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TMI Blog2022 (3) TMI 1138X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly if the AO increases the value of closing stock for the year under consideration then it is the duty to give the corresponding effect in the opening value of the closing stock. Thus there will not be any impact on the income declared by the assessee except the increase in the amount of income in one year and decrease in the amount of income in the subsequent year. On this reasoning as well, we are also not convinced with the findings of the AO - we are not inclined to interfere in the order of the Ld.CIT(A). Hence the ground of appeal of the Revenue is dismissed. Addition on account of lower gross profit - HELD THAT:- AO has increased the amount of gross profit by 0.15% on the reasoning that the assessee was not maintaining the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and/or on facts in deleting the addition of ₹ 2,28,68,440/- on account of under valuation of stock. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in restricting the addition on account of low GP to ₹ 3,00,000/- as against total G.P. addition of ₹ 36,34,633/- made by the A.O. 3. On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the A.O. 4. It is, therefore, prayed that the order of the CIT (A) be set aside and that of the A.O. be restored to the above extent. 3. The first issue raised by the Revenue is that the Ld. CIT(A) erred in deleting the addition made by the AO for ₹ 2,28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue to the DEPB effect, then the stock has to be valued at market price and not cost price. Now, if this is done, then this finding is in favour of the appellant because the appellant has valued the stock at cost, which as per AO's logic, is higher than the market price. Therefore, there is no logic in the Finding of the AO. Secondly, one cannot randomly alter the valuation of closing stock, which is followed consistently year after year. The change in the valuation of closing stock, is only warranted when it is altered in order to reduce the profitability. No such practice has been followed by the appellant. The AO could not establish such a practice. Even the decision relied upon by the AO (British Paints Ltd) if ready contextuall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is the incentive that is given to the parties in order to promote the export activities. Therefore the exporters generally take into consideration such incentive while determining the sales price of the export product. 8.2 The Government is giving DEPB benefit to the parties so as to give them leverage to stand in the competitive international market. The DEPB has nothing to do with the cost of the closing stock. Accordingly to our understanding, the order passed by the AO is perverse. We also note that this Tribunal bearing ITA nos. 759 to 761/Rjt/2016 dated 12/09/2017 has decided the issue in favour of the assessee and against revenue. The relevant extract of the order is reproduced as under: 9. We have given a thoughtful conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closing stock for the year under consideration then it is the duty to give the corresponding effect in the opening value of the closing stock. Thus there will not be any impact on the income declared by the assessee except the increase in the amount of income in one year and decrease in the amount of income in the subsequent year. On this reasoning as well, we are also not convinced with the findings of the AO. 8.4 In view of the above and after considering the fact in totality we are not inclined to interfere in the order of the Ld.CIT(A). Hence the ground of appeal of the Revenue is dismissed. 9. The next issue raised by the Revenue is that the Ld.CIT(A), erred in restricting the addition made by the AO for ₹ 36,34,633/- on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rting to provisions of section 145 of the I T Act. Once when the books are accepted as such, then the book results also should have been accepted. No irregularity in purchase or sale was noticed during the assessment proceedings. It appears that, no efforts were also made to inquire on these issues. Therefore, in the absence of any specific instance, the estimation made by the AO is on arbitrary basis. So far as the finding of the AO that similar addition made in the preceding year got sustained in the first appeal is concerned, I find that the Id. CIT(A)-1 Rajkot has given a detailed finding on this issue. It is seen from the appellate order that, there were issues of low yield (drastic fall in yield during that year); certain unexpla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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