2021 (7) TMI 848 - HC - Income Tax

Disallowance of loss in the stock valuation - HELD THAT - Assessee, apart from submitting an unsigned chart, allegedly based on the books of account maintained by the Assessee, had failed to produce on record any material in support of the substantial variation between the cost price and the market price. In such a situation, there was nothing wrong with the approach of the Assessing Officer and the determination ultimately made by the Assessing Officer. We dismiss this Appeal by holding that substantial question of law as framed, does not arise in the matter or any case, based on the material on record, is required to be answered against the Appellant-Assessee.

Summary

Issues:
Assessment of stock valuation for the Assessment Year 2009-2010.

Analysis:
The appeal questioned the addition of ?3,02,29,477 to the total income of the Assessee due to the disallowed loss claimed in stock valuation. The Assessing Officer, CIT (Appeals), and ITAT upheld this addition, leading to the current appeal. The Appellant argued that the valuation should be based on the market price as of March 2009, not the average for the entire year. The Appellant's accounts were accepted by the Assessing Officer without requiring additional evidence. However, the Respondent defended the orders, claiming no evidence justified the significant price variation. The court noted the lack of clarity in the raised question and found that the specific issue was not effectively raised or adjudicated before earlier authorities.

The court emphasized that findings of fact cannot be interfered with unless there is perversity. The authorities found the Appellant failed to explain the cost-price disparity adequately. The Appellant's failure to provide evidence to support their claims was noted, leading to the dismissal of the appeal. The court highlighted that the Appellant's reliance on Generally Accepted Accounting Principles was insufficient without substantial evidence. The judgment cited Commissioner of Income-tax vs. British Paints India Ltd., emphasizing the duty of the Assessing Officer to determine taxable income correctly when accounts do not reflect the real cost of stock-in-trade.

In conclusion, the court dismissed the appeal, stating that the substantial question of law did not arise based on the material on record. The lack of evidence to explain the cost-price variation led to the dismissal of the appeal, with no order as to costs.