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TMI Blog2016 (10) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case Ld. CIT(A) has erred in deleting the addition on undervaluation of closing stock for Rs. 8,73,46,711/- without considering the fact that the assessee has never claimed the value of stock of gold for the F. Yr. 2004-05, 2005-06 in the valuation of closing stock for the A. Yr. 2009-10 during the course of assessment proceedings for the A. Yr. 2009-10. But the same was claimed in the course of Assessment proceedings for the A. Yr. 2011-12 in the valuation of closing stock. This discrepancy is of a very serious nature and contradicts the claim made by the assessee that it has consistently followed the UFO method of closing stock. (ii) That on the facts and in the circumstances of the case Ld. CIT(A) has erred in not consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Blue Sapphire 3190.980 ct. 546,735.00 Multi Sapphire 3340.580 ct 291,518.00 Semi Precious 11372.620 278,995.00 Imitation Stone 5086.449 ct. 202,795.00 Total 142,624,442.00 5. Basing on above information as provided by the Assessee, the AO summarized the valuation of stock as under: Total value of stone & other items Rs. 7,69,29,855/- Add: Gold Value Rs. 6,56,94,587/- Total value of stock Rs.14,26,24,442/ Total Gold stock in terms of pure Gold 107167.19 grams Less : Gold deposit as claimed by the Assessee 39083.07 grams Net gold stock in terms of pure gold 68084.12 grams 6. The AO was of the view, that the assessee deliberately undervaluing stock by following LIFO method of valuation of gold stock and prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proof it is not possible to accept the rates pertaining to F.Y's 2004-05, 2005-06 and 2006-07 as claimed by the assessee. Further, it is seen during the course of assessment proceeding for the A.Yr. 2009-10 the assessee has claimed the value of closing stock comprising only of closing stock of rate of F.Y.- 2006-07 and F.Y.- 2007-08 and not of F.Y. - 2004-05 and 2005-06. The same was duly reflected in para no. 11 of assessment order u/s.143(3) dated 27/12/2011, the same is reproduced as below. The scanned copy of the relevant page of the assessment order as well as the scanned copy of annexure page 3 on which para 11 of Asstt. Order of A.Yr. 2009-10. Hence, it is crystal clear that the assessee has not consistently followed the LIFO m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time of hearing, the Ld.AR submits that the appellant Revenue challenged the order of CIT-A passed for A.Y 2009-10 before this Tribunal and submitted that the Tribunal upheld the order of CIT-A. 14. Heard rival submissions and perused the material evidence on record. We find that the observation of the Coordinate Bench that the AO did not give any justifiable reason for rejection of LIFO method which has been followed consistently by the Assessee and which method the Revenue has been accepting for earlier years. The relevant portion of which is reproduced herein below: 7.2. It is quite natural that jewellery being a fashion industry, the old stocks would most of the times remain with the assessee and the revenue cannot expect the old ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ock. It as further explained that the said jewellery being old conventional jewellery was not sold during the year and was available at the close of the year. The balance stock was out of the purchases made during the year less sales made by the assessee. The Assessing Officer while re-computing the value of stock has accepted the weights in grams of stocks but had only revalued the stock by adopting a figure higher than rate disclosed by the assessee. We find no merit in the said addition being made by the Assessing Officer where the valuation of closing stock has been changed vis-a-vis its value and not because of any difference in the quantity of stock. The assessee was consistently following a particular method of accounting which is be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of its closing stock of gold which has been accepted by the department in the earlier years even in scrutiny assessment proceedings of the assessee. Then there is no justifiable reason to reject the same method during the year under appeal. In this regard, we place reliance on the decision of the Hon'ble Apex Court in the case of United Commercial Bank vs CIT reported in 240 ITR 355 (SC) wherein the principles were laid down for valuation of assets at page 366. We find that the following decisions also support the case of the assessee:- CIT vs Sant Ram Mangat Ram reported in (2005) 275 ITR 312 (P&H) CIT vs Ema India Ltd reported in (2006) 296 ITR 510 (All) CIT vs Jagatjit Industries Ltd reported in (2011) 339 ITR 382 (Del) CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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