9911796707
TMI Blog1983 (1) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... luation followed by the petitioner in valuing the yarn for weaving process (shortly " yarn in process "). Petitioner was valuing yarn in process at the rate of 12 paise per kilogram describing the method of valuation as cost method. This method of valuing its stock at a fixed rate is followed since last many years. This is evident from the assessment order for the assessment year 1942-43, wherein it is stated as follows : " The assessee is valuing the stock since years past at a fixed rate and hence it is no use disturbing the same as this method of valuing was accepted by us. " The income-tax Department (hereinafter referred to as the "Department") as is pointed out in the assessment order for the assessment year 1942-43 had accepted the method of valuation adopted by the petitioner. Same method which was accepted by the Department was followed by the petitioner in valuing its stock in subsequent years including the year in question, namely, assessment year 1972-73. The assessment for the assessment year 1972-73 was completed on the basis of valuation of stock disclosed by the assessee. The ITO, however, issued notice, annex. I, under s. 148 read with s. 147 of the Act to reop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent, the petitioner had wrongly estimated the value of the yarn in process at 12 np. per kg. without furnishing a detailed working of the closing stock which resulted in a suppression of profit. It was in these circumstances, says the respondent, that the proceedings in question were initiated by issuing the notice at annex. 'I'. Questions similar to those raised in this petition were raised in the case of Aryodaya Spg. Wvg. Co. Ltd. v. ITO [Special Civil Application No. 1940 of 1979, decided on January 17, 198 3 ([1983] 144 ITR 817] and, in our opinion, our decision in the said case would govern the present petition also, The learned counsel for the respondent, however, sought to distinguish the aforesaid case of Aryodaya Spg. Wvg. Co. on the ground that in that case complete details of the working of the valuation of stock were stated in the statement filed along with the return, whereas in the instant case, the petitioner had not furnished any such details. All that was stated in the balance-sheet of the petitioner was that the stock was valued at cost, which statement, having regard to the method followed by the petitioner, was not correct. It was submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hange in the method of valuation which he had hitherto been following. In the instant case, the petitioner, while submitting its return for the assessment year in question did not notify any change of departure made by it in the method hitherto followed by it in valuing its stock. There is, therefore, a presumption that the petitioner had not departed from its past practice in valuing its stock. In other words, the respondent had to presume that the petitioner bad valued its stock of yarn in process at 12 p. per kg. as in the past. Petitioner had, in our opinion, disclosed all the primary facts necessary for its assessment. It was not necessary for the petitioner to disclose something which was known to the Department. As pointed out above, the method followed by the petitioner in valuing its stock at 12 p. per kg. by calling it a method of cost was known to the Department. This, as pointed out above, is evident from the reasons recorded by the ITO for reopening the assessment and the statements made in the affidavit-in reply. Since the method of valuation consistently adopted by the petitioner was already known to the respondent or the Department, the petitioner cannot be found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then to draw the correct inference on the basis of the facts found. On the facts and in the circumstances of, the case, prima facie, the appendage of label which the petitioner gave to the method of valuation of stock of yarn, namely valuation of stock at cost, is not by itself a primary fact. But even assuming that the description accordingly given by, the petitioner about the method of valuation constitutes a primary fact, it was the duty of the ITO to make an investigation into the facts and draw a correct inference from the facts found by him and to decide, inter alia, whether or not the stock can be said to have been valued at cost, as claimed by the petitioner having regard to the method adopted. It was not part of the duty or responsibility of the petitioner to advise the ITO with regard to the true and correct inferences which should be drawn from the primary facts as regards the method of valuation. Section 147(a) empowers the ITO, subject to the provisions of ss. 148 to 153, to assess or reassess income or recompute the loss or depreciation allowance, as the case may be, in any assessment year, if he has reason to believe that by reason of omission or failure on the par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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