The ACIT, Circle-2,, Bhavnagar v. M/s. Shantilal Nagardas and Co.,, Bhavnagar

ITA 3362/AHD/2009 | 2006-2007
Pronouncement Date: 11-11-2011 | Result: Dismissed

Appeal Details

RSA Number 336220514 RSA 2009
Assessee PAN AANFS9477N
Bench Ahmedabad
Appeal Number ITA 3362/AHD/2009
Duration Of Justice 1 year(s) 10 month(s) 19 day(s)
Appellant The ACIT, Circle-2,, Bhavnagar
Respondent M/s. Shantilal Nagardas and Co.,, Bhavnagar
Appeal Type Income Tax Appeal
Pronouncement Date 11-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 11-11-2011
Date Of Final Hearing 09-11-2011
Next Hearing Date 09-11-2011
Assessment Year 2006-2007
Appeal Filed On 22-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND A. MOHAN ALAN KAMONY AM) ITA NO.3362/AHD/2009 A. Y.: 2006-07 THE A. C. I. T. CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAGARDAS & CO. NANAVATI BAZAR BHAVNAGAR PA NO. AANFS 9477 N (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SAMIR TEKRIWAL SR. DR RESPONDENT BY SHRI ANIL KSHATRIYA AR DATE OF HEARING: 09-11-2011 DATE OF PRONOUNCEMENT: 11-11-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XX AHMEDABAD DATED 30-09-2009 FOR ASSESSMENT YEAR 2006-07 ON T HE FOLLOWING GROUNDS: 1. THE LD. CIT(A)-XX AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.53 13 006/- MA DE BY THE AO ON ACCOUNT OF INCORRECT VALUATION OF STOCK WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER. 1.2 IN DOING SO THE LD. CIT(A) HAS ERRED IN LAW A ND ON FACTS IN HOLDING THAT THE DEPARTMENT CANNOT COMPEL THE AS SESSEE TO ADOPT A PARTICULAR SYSTEM OF ACCOUNTING WITHOUT AP PRECIATING THAT THE ASSESSEE HAD NOT FOLLOWED THE RECOGNIZED C OMMERCIAL ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 2 ACCOUNTING POLICY FOR VALUATION OF CLOSING STOCK W HICH IS LOWER OF COST OR MARKET PRICE. 1.3 IN DOING SO THE LD. CIT(A) HAS ERRED IN LAW A ND ON FACTS IN NOT APPRECIATING THAT FROM THE ASSESSEE'S METHOD OF VALUATION OF CLOSING STOCK ON THE BASIS OF THE AVERAGE RATE M ETHOD FOR THE LAST THREE YEARS THE CORRECT PROFIT OF THE ASSESSE E FOR THE YEAR UNDER CONSIDERATION COULD NOT HAVE BEEN ARRIVED AT AND AS SUCH THE AO WAS JUSTIFIED IN LAW IN REJECTING THE SAID M ETHOD OF VALUATION ADOPTED BY THE ASSESSEE. 1.4 IN DOING SO THE LD. CIT(A) HAS ERRED IN LAW A ND ON FACTS IN NOT APPRECIATING THAT UNDER THE WEIGHTED AVERAGE COST FORMULA AS PER THE ACCOUNTING STANDARD 2 (REVISED) THE COST OF EACH ITEM IS DETERMINED FROM THE WEIGHTED AVERAG E OF THE COST OF SIMILAR ITEMS AT THE BEGINNING OF A PERIOD AND THE COST OF SIMILAR ITEMS PURCHASED OR PRODUCED DURING THE YEAR AND THE SAID ACCOUNTING STANDARD NOWHERE PROVIDES THAT AVER AGE MARKET RATE OF THREE YEARS CAN BE TAKEN FOR VALUING THE CLOSING STOCK. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT (A)-XX AHMEDABAD OUGHT TO HAVE UPHELD THE ORDE R OF THE A.O. 3. IT IS THEREFORE PRAYED THAT THE ORDER OF THE C IT(A)-XX AHMEDABAD BE SET ASIDE AND THAT OF A.O BE RESTORED TO THE ABOVE EXTENT. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF GOLD AND SILVER JEWELLER IES. THE ASSESSEE FIRM IS IN EXISTENCE FOR THE LAST SEVERAL YEARS. FO R THE ASSESSMENT YEAR 2006-07 THE ASSESSEE FIRM FILED ITS RETURN OF INCOME ON 31-12-2006 DECLARING TOTAL INCOME OF RS.9 89 570/-. THE RETURN OF INCOME WAS DULY SUPPORTED BY AUDITED ANNUAL ACCOUNT S AND ACCOMPANYING DOCUMENTS. AS PER THE AUDITED ACCOUNTS THE METHOD ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 3 OF VALUATION OF CLOSING STOCK IS STATED TO BE LOWE R COST OR AVERAGE MARKET PRICE WHICHEVER IS LESS AND THE CORRESPONDI NG COST IS DETERMINED ON WEIGHTED AVERAGE COST METHOD. DETAILE D CALCULATION OF VALUATION OF STOCK IS NARRATED IN PARA 3 OF THE ASS ESSMENT ORDER ITSELF. THESE DETAILS WERE FILED BEFORE THE AO. FROM THIS D ETAILED CALCULATION OF STOCK IT WAS NOTICED BY THE AO THAT THE ASSESSE E HAS MAINTAINED VALUATION OF STOCK AS AVERAGE RATE OF LAST THREE YE ARS' MARKET PRICE BEING FOLLOWED BY THE ASSESSEE. THE ASSESSEE WAS CO NSISTENTLY FOLLOWING SUCH METHOD OF VALUATION SINCE LAST MANY YEARS RATHER SINCE INCEPTION AND WAS FOLLOWED IN ALL THE PAST YE ARS INCLUDING IMMEDIATELY PRECEDING YEAR WHERE THE THEN AO HAD PA SSED AN ORDER UNDER SECTION 143(3) OF THE IT ACT IN RELATION TO A SSESSMENT YEAR 2005-06. WHILE VALUING THE STOCK THE ASSESSEE HAD TAKEN INTO CONSIDERATION THE PURCHASE PRICE SALE PRICE CORRE SPONDING PURCHASE TAX LABOUR CHARGES ETC. FOR THE NUMERATOR. THE CO RRESPONDING SUMMATION OF THE QUANTITY WAS TAKEN AS THE DENOMINA TOR SO AS TO ARRIVE AT THE WEIGHTED AVERAGE COST OF ONE UNIT OF STOCK. THIS HAS BEEN MULTIPLIED BY THE QUANTITY OF CLOSING STOCK SO AS TO ARRIVE AT THE VALUE OF STOCK ON THE RESPECTIVE BALANCE SHEET DATE S. THE AO DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS WAS OF THE OPINION THAT THE CLOSING STOCK WAS REQUIRED TO BE VALUED ON THE LAST DAY PRICE OF THE GOLD/SILVER ARTICLES. HE ACCORDINGLY ASKED THE ASSE SSEE TO SHOW CAUSE AS TO WHY THE METHOD OF VALUATION ADOPTED BY THE ASSESSEE SHOULD NOT BE ADOPTED AT COST OR MARKET PRICE WHIC HEVER IS LOWER AS PREVAILING ON 31-03-2006 INSTEAD OF AVERAGE OF MARK ET RATE OF PRECEDING THREE YEARS FOLLOWED BY THE ASSESSEE VIDE LETTER DATED 17-12-2008. THE ASSESSEE STRONGLY OBJECTED TO THIS PROPOSAL OF THE ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 4 AO TO DISTURB THE VALUE OF CLOSING STOCK. COPY OF T HE REPLY FILED BY IT BEFORE THE AO OBJECTING TO THIS PROPOSAL IS APPENDE D AT PAGE NO.5 TO 7 OF PAPER BOOK. THE AO ON PERUSAL OF DETAILED WORKING OF CLOSING STOCK FOUND THAT THE ASSESSEE HAS MAINTAINED CLOSI NG STOCK OF GOLD AND SILVER ORNAMENTS BY ADOPTING AVERAGE RATE METHO D OF THREE YEARS WHICH IS NOT IN CONFORMITY WITH THE ACCOUNTING POLI CY FOR VALUATION OF CLOSING STOCK. THE AO HAS AFTER CONSIDERING THE FAC TS AND EXPLANATION OF THE ASSESSEE CONCLUDED THAT THE SAME CANNOT BE A CCEPTED AS THE ASSESSEE HAS NOT FOLLOWED THE RECOGNIZED COMMERCIAL ACCOUNTING POLICY FOR VALUATION OF CLOSING STOCK. THE AO HAS HOWEVER NOT MADE ANY MENTION OR TRIED TO DISTINGUISH TH E CASE LAWS CITED BY THE ASSESSEE FROM THE FACTS OF THE ASSESSEES CASE. AFTER REJECTING THE METHOD OF ACCOUNTING FOR VALUATION OF CLOSING S TOCK WITHOUT INVOKING PROVISIONS OF SECTION 145 OF THE IT ACT T HE AO PROCEEDED TO REVALUE THE CLOSING STOCK AT COST OR MARKET PRICE WHICHEVER IS LOWER AND HE HAS DRAWN REVISED PROFIT & LOSS ACCOUNT REPLACING THE VALUATION OF BOTH THE OPENING AS WELL AS CLOSING ST OCKS AND DETERMINED THE RESULTANT NET PROFIT AT RS.62 65 101 /-. SINCE THE NET PROFIT DISCLOSED IN THE AUDITED ACCOUNTS OF THE ASS ESSEE WAS RS.9 52 095/- HE HAS MADE AN ADDITION OF RS.53 13 006/-. 3. BEFORE THE LEARNED CIT(A) IT WAS SUBMITTED BY TH E ASSESSEE AS UNDER: '(1) IN THE ASSESSMENT ORDER THE LEARNED ASSESSING OFFICER HAS ADOPTED LAST PRICE OF GOLD AND SILVER TO MAKE V ALUATION OF CLOSING STOCK AS AGAINST AVERAGE RATE OF LAST THREE YEARS MARKET PRICE ADOPTED BY THE ASSESSEE. (2) THE ASSESSEE WAS ADOPTING SUCH METHOD OF VALUAT ION SINCE LAST MANY YEARS AND HAS BEEN ADOPTED IN ALL S UCH YEARS ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 5 INCLUDING IN THE PRECEDING YEAR WHERE THE ASSESSMEN T WAS FINALIZED U/S 143(3). RELIANCE MAY ALSO BE MADE TO THE DECISION OF ITAT AHMEDABAD IN THE CASE OF INCOME TAX OFFICER VS. CHO KSHI HIRACHAND & BROS (37 TTJ 415) WHEREIN IT HAS BEEN HELD THAT 'WHEN THE VALUATION OF CLOSING STOCK ACCORDING TO T HE ACCOUNTING SYSTEM CONSISTENTLY FOLLOWED WAS ACCEPTE D BY THE REVENUE IN EARLIER AS WELL AS SUBSEQUENT ASSESSMENT YEARS ITO WAS NOT JUSTIFIED IN MAKING ADDITIONS BY ADOPTI NG A DIFFERENT METHOD FOR ASSESSMENT YEARS IN QUESTION.' ( 3) RELIANCE IS ALSO PLACED ON THE DECISION OF YOUR HONOUR IN THE CASE OF M/S SONI DWARKADAS VIRCHAND & SONS WHEREIN YOUR HONOUR HAS HELD THAT: 'THE ISSUE OF DISTURBING THE VALUATION OF CLOSING S TOCK CAN ALSO BE SEEN FROM THE CONTEXT OF RULE OF CONSISTENCY. IT IS A MATTER OF FACT THAT THE APPELLANT IS A PARTNERSHIP-FIRM CARRY ING ON THIS BUSINESS FOR THE LAST SEVERAL YEARS. A NUMBER OF SC RUTINY ASSESSMENTS HAVE ALSO BEEN COMPLETED BY THE DEPARTM ENT IN THE PAST IN SEVERAL YEARS. THE AR HAS POINTED OUT T HE FIRM HAD VALUED THE STOCK BY ADOPTING THE SAME FORMULA AND T HE SAME HAS NEVER BEEN DISTURBED OR CHALLENGED BY THE DEPAR TMENT IN THE PAST. THE AO IS THEREFORE NOT JUSTIFIED IN AD OPTING SUDDENLY A CHANGED METHOD REPLACING THE STANDARD AND ACCEPTE D METHOD OF VALUATION OF STOCK (WEIGHTED AVERAG E COST METHOD) TO MARKET PRICE.' A COPY OF THE ABOVE DECISION IS ENCLOSED HEREWITH. (4) WITHOUT PREJUDICE TO WHATEVER STATED ABOVE IT MAY BE APPRECIATED THAT IN ANY CASE THE VALUATION OF STOC K SHOULD BE AT COST OR MARKET PRICE WHICHEVER IS LOWER. THERE IS A CATENA OF DECISIONS HOLDING THAT CLOSING STOCK SHOULD BE VALU ED AT AVERAGE COST PRICE METHOD CALCULATED ON THE BASIS O F VALUE OF OPENING STOCK AND PURCHASES MADE DURING THE YEAR. REFERENCE MAY BE MADE TO THE DECISION OF ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 6 DECISION OF ITAT CHANDIGARH IN THE CASE OF ACI T VS JAGDISH CHAND (90 TTJ 943) WHEREIN IT HAS BEEN HELD THAT 'VALUATION OF CLOSING STOCK OF GOLD ORNAMENTS AT TH E AVERAGE RATE OF OPENING AND PURCHASES MADE DURING THE YEAR WAS JUSTIFIED ADDITION MADE BY APPLYING AVERAGE RATE O F PURCHASES TO THE STOCK COULD BE SUSTAINED.' DECISION OF ITAT INDORE BENCH IN THE CASE OF A CIT VS. GOPALDAS VALLBHDAS (59 TTJ 768) WHEREIN IT HAS BEEN HELD THAT CLOSING STOCK SHOULD BE VALUED AT AVERAGE COST CAL CULATED ON THE BASIS OF VALUE OF OPENING STOCK AND PURCHASES M ADE DURING THE YEAR WHERE LIFO OR FIFO METHOD COULD NOT BE APP LIED. * DECISION OF YOUR HONOUR IN THE CASE OF M/S SONI W ARKADAS VIRCHAND & SONS WHEREIN YOUR HONOUR HELD THAT '18. SINCE THE CASE OF APPELLANT IS CLEARLY NOT COV ERED UNDER PARA.14 OF AS-2 (REVISED) IT WILL UNDOUBTEDLY BE C OVERED BY PARA.16 WHICH CLEARLY PROVIDED THAT THE COST OF INV ENTORIES OTHER THAN THOSE DEALT WITH IN PARA.14 SHOULD BE ASSIGNE D BY USING THE FIRST IN FIRST OUT (FIFO) OR WEIGHTED AVERAGE C OST FORMULA.' DURING THE COURSE OF ASSESSMENT THE ASSESSEE HAS F URNISHED REVISED WORKING OF STOCK ON THE BASIS OF AVERAGE PR ICE. THE STOCK VALUE FOLLOWING THAT METHOD WORKS OUT AT RS.2 62 86 543/- AS AGAINST RS.2 78 09 346/- SHOWN BY THE ASSESSEE. (5) THERE WAS AN ARITHMETICAL ERROR IN CALCULATION OF OPENING STOCK. THE PAPER BOOK FILED BY THE APPELLANT ALSO CONTAINS COPY OF THE WRITTEN SUBMISSION DATED 24 TH DECEMBER 2008 MADE BEFORE THE ASSESSING OFFICER. THE RELEVANT PORTION OF THE SAME IS REPRODUCED HEREIN BELOW. (1) AS REGARDS YOUR QUERY AS TO WHY VALUATION OF GO LD BARS AND SILVER SHOULD NOT BE MADE AT THE RATE PREVAILIN G AS AT 31/03/2006 AND GOLD AT THE PURCHASE PRICE OF ORNAME NTS ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 7 AS AT THAT DATE SHOULD NOT BE ADOPTED FOR VALUATION OF STOCK INSTEAD OF AVERAGE OF MARKET RATE FOR \THREE YEARS AS TAKEN BY YOU WE SUBMIT AS UNDER: WE FOLLOW SUCH METHOD OF VALUATION SINCE LAST SEVER AL YEARS AND IS ACCEPTED BY THE DEPARTMENT IN ALL THE YEARS INCLUDING IN A.Y. 2005-2006 WHICH IS SUBJECTED TO SCRUTINY ASSES SMENT (COPY OF THE ASSESSMENT ORDER IS ON YOUR RECORD) REFERENCE MAY BE MADE TO THE DECISION OF SUPREME CO URT IN THE CASE OF UNION OF INDIA VS. KAMLASHI FINANCE COR PORATION LIMITED (1994) 72 TAXMAN 43 WHEREIN IT HAS BEEN HEL D THAT JUDGMENT OF A HIGHER APPELLATE FORUM OR OF A HIGHER COURT IS BINDING UPON ALL THE AUTHORITIES WORKING UNDER IT A ND TO THE DEPARTMENT BEFORE A STILL HIGHER COURT AND THE ISSU E PENDING BEFORE IT. IT MAY BE APPRECIATED THAT SUCH METHOD OF VALUATION OF STOCK HAS BEEN FOLLOWED BY US SINCE VARIOUS YEARS AND IS ACCEPTED IN ALL SUCH YEARS BY THE DEPARTMENT. AS SUCH RATIO OF THE ABOVE DECISION IS APPLICABLE TO OUR CASE. RELIANCE MAY ALSO BE MADE TO THE DECISION OF ITAT AHMEDABAD IN THE CASE OF INCOME TAX OFFICER VS. CHO KSHI HIRACHAND & BROS (37 TTJ 4151) WHEREIN IT HAS BEEN HELD THAT: 'WHEN THE VALUATION OF CLOSING STOCK ACCORDING TO T HE ACCOUNTING SYSTEM CONSISTENTLY FOLLOWED WAS ACCEPTE D BY THE REVENUE IN EARLIER AS WELL AS SUBSEQUENT ASSESSMENT YEARS ITO WAS NOT JUSTIFIED IN MAKING ADDITIONS BY ADOPTI NG A DIFFERENT METHOD FOR ASSESSMENT YEARS IN QUESTION.' A COPY OF THE ABOVE DECISION IS ENCLOSED HEREWITH. WITHOUT PREJUDICE TO WHATEVER STATED ABOVE IT MAY BE APPRECIATED THAT IN ANY CASE VALUATION OF STOCK SHO ULD BE AT COST OR MARKET PRICE WHICHEVER IS LOWER. THERE IS A CATENA OF DECISIONS HOLDING THAT CLOSING SHOULD BE VALUED AT AVERAGE COST PRICE METHOD CALCULATED ON THE BASIS OF VALUE OF OP ENING STOCK AND PURCHASES MADE DURING THE YEAR. ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 8 THE LEARNED COUNSEL HAS FURNISHED REVISED WORKING O F STOCK ON THE BASIS OF AVERAGE PRICE FROM WHICH IT MAY BE APP RECIATED THAT OUR STOCK VALUE WORKS OUT AT RS.2 62 86 543/- AS AGAINST RS.2 78 09 346/- SHOWN BY US. THUS IN ANY CASE THE VALUATION AS PER MARKET RATE AS ASKED FOR BY YOUR GOODSELF IS NOT A STANDARD METHOD. (2) AS REGARDS INTRODUCTION TO PARTNER CAPITAL COP IES OF BANK PASS BOOKS OF PARTNERS SHOWING SOURCE OF AMOUNT INT RODUCE ARE ENCLOSED HEREWITH. (3) A COPY OF BILL OF MAKING CHARGES PAID TO VINAYA K SILVER WORKS AMOUNTING TO RS.25 875/- IS ENCLOSED HEREWITH . SINCE THE ABOVE AMOUNT HAS NOT BEEN SUBJECTED TO TDS THE SAME HAS BEEN DISALLOWED IN THE RETURN OF INCOME FILED. (4) PROVISIONS OF SERVICE-TAX ARE NOT APPLICABL E TO US. WE HOPE THE ABOVE WILL SUFFICE YOUR REQUIREMENTS. THE APPELLANT HAS ALSO RELIED ON VARIOUS JUDICIAL C ITATIONS WHICH ARE PLACED ON PAGE NUMBERS 14 TO 45 OF THE PAPER BO OK. A COPY OF ASSESSMENT ORDER FOR A. Y. 2005-06 PASSED U NDER SECTION 143(3) OF THE ACT DATED 13 TH DECEMBER 2007 BY THE ASSESSING OFFICER IS ALSO FILED IN SUPPORT OF ARGUM ENTS THAT THE VALUATION OF STOCK ON WEIGHTED AVERAGE COST BASIS H AS NOT BEEN DISTURBED BY THE DEPARTMENT IN THE PAST AND THE RUL E OF CONSISTENCY HAS TO BE ADOPTED IN SUCH MATTER. DURING THE COURSE OF APPELLATE PROCEEDINGS THE AR HAS SUBMITTED AT LENGTH ON THE ISSUE. FURTHER ON BEING ASKED BY THE UNDERSIGNED DURING THE COURSE OF APPEAL HEARING T HE AR HAS FILED THE QUANTITATIVE DETAILS AND ALSO PRODUCED TH E FOLLOWING BOOKS OF ACCOUNT/DOCUMENTS: I. CASH BOOK II. LEDGER III. BANK BOOK IV SALES AND PURCHASE REGISTER V. PURCHASE AND SALES BILL FILES ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 9 VI. KARIGAR REGISTER THE ABOVE DOCUMENTS ARE VERIFIED WITH REFERENCE TO THE ASSESSEE'S SUBMISSIONS AND IT IS SEEN THAT THE AFOR ESAID DOCUMENTS ARE THOROUGHLY AUDITED BY THE CHARTERED ACCOUNTANTS UNDER THE STATUTORY AUDIT UNDER SECTION 44AB OF TH4E ACT AND THEY EXHIBIT MARKING IN GREEN INK AT A PPROPRIATE PLACES HAVING MADE BY THE AUDITORS. IN THE COURSE O F VERIFICATION I DO NOT FIND ANY DISCREPANCY/MISTAKE IN THE MAINTENANCE OF THE BOOKS OF ACCOUNT PRODUCED BY THE APPELLANT. IT IS PERTINENT TO NOTE HERE THAT IN THE BODY OF ASSESSMENT ORDER ALSO THE ASSESSING OFFICER HAS NO WHERE MENTIONED ANY MISTAKE OR DISCREPANCY HAVING DETECTE D BY HIM IN THE COURSE OF EXAMINATION OF BOOKS OF ACCOUNT IN THE COURSE OF ASSESSMENT PROCEEDINGS. 4. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS O F THE ASSESSEE IN THE LIGHT OF THE FINDINGS OF THE AO DEL ETED THE ADDITION. HIS FINDINGS IN THE IMPUGNED ORDER READ AS UNDER: 3.3 I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER THE SUBMISSIONS MADE BY THE LEAR NED AR OF THE APPELLANT AND THE CASE-LAWS RELIED UPON B Y HIM. THE PRIMARY DISPUTE IN THE PRESENT APPEAL ARISES OU T OF THE METHOD OF VALUATION OF STOCK WHICH HAS A DIRECT BEARING ON THE RESULTANT PROFIT FOR THE YEAR UNDER CONSIDERATION. IT IS THE UNCONTROVERTED AND UNDISPU TED FACT THAT THE APPELLANT-FIRM HAS BEEN CONSISTENTLY VALUI NG THE INVENTORY AT WEIGHTED AVERAGE COST. THE ASSESSING OFFICER HAS DISBELIEVED THE VALIDITY OF THIS METHOD AND RECASTED THE TRADING ACCOUNT BY TAKING BOTH THE OPE NING AND CLOSING STOCK AT THE PREVAILING MARKET RATES ON THE LAST DATE OF THE FINANCIAL YEAR I.E. 31-03-2006. IN BOTH THE INSTANCES THE PREVAILING MARKET PRICE WAS SUBSTANT IALLY HIGHER THAN THE CORRESPONDING COST AND THIS RESULTE D INTO A NOTIONAL ADDITION OF RS.53 13 006/-. 3.3.1 ON PERUSAL OF THE RECORDS OF THE APPELLANT I FIND THAT THE APPELLANT HAS BEEN CONSISTENTLY FOLLOWING METHO D OF ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 10 VALUING THE INVENTORY AT WEIGHTED AVERAGE COST WHIC H IN THIS LINE OF BUSINESS IS THE GENERALLY ACCEPTED ACC OUNTING METHOD AND ALSO ACCEPTABLE AS PER ACCOUNTING STANDA RD 2 (REVISED) ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. THIS ALSO HAS BEEN UPHELD BY VARIOUS COURTS AND TRIBUNALS. THE ITAT CHANDIGARH 'A' BENCH ON THE SIMILAR FACTS AND IN SIMILAR NATURE OF BUSINESS IN THE CASE OF ACIT VS. JAGDISHCHAND (2004 ) 90 TTJ (CHD) 943 HELD SUCH ENHANCEMENT OF VALUATION OF CLOSING STOCK AS NOT JUSTIFIED. 3.3.2 CONSIDERING THE ISSUE OF VALUATION OF INVENTO RY FROM ANOTHER ANGLE A PERSON CAN BE SAID TO EARN INCOME IF AND ONLY IF THE SAME HAS ACCRUED TO IT AND IF AND ONLY IF THERE IS A REASONABLE CERTAINTY OF RECOVERY OF THE SAME I N DUE COURSE OF TIME. MERELY BECAUSE OF THE SPIRALING PRI CES IN RESPECT OF INVENTORY HELD THERE IS NEITHER ACCRUAL OF INCOME NOR REASONABLE CERTAINTY OF REALIZATION IN D UE COURSE OF TIME. IT CAN AT THE MOST BE TREATED AS A FUTURE PROFIT WHICH MAY OR MAY NOT BE REALIZED IN THE YEA R OF SALE. 3.3.3 THE LEARNED COUNSEL OF THE APPELLANT HAS REFE RRED VARIOUS JUDICIAL PRONOUNCEMENTS THROUGH WRITTEN SUBMISSIONS AS WELL AS ORAL ARGUMENTS AND HAS RELIE D ON THE FOLLOWING CASE-LAWS IN SUPPORT OF HIS ARGUMENTS : (I) I T O VS. CHOKSI HIRACHAND & BROS. 37 TTJ 415 O F ITATAHMEDABAD BENCH; (II) ACIT VS. JAGDISHCHAND (90) TTJ PAGE 943 CHAN) ; (III) ACIT VS. GOPALDAS VALLABHDAS 59 TTJ PAGE 768 (INDORE ITAT); (IV) I T O VS. M/S. SON! DWARKADAS VIRCHAND &. SONS BHAVNAGAR; (V) DCIT VS. LURGI INDIA COMPANY LIMITED (2008) 114 ITD 1 (DELHI); (VI) VOLTAMP TRANSFORMERS LIMITED V/S C I T 2008 2 17 ITR (GUJQRAT) PAGE 254. ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 11 3.3.4 I FIND THAT BEFORE THE ASSESSING OFFICER THE APPELLANT HAS CITED THE RELEVANT JUDGMENTS BUT THE ASSESSING OFFICER HAS SUMMARILY REJECTED STATIN G THAT THE EXPLANATION OF THE ASSESSEE IS NOT ACCEPTABLE WITHOUT MAKING ANY EFFORT TO CLARIFY AS TO HOW JUDGMENTS CI TED HAVE NO RELEVANCE. IN THE CONTEXT OF THE ABOVE HON 'BLE SUPREME COURT HAS CLEARLY HELD THAT THE VALUATION O F STOCK IN TRADE WHETHER AT COST OR MARKET PRICE WHICH IS A MATTER ENTIRELY WITHIN THE DISCRETION OF THE ASSESSEE - C I T VS. BRITISH PAINTS LTD (188 ITR 44). SIMILARLY THE A PEX COURT HAS HELD IN CHAINRUP SAMPATRAM VS. CIT (24 ITR 481) THAT WHILE VALUING THE CLOSING STOCK IT IS ONLY TH E ANTICIPATED LOSS THAT IS REQUIRED TO BE TAKEN INTO ACCOUNT WHILE THE ANTICIPATED PROFIT IN THE SHAPE OF APPREC IATED VALUE OF STOCK IS NOT REQUIRED TO BE BROUGHT INTO A CCOUNT TILL ITS ACTUAL REALIZATION. FURTHER THE HON'BLE S UPREME COURT HAS CARVED OUT AN EXCEPTIONAL SITUATION ONLY WHERE THE ABOVE METHOD OF VALUATION OF STOCK WILL NOT BE APPLIED. THIS HAS BEEN DONE IN THE CASE OF SAKHTI TRADING CO . VS. CIT (250 ITR 871) IN WHICH THE HON'BLE SUPREME COU RT HAS HELD THAT IF THERE IS A DISSOLUTION OF THE FIRM COUPLED WITH DISCONTINUATION OF THE BUSINESS THE STOCK HAS TO BE VALUED AT MARKET PRICE. THIS IS BECAUSE IN THE CASE OF DISSOLUTION OF THE FIRM WITH DISCONTINUATION OF BUSINESS 'GOING CONCERN CONCEPT' DOES NOT APPLY AND THE ACCO UNTS ARE REQUIRED TO BE SETTLED PRIMARILY FOR DETERMININ G THE RIGHTS AND OBLIGATIONS OF THE PERSONS CONCERNED. TH E HON'BLE GUJARAT HIGH COURT HAS ALSO FOLLOWED THE AB OVE VIEW IN BALAPUR VIBHAG JUNGLE KAMDAR MANDALI LTD VS . CIT (135 ITR 91) AND IN KWALITY STEEL SUPPLIERS VS. C I T (271 ITR 40). SINCE IN THE PRESENT CONTEXT THERE I S NEITHER DISSOLUTION OF THE FIRM NOR DISCONTINUATION OF BUSI NESS THE EXCEPTION CARVED OUT FROM THE GENERAL RULE THUS C LEARLY DOES NOT APPLY. 3.3.5 THE ISSUE OF DISTURBING THE VALUATION OF CLOS ING STOCK CAN ALSO BE SEEN FROM THE CONTEXT OF THE RULE OF CONSISTENCY. IT IS A MATTER OF FACT THAT THE APPELL ANT IS A PARTNERSHIP FIRM CARRYING ON THIS BUSINESS FOR THE LAST SEVERAL YEARS. A NUMBER OF SCRUTINY ASSESSMENTS HA VE ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 12 ALSO BEEN COMPLETED BY THE DEPARTMENT IN THE PAST I N ALL THESE YEARS. THE AUTHORISED REPRESENTATIVE HAS POIN TED OUT THAT THE FIRM HAD VALUED THE STOCK BY ADOPTING THE SAME FORMULA AND THE SAME HAS NEVER BEEN DISTURBED OR CHALLENGED BY THE DEPARTMENT IN THE PAST. THE ASSES SING OFFICER IS THEREFORE NOT JUSTIFIED IN ADOPTING SU DDENLY A CHANGED METHOD REPLACING THE STANDARD AND ACCEPTED METHOD OF VALUATION OF STOCK (WEIGHTED AVERAGE COST METHOD) TO MARKET PRICE. 3.3.6 THE CONTENTION OF THE APPELLANT THAT THE ISS UE ALSO GETS COVERED BY ACCOUNTING STANDARD - 2 (REVISED) ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA IS ALSO CORRECT. THE ASSESSING OFFICER HAS HOWEV ER PROCEEDED TO DISTURB THE METHOD UNDER AS-2 PARA.14 AND NOT BY PARA.16 AS MADE OUT BY THE APPELLANT TO BE. THE PARA.14 IN TURN PROVIDES THAT THE COST OF INVENTO RIES OF ITEMS THAT ARE NOT ORDINARILY INTERCHANGEABLE AND G OODS OR SERVICES PRODUCED AND SEGREGATED FOR SPECIFIC PROJE CTS SHOULD BE ASSIGNED BY SPECIFIC IDENTIFICATION OF TH EIR INDIVIDUAL COSTS HAS CLEARLY NO APPLICATION IN THE CASE OF THE APPELLANT BEING A JEWELER HAVING HUNDREDS AND THOUSANDS OF ITEMS IN STOCKS WITH THERE CLEARLY BEI NG NO SPECIFIC IDENTIFICATION OF THE STOCK WITH REFERENCE TO THE SPECIFIC COST ASSIGNED TO IT. THE PARAGRAPH 14 OF A S-2 (REVISED) WILL APPLY ONLY TO SPECIFIC KIND OF INDUS TRIES AND CANNOT HAVE GENERAL OR BLANKET APPLICATION. FOR EXA MPLE A DEALER OF CARS CAN SEPARATELY IDENTIFY EACH AND E VERY CAR LYING IN STOCK WITH REFERENCE TO THE SPECIFIC C OST ATTACHED TO IT. THIS IS BECAUSE THE CARS ARE NOT INTERCHANGEABLE AND ARE SEPARATELY IDENTIFIABLE WIT H REFERENCE TO THE CHASSIS NUMBER ASSIGNED WHICH IS A LSO CLEARLY MENTIONED ON THE FACE OF THE INVOICE AND OT HER DOCUMENTS. THE CAR DEALER CANNOT THUS GO BY AVERA GE COST METHOD OF VALUATION OF STOCK AND HAS TO GO BY DETERMINING THE PRODUCT SPECIFIC COST AT THE END OF THE YEAR. EVEN IN THIS SITUATION IT IS NOT OPEN FOR TH E ASSESSING OFFICER TO REPLACE THIS VALUATION BY THE MARKET PRICE AS DONE BY THE ASSESSING OFFICER. ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 13 3.3.7 SINCE THE CASE OF THE APPELLANT IS CLEARLY NO T COVERED UNDER PARA.14 OF AS - 2 (REVISED) IT WILL UNDOUBTEDLY BE COVERED BY PARA.16 WHICH CLEARLY PROVIDES THAT THE COST OF INVENTORIES OTHER THAN TH OSE DEALT WITH IN PARA.14 SHOULD BE ASSIGNED BY WEIGHTED AVE RAGE COST FORMULA. 3.3.8 RECENTLY THE HON'BLE ITAT 'C BENCH AHMEDAB AD HAS DELIVERED A JUDGMENT IN REGARD TO METHOD OF ACCOUNTING IN THE CASE OF ACIT VS. SHRI VIJAY M. PA REKH IN ITAS NO.1994 TO 1999/AHD/2009 VIDE THEIR ORDER D ATED 25 TH SEPTEMBER 2009 WHEREIN THE HON'BLE ITAT HAS OBSERVED THAT THE ASSESSEE HAD BEEN REGULARLY FOLLO WING THE VERY SAME METHOD OF ACCOUNTING CONSISTENTLY WHI CH HAD BEEN ACCEPTED BY THE DEPARTMENT EVEN IN THE PAS T IN THE ORDERS PASSED UNDER SECTION 143(3) OF THE ACT. IT IS FURTHER OBSERVED THEREIN THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY CAUSE OR EVIDENCE IN REJECTING THE METHOD OF ACCOUNTING REGULARLY FOLLOWED BY THE ASSE SSEE BUT ON THE OTHER HAND THE ASSESSING OFFICER HAS AP PLIED ANOTHER SYSTEM OF ACCOUNTING AGAINST THE SPIRIT OF APPLICABLE SECTION I.E. SECTION 145 OF THE ACT THOU GH HE HAS NOT CATEGORICALLY REJECTED THE BOOKS OF THE APP ELLANT. IT IS FURTHER HELD THAT THE DEPARTMENT CANNOT COMPE L THE ASSESSEE TO ADOPT A PARTICULAR SYSTEM OF ACCOUNTING . THE HON'BLE TRIBUNAL HAS ALSO OBSERVED THAT THERE IS NO COGENT AND VALID REASON FOR DISTURBING THE METHOD O F ACCOUNTING REGULARLY FOLLOWED BY THE APPELLANT. 3.3.9 IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE I H OLD THAT THE ASSESSING OFFICER'S APPROACH IN THE PRESEN T CASE IS NOT JUSTIFIED IN DISTURBING THE METHOD OF VALUAT ION OF OPENING AND CLOSING STOCKS AND THEREBY MAKING AN ADDITION PF RS.53 13 006/-. IN VIEW OF ABOVE DISCUS SION AND TAKING INTO CONSIDERATION THE ENTIRETY OF THE F ACTS THE RESULTANT ADDITION OF RS.53 13 006/- IS HEREBY DELE TED. 4. IN THE RESULT THE APPEAL IS ALLOWED. ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 14 5. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND REFERRED TO PARA 3 IN THE ASSESSMENT ORDER AND SUBMITTED THAT T HE METHOD OF VALUATION OF CLOSING STOCK BY THE ASSESSEE WAS NOT THE CORRECT METHOD OF VALUATION. THE ASSESSEE FOLLOWED THE METH OD OF VALUATION OF CLOSING STOCK AT LOWER OF COST OR (AVERAGE MARKE T PRICE) WHICHEVER IS LESS. THE ASSESSEE ADOPTED AVERAGE OF THREE YEAR S WHICH WAS INCORRECT METHOD. SINCE INCORRECT METHOD WAS APPLIE D THEREFORE AVERAGE OF OPENING STOCK SHOULD BE ADOPTED WHILE MA KING VALUATION OF THE CLOSING STOCK. HE HAS SUBMITTED THAT THE AO HAS NOT CHANGED THE METHOD OF VALUATION OF CLOSING STOCK BUT APPLIE D CORRECT METHOD OF VALUATION. HE HAS SUBMITTED THAT THE DECISIONS CITE D BY THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE CASE COPIES WHICH ARE FILED IN THE PAPER BOOK. THE LEARNED DR ALSO FILED COPY OF ACCOU NTING STANDARD 2 ACCORDING TO WHICH FIFO/WEIGHTED AVERAGE METHOD IS EXPLAINED WHICH PROVIDES AS UNDER: FIFO/WEIGHTED AVERAGE METHOD THE COST OF INVENTORIES OTHER THAN THOSE DEALT WIT H IN THE SPECIFIC IDENTIFICATION METHOD SHOULD BE ASSIGNED BY USING THE FIRST-IN FIRST-OUT (FIFO) OR WEIGHTED AVERAGE COST FORMULA. THE FORMULA USED SHOULD REFLECT THE FAIREST POSSIBLE AP PROXIMATION TO THE COST INCURRED IN BRINGING THE ITEMS OF INVEN TORY TO THEIR PRESENT LOCATION AND CONDITION. THE FIFO FORMULA ASSUMES THAT THE ITEMS OF INVENTOR Y WHICH WERE PURCHASED OR PRODUCED FIRST ARE CONSUMED OR SO LD FIRST AND CONSEQUENTLY THE ITEMS REMAINING IN INVENTORY A T THE END OF THE PERIOD ARE THOSE MOST RECENTLY PURCHASED OR PRO DUCED. UNDER THE WEIGHTED AVERAGE COST FORMULA THE COST O F EACH ITEM IS DETERMINED FROM THE WEIGHTED AVERAGE OF THE COST OF SIMILAR ITEMS AT THE BEGINNING OF A PERIOD AND THE COST OF SIMILAR ITEMS ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 15 PURCHASED OR PRODUCED DURING THE PERIOD. THE AVERAG E MAY BE CALCULATED ON A PERIODIC BASIS OR AS EACH ADDITION AL SHIPMENT IS RECEIVED DEPENDING UPON THE CIRCUMSTANCES OF THE E NTERPRISE. THE LEARNED DR THEREFORE SUBMITTED THAT THE LEARN ED CIT(A) SHOULD NOT HAVE DELETED THE ADDITION BECAUSE THE ASSESSEE HAS NOT FOLLOWED THE RECOGNIZED COMMERCIAL ACCOUNTING POLICY FOR VAL UATION OF THE CLOSING STOCK. HE HAS ALSO RELIED UPON THE ORDER OF THE ITAT AHMEDABAD BENCH IN THE CASE OF M/S. BALAR EXPORTS VS DCIT IN ITA NO.3010/AHD/2010 DATED 11-02-2011 IN WHICH THE TRIB UNAL OBSERVED THAT WHAT IS DISTURBED BY THE AO IS THE WORKING BY THE ASSESSEE WITH REGARD TO THE MARKET VALUE OF THE CLOSING STOCK AND NOT CHANGED THE METHOD OF VALUATION OF CLOSING STOCK. 6. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND REFERRED TO THE AUDITED BALANCE SHEET OF ASSESSMENT YEAR IN APPEAL AND PRECEDING ASSESSMENT YEAR 2005-06 AND SUBMITTED THAT THE ASSESSEE FOLLOWED THE SAME METHOD OF VALUATION OF C LOSING STOCK IN THE ASSESSMENT YEAR UNDER APPEAL AS WELL AS IN THE EARLIER ASSESSMENT YEARS. HE HAS SUBMITTED THAT IN THE PREC EDING ASSESSMENT YEAR 2005-06 THE AO ACCEPTED THE SAME M ETHOD OF VALUATION IN THE SCRUTINY ASSESSMENT U/S 143 (3) OF THE IT ACT COPY OF WHICH IS FILED AT PB-103 OF THE PAPER BOOK. HE HAS RELIED UPON THE ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF NEPTUN E INFRASTRUCTURE PVT. LTD. ETC. IN IT(SS)A NO.450/AHD /2011 ETC. DATED 31-10-2011 IN WHICH IT WAS HELD THAT IT IS WELL SET TLED LAW THAT THOUGH THE PRINCIPLE OF RES-JUDICATA DOES NOT APPLY TO THE INCOME TAX ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 16 PROCEEDINGS BUT THE PRINCIPLE OF CONSISTENCY SHALL HAVE TO BE FOLLOWED BY THE REVENUE DEPARTMENT WHILE MAKING THE ASSESSME NTS. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD AND DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE ASSESSEE FILED COPY OF THE AUDIT REPORT OF THE ASSESSMENT YEAR UNDER APPEAL AS WELL AS OF THE PRECEDING ASSES SMENT YEAR 2005- 06. WE FIND THAT IN BOTH THE AUDIT REPORTS THE ASSE SSEE HAS ADOPTED THE SAME METHOD OF VALUATION OF THE CLOSING STOCK W HICH IS ADOPTED IN THE ASSESSMENT YEAR UNDER APPEAL AND FOLLOWED IN TH E PRECEDING ASSESSMENT YEAR. IN THE ASSESSMENT YEAR 2005-06 TH E AO ACCEPTED THE SAME METHOD OF VALUATION OF THE CLOSING STOCK I N THE SCRUTINY ASSESSMENT U/S 143 (3) OF THE IT ACT. IT IS THEREF ORE PROVED ON RECORD THAT THE REVENUE DEPARTMENT ACCEPTED THE SAME METHO D OF VALUATION OF CLOSING STOCK IN THE EARLIER YEARS ON THE SAME S ET OF FACTS AND CIRCUMSTANCES OF THE CASE OF THE BUSINESS OF THE AS SESSEE. IT IS WELL SETTLED LAW THAT THOUGH THE PRINCIPLE OF RES-JUDICA TA DOES NOT APPLY TO THE INCOME TAX PROCEEDINGS BUT PRINCIPLE OF CONSIS TENCY SHALL HAVE TO BE FOLLOWED BY THE REVENUE DEPARTMENT WHILE MAKING THE ASSESSMENT. WE RELY UPON THE DECISION OF THE HONBL E M. P. HIGH COURT IN THE CASE OF GODAVARI CORPORATION LTD. 156 ITR 835 DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF BERGER PAINTS (INDIA) LTD. 266 ITR 99 AND THE DECISION OF THE HONBLE S UPREME COURT IN THE CASE OF RADHASWAMY SATSANG 193 ITR 321. THE HO NBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF VIKASH CHEMI GU M 276 ITR 32 HELD THAT SOURCE OF INCOME IN EARLIER YEAR NOT CHALLENGED BY THE REVENUE DEPARTMENT IT IS NOT OPEN TO CHALLENGE THE SAME SOURCE ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 17 OF INCOME IN SUBSEQUENT ASSESSMENT YEAR. THE HONBLE SUPREME COURT IN THE CASE OF SATISH PANNALAL SHAH 249 ITR 221 DEPRECATED THE PRACTICE OF THE DEPARTMENT IN ACCEPT ING THE CORRECTNESS OF THE JUDGMENT IN PARTICULAR CASE AND IN CHALLENGING ITS QUESTION IN ANOTHER CASE. THE LEARNED COUNSEL FOR T HE ASSESSEE ALSO RELIED ON THE ASSESSMENT ORDER IN THE CASE OF THE A SSESSEE U/S 143(3) DATED 16-12-2009 (PB-106) FOR ASSESSMENT YEA R 2007-08 IN WHICH ALSO THE AO ACCEPTED SAME METHOD OF VALUATION OF CLOSING STOCK. THIS ORDER IS PASSED BY SHRI RAVI PRAKASH A CIT CIRCLE-2 BHAVNAGAR WHO HAS FILED THE PRESENT DEPARTMENTAL A PPEAL BEFORE THE TRIBUNAL ON 22-12-2009. IT IS THEREFORE CLEAR THA T REVENUE DEPARTMENT NOT ONLY IN PAST BUT IN SUBSEQUENT YEARS ALSO ACCEPTED THE CLAIM OF THE ASSESSEE. THIS STAND OF THE AO WOU LD DEMOLISH ALL ARGUMENTS OF THE LEARNED DR. THE FINDINGS OF THE LE ARNED CIT(A) ON CORRECT METHOD OF VALUATION ADOPTED BY THE ASSESSEE HAVE NOT BEEN REBUTTED THROUGH ANY EVIDENCE ON RECORD. THE LEARNE D CIT(A) ON PROPER APPRECIATION OF THE FACTS AND MATERIAL ON RE CORD RIGHTLY FOLLOWED THE VARIOUS ORDERS OF THE TRIBUNAL INCLUDI NG THE ORDERS OF JURISDICTIONAL ITAT AHMEDABAD BENCH IN ARRIVING AT THE JUST DECISION IN THE MATTER. WE THEREFORE DO NOT FIND ANY JUSTI FICATION TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). CONSIDERING T HE ABOVE DISCUSSION WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. THE DECISION CITED BY THE LEARNED DR OF M/S. BALAR EXPO RTS (SUPRA) IF CLEARLY DISTINGUISHABLE FROM THE FACTS OF THE PRESE NT CASE. WE MAY ALSO NOTE THAT IN THIS CASE IN PARA 11 THE TRIBUNAL HAS OBSERVED THAT THE AO HAS MADE CORRECT VALUATION OF THE CLOSING ST OCK AS PER THE METHOD FOLLOWED BY THE ASSESSEE. SUCH OBSERVATIONS WOULD RATHER ITA NO.3362/AHD/2009 THE ACIT CIRCLE-2 BHAVNAGAR VS M/S. SHANTILAL NAG ARDAS & CO. 18 SUPPORT THE FINDINGS OF THE LEARNED CIT(A). IN VIEW OF THE ABOVE THE DEPARTMENTAL APPEAL HAS NO MERIT AND THE SAME IS DI SMISSED. 8. IN THE RESULT THE DEPARTMENTAL APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD