9911796707
TMI Blog1964 (7) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... t value at all. These had been purchased during the course of the account year. During the year, cobra skins found a market up to February, 1953, but other varieties, of which also the assessee carried a stock but upon which he did not place any value, admittedly had virtually no sales at all. During the course of the assessment proceedings, the assessee explained that all these varieties of skins, including cobra, virian and baby, were saleable only in America and England, that they had no market whatsoever in India and that his foreign agents and representatives had informed him that there were no buyers for these three varieties even abroad. He accordingly claimed that he was entitled to value this stock at nil . The Income-tax Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out that the accepted mercantile practice of valuing the closing stock at either the market rate or cost, whichever was lower, had been ignored by the authorities below. It was also pointed out that the overdraft from the bank was on the security not of these unsaleable skins but of the tannery, building, the closing stock, hides and skins, etc., to the value of nearly ₹ 2 lakhs. Correspondence was produced before the Tribunal to show that there was no market for these varieties of skins definitely after February, 1953. The Tribunal accepted the assessee's case as true to a certain extent , for it found that the turnover of the assessee had fallen from ₹ 25 lakhs to about ₹ 6 lakhs. It also agreed that snake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of this part of the closing stock at ₹ 43,708. On the directions of this court under section 66(2) of the Income-tax Act, the following question stands referred to us : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in valuing the closing stock of the unsold snake skins at ₹ 43,708 ? It seems exceedingly difficult to accept the reasoning adopted by the Tribunal in justifying the addition. The Tribunal purports to hold that if the assessee had written off this stock, he would have been justified in doing so. It accepts also the position that the fancy market for snake skins had disappeared, as is strongly supported by the circumstance that the turnover had fallen from ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue and the purchase value. Indeed, in the contingency of these skins finding a sale, it is revenue that would stand to gain. The observation of the Tribunal that this method of permitting him to value the goods would open the door for showing these very goods as obsolescent and then sell them off later without bringing the profits into the books is wholly uncalled for. It seems to suggest that the Tribunal found the assessee's intention to be to make a concealed profit by the sale of the goods in subsequent years. It is unfortunate that the Tribunal should have indulged in such uncalled for aspersions on the assessee's integrity. In Commissioner of Income-tax vs Chari and Ram ( 1949 ) 17 ITR 1 , it has been laid down that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market rate, as it was lower than the cost price. It was pointed out that there was no proof that this was a variation of the method of accounting which the assessee had been following, and the decision in Commissioner of Income-tax vs Chari and Ram ( 1949 ) 17 ITR 1 was followed. In Chhaoni Lal Pragdas vs Commissioner of Income-tax ( 1957 ) 31 ITR 597 , this principle was again affirmed. While it was pointed out that the assessee could not place an arbitrary value on the stocks, it was held that stocks must be valued either at cost price or at market price. There seems to be no quarreling with the question of fact that there was no market for these skins either locally or abroad. Locally it is certain there was at no time any market, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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