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TMI Blog2016 (9) TMI 1354X X X X Extracts X X X X X X X X Extracts X X X X ..... , we do not find any fault with the decision of the ld. CIT (A) directing the AO to treat the surrendered amount as excess stock qua the excess stock found. Addition on account of change of method of valuation of closing stock - Held that:- The change in the method of valuation of the stock is bona fide and the AO himself in the subsequent year has accepted the same. The various cases laws relied by the ld. AR also support the case of the appellant. As in case of Anil Kumar Tantia v. ITO [2013 (5) TMI 948 - ITAT JODHPUR] held that the appellant who was dealer of precious metal like gold and silver and previously adopting the method of valuation of closing stock at market rate but the changed the same to weighted average cost price for which bona fide reasons exist considering the fluctuation in the rates, the same needs to be accepted. Considering all these facts find that the change in the method of valuation of the stock is bona fide. Accordingly, the addition made by the AO is deleted. Addition on account of making charges on unaccounted excess stock - element of making charges paid by the assessee on such excess stock - Held that:- CIT (A) has rightly deleted the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lement of making charges paid by the assessee on such excess stock. 2. Briefly stated the facts of the case are that a search and seizure action under section 132 of the Income Tax Act, 1961 (hereinafter referred to as the Act) was carried out at the residential and business premises of the assessee and his family members as well as survey u/s 133A was also conducted at some of the business premises of the assessee on 03.02.2011. During the course of survey, excess stock of gold and silver ornaments were found valuing ₹ 77,66,887/-. This amount was surrendered for taxation in the hands of the assessee. Further, a sum of ₹ 1,20,000/- on account of advances given for land purchase also offered for taxation as observed by the AO. Subsequently, a return was filed on 30.09.2011 declaring total income of ₹ 59,93,693/-. This return was further revised on 08.12.2011 declaring total income of ₹ 59,13,690/-. The case of the assessee was picked up for scrutiny assessment. While framing the assessment, the AO made various additions and treated the excess stock as unexplained investment not recorded in the books of account and made addition by invoking provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shi Hiralal Maganlal vs. DCIT, 131 TTJ (Ahd.) 1 has held that in a cases where source of investment/expenditure is clearly identifiable and alleged undisclosed asset has no independent existence of its own or there is no separate physical identity of such investment/expenditure then first what is to be taxed is the undisclosed business receipt invested in unidentifiable unaccounted asset and only on failure it should be considered to be taxed under section 69 on the premises that such excess investment is not recorded in the books of account and its nature and source is not identifiable. Once such excess investment is taxed as undeclared business receipt then taxing it further as deemed income under section 69 would not be necessary. Therefore, the first attempt of the assessing authority should be to find out link of undeclared investment/expenditure with the known head, give opportunity to the assessee to establish nexus and if it is satisfactorily established then first such investment should be considered as undeclared receipt under that particular head. It is observed that there is no conflict with the decision of Hon ble Gujarat High Court in the case of Fakir Mohd. HajiHasan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade at Market Rate. - During the year, the appellant has changed the method of valuation of the stock from market price to cost or net realizable value, whichever is lower. - This change was carried out during the year as there has been wide fluctuation in the rates of gold/silver. - The appellant has subsequently followed the same method consistently. - The AO has completed the assessment for A.Y. 2012-13 by accepting the changed method by adopting the closing stock of AY 2011-12 as the opening stock and also accepting the closing stock as on 31.03.2012 valued by the appellant on the basis of the changed method. 6.2. From the above, I find that the change in the method of valuation of the stock is bona fide and the AO himself in the subsequent year has accepted the same. The various cases laws relied by the ld. AR also support the case of the appellant. I further noticed that the Hon ble ITAT Jodhpur Bench in case of Anil Kumar Tantia v. ITO dated 31.05.2013 for AY 2007-08 to 2009-10 held that the appellant who was dealer of precious metal like gold and silver and previously adopting the method of valuation of closing stock at market rate but the changed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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