEDIATELY SUCCEEDING YEAR. ULTIMATELY THE RESULTS FOR B OTH THE YEARS WERE ACCEPTED. THEREFORE IT IS ARGUED THAT THERE IS NO REASON T O MAKE ANY ADDITION IN THIS YEAR. THE FIGURES OF GROSS PROFIT RATE FOR VARIOU S YEARS AND TREATMENT METED OUT TO IT IN PAST AND FUTURE SUBMITTED BY THE LEARNED COUN SEL BEFORE US ARE REPRODUCED BELOW:- 1994-94 1638.32 484.82 29.59 ADDITIONS IN TRADING ACCOUNT BY CIT(A) WHICH WAS CONFIRMED BY THE TRIBUNAL. 1995-96 1986.55 582.93 29.35 ADDITIONS OUT OF EXPE NSES DELE- TED BY CIT(A). 1996-97 2070.55 586.21 28.31 ADDITIONS IN TRADING ACCOUNT DE- LETED BY CIT(A) WHICH WAS SENT BACK BY THE TRIBUNAL TO ASSESSING OFFICER WHO CONFIRMED ACTION OF CIT(A) U/S 143(3)/254. 1997-98 1979.89 480.61 24.27 ADDITIONS OUT OF EXPE NSES DELETED BY CIT(A). 1998-99 2122.97 475.25 22.07 ADDITIONS OUT OF EXPE NSES DELETED BY CIT(A). 1999-00 2163.98 515.63 23.83 ADDITIONS OUT OF EXPE NSES DELETED BY CIT(A). 2000-01 2121.46 517.75 24.40 ADDITIONS OUT OF EXPE NSES DELETED BY CIT(A). 2108-2008-SG 10 2001-02 2233.36 501.01 22.43 ADDITIONS OUT OF EXPE NSES DELETED BY CIT(A). 2002-03 2364.34 509.45 21.55 RETURNED INCOME ACCEP TED IN ASS- MENT ORDER U/S 143(3). 2003-04 2893.72 698.43 24.14 ADDITIONS IN TRADING ACCOUNT DELE- TED BY CIT(A). DEPARTMENT IS IN APPEAL BEFORE ITAT. 2004-05 3130.67 732.60 23.40 NOMINAL ADDITION OF ` 1.83 LACS IN TRADING ACCOUNT DELETED BY CIT(A). 2005-06 3326.53 813.71 24.46 RETURNED INCOME ACCEP TED IN ASSESSMENT ORDER U/S 143(3). 2005-07 3265.69 676.05 20.70 RETURNED INCOME ACCEP TED IN ASSESSMENT ORDER U/S 143(3). 2007-08 5130.43 1086.88 21.18 RETURNED INCOME ACCEP TED IN ASSESSMENT ORDER U/S 143(3). 2008-09 4417.25 953.61 21.59 RETURNED INCOME ACCEP TED IN ASSESSMENT ORDER U/S 143(3). 5. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSION S MADE BEFORE US. ON THE BASIS OF THE FACTS ON RECORD AND MENTIONED IN THE IMPUGNED ORDER IT IS CLEAR THAT THE ASSESSEE HAS BEEN MAINTAINING REGULAR BOOKS OF AC COUNT. NO DISCREPANCY WHATSOEVER HAS BEEN POINTED OUT BY THE ASSESSING OFFICER IN MAINTENANCE OF THESE ACCOUNTS. THE ACCOUNTS ARE ALSO AUDITED. THE ASSESSEE HA S BEEN VALUING FINISHED GOODS AT MARKET VALUE TAKING THE SALE PRICE OF THE ITEMS IN THE FOLLOWING MONTH OF APRIL. THE RAW MATERIAL AND SEMI-FINISHED GOODS ARE VAL UED ON COST BASIS. THEREFORE IT CAN BE SAID THAT TWO DIFFERENT METHODS HAVE B EEN EMPLOYED FOR VALUING FINISHED GOODS ON ONE HAND AND RAW MATERIAL AN D SEMI-FINISHED GOODS ON 2108-2008-SG 11 THE OTHER. THERE MAY BE SOME MISTAKE IN DOING SO AS ALL I TEMS OF STOCK HAVE TO BE VALUED ON A CONSISTENT BASIS I.E. EITHER ON COST OR COS T OR MARKET VALUE WHICHEVER IS LESSER. FURTHER THERE HAVE BEEN DELAYS IN SELLING FINISHED G OODS AND IN SUCH CASES THE SALE PRICE MAY NOT REFLECT THE FAIR MARKET VALUE OF THE GOODS ON THE CLOSE OF THE PREVIOUS YEAR. HOWEVER THE AFORESAID METHOD HAS BEEN EMPLO YED ON A CONSISTENT BASIS. IN CASE THE ASSESSING OFFICER WANTED TO CHANGE TH E METHOD TO THE RECOGNIZED METHOD MENTIONED ABOVE THE SAME EXERCISE SHOULD HA VE ALSO BEEN UNDERTAKEN FOR VALUING THE OPENING STOCK. IN OTHER WORD S THE BOOK RESULTS CANNOT BE ENHANCED MERELY BY RE-VALUING THE CLOSING STOCK. IN T HESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE CONSISTENT METHOD ADOPTED BY THE A SSESSEE SHOULD HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER. FURTHER NO OTHER D ISCREPANCY HAS BEEN POINTED OUT IN THE BOOKS OF ACCOUNT. IN THIS SCENARIO VARIOUS OBJECTIONS REGARDING COST OF PRODUCTION MATHEMATICAL BASIS FOR VALUATION OF WORK IN PROGRESS VALUATION OF PACKING MATERIAL QUANTITATIVE-WISE COST OF ITEMS A ND DIFFERENCE IN TWO INVENTORIES LOOSE SIGNIFICANCE. THEREFORE WE ARE OF THE VI EW THAT THE LEARNED CIT(A) RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 6. IN RESULT THE APPEAL IS DISMISSED. THIS ORDER WAS PRONOUNCED IN OPEN COURT ON 11-03-2011. SD/- SD/- ( R.P. TOLANI ) ( K.G. BANSAL ) 2108-2008-SG 12 JUDICIAL MEMBER ACCOUNTANT ME MBER DT.11 /03/2011 NS COPY FORWARDED TO:- 1. ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE-2 MEERUT. 2. M/S SANSPAREILS GREELANDS P. LTD. 28/32 VICTORIA PARK MEERUT. 3. THE CIT (A) NEW DELHI. 4. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DELHI. TRUE COPY BY ORDER (ITAT NEW DELHI).