M/s. Santram Fine Chemicals, Nadiad V. The Income tax Officer, Ward-1, Nadiad

ITA 1006/AHD/2007

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9931 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-09-2010
• Assessment Year: 1997-1998
• Appeal Filed On: 07-03-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH
• Keywords: Additional evidence
• Section: 143(1); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.1006/AHD/2007 A. Y: 1997-98 M/S. SANTRAM FINE CHEMICALS, C/O. KSUSHIK DALAL, PARTNER, 17, SMT. SHIKHAR SOCIETY, NARAYAN NAGAR ROAD, AHMEDABAD THE INCOME TAX OFFICER, WARD-1, NADIAD PA/GIR NO.31-622-FQ-0427 (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SUNIL TALATI, AR RESPONDENT BY SHRI K. M. MAHESH, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-IV, BARODA DATED 17-11-2006 FOR ASSESSMENT YEAR 1997-98 ON THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) HAS ERRED IN NOT FOLLOWING DIRECTIONS OF HONBLE ITAT AND IN TURN CONFIRMING ADDITION MAD E OF RS.6,13,300 BEING VALUE OF CLOSING STOCK. YOUR APPE LLANT SUBMITS THAT VALUE OF STOCK BE ACCEPTED NOW AND LOS S DUE TO IMPURITY OF MATERIAL BE ALLOWED AS REVENUE EXPEND ITURE AS CLAIMED. THE ADDITION MADE TO TRADING RESULT IS NOT JUSTIFIED. IT BE HELD SO NOW. 2. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING LEVY OF INTEREST U/S 234A/B OF THE ACT. YOUR APPELLANT SUBM ITS THAT LEVY OF INTEREST BEING INCORRECT SAME BE DELETED NO W. ITA NO.1006/AHD/2007 M/S. SANTRAM FINE CHEMICALS VS ITO W-1, NADIAD 2 2. THIS APPEAL WAS EARLIER DISMISSED IN DEFAULT VID E ORDER DATED 10-02-2010. THE APPEAL WAS RECALLED WHILE ALLOWING MISC. APPLICATION VIDE ORDER DATED 25-06-2010 AND THE APPEAL OF THE A SSESSEE WAS RE-FIXED FOR HEARING ON MERIT. 3. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND A LSO CONSIDERED THE MATERIAL ON RECORD. 4. ON GROUND NO.1 OF THE APPEAL, THE AO MADE ADDITI ON OF RS.6,13,300/-. THE FACTS OF THE CASE ARE THAT THE A SSESSEE FIRM IS MANUFACTURER OF CHEMICAL INTERMEDIARIES AND ALSO DO ING JOB WORK FOR OTHERS AND FILED RETURN OF INCOME ON 18-02-1999 DEC LARING A LOSS OF RS.5,780/-. THE CASE WAS PROCESSED U/S 143(1) (A) O F THE IT ACT ON 24-05-1999 AND ORDER U/S 143 (3) OF THE IT ACT WAS PASSED ON 24-03- 2000. DURING THE ASSESSMENT PROCEEDINGS, THE AO CAL LED FOR THE DETAILS OF OPENING STOCK AND CLOSING STOCK AND ALSO ASKED THE ASSESSEE AS TO HOW THE VALUATION OF CLOSING STOCK FOR THE YEAR UNDER A PPEAL HAS BEEN DONE. IT WAS STATED BY THE ASSESSEE THAT THE STOCK IS VALUED AT COST OR MARKET PRICE WHICHEVER IS LOWER. IT IS OBSERVED BY THE AO IN HIS ORDER THAT THE DEFECTIVE ITEMS WERE SHOWN IN THE CLOSING STOCK AT LESSER AMOUNT. IT WAS STATED BY THE ASSESSEE THAT THE PURCHASE DURING THE YEAR AMOUNTING TO RS.2,69,121/- HAS BEEN UTILIZED FOR THE JOB WORK DO NE DURING THE YEAR AND CLOSING STOCK OF RS.48,200/- SHOWN IN THE PROFI T AND LOSS ACCOUNT IS THE BALANCE OUT OF THE ABOVE PURCHASE. AS AGAINST T HE OPENING STOCK OF RS.6,13,300/-, IT WAS STATED THAT BECAUSE OF DEFECT IVE/OLD MATERIAL THE VALUE HAS BEEN TAKEN AT NIL. IT IS OBSERVED BY THE AO IN HIS ORDER THAT THE METHOD OF VALUATION OF STOCK FOLLOWED BY THE AS SESSEE IS AT COST, WHICH IS INDICATED IN THE RELEVANT COLUMN IN PART IV OF THE RETURN FOR THE YEAR UNDER CONSIDERATION. PAST RECORDS ALSO INDICAT ED THAT THE VALUATION OF CLOSING STOCK HAS BEEN DONE AT COST. ONCE THE AS SESSEE FOLLOWS A ITA NO.1006/AHD/2007 M/S. SANTRAM FINE CHEMICALS VS ITO W-1, NADIAD 3 PARTICULAR METHOD OF VALUATION, HE IS REQUIRED TO S TICK TO THAT METHOD AND CANNOT SWITCH OVER TO ANOTHER METHOD TO SUIT HIS CO NVENIENCE. THE OPENING AND CLOSING STOCK POSITION FOR THE PREVIOUS YEARS AS REFLECTED IN THE ASSESSMENT ORDER AS PER RECORD IS AS UNDER: A. YRS OPENING STOCK PURCHASES SALES CLOSING STOCK METHOD 1991-92 2,99,000/- 10,64,618/- 10,09,533/- 5,71,800/- COST 1992-93 5,71,800/- 3,82,112/- 4,38,180/- 6,49,211/- COST 1993-94 6,49,211/- 4,15,367/- 3,06,250/- 8,73,681/- COST 1994-95 8,73,681/- 2,53,328/- 6,58,303/- 7,03,280/- COST 1995-96 7,03,280/- 9,10,472/- 10,11,463/- 6,29,500/- COST 1996-97 6,29,500/- 11,09,792/- 8,63,512/- 6,13,300/- COST 1997-98 6,13,300/- 2,69,121/- SALES NIL RS.2,20,921/- CONSUMED FOR JOB WORK 48,200/- COST FROM THE ABOVE, THE AO OBSERVED THAT THE ASSESSEE H AS BEEN FOLLOWING COST METHOD FOR VALUATION OF CLOSING STOCK. THE VAL UE OF STOCK WHICH WAS TAKEN AT RS.6,13,200/- AS ON 31-03-1996 HAVE ALL OF A SUDDEN FALLEN TO ZERO AS ON 01-04-1996. THE ACTION OF THE ASSESSEE T O SWITCH OVER TO MARKET PRICE METHOD FOR VALUATION OF CLOSING STOCK IS NOT PERMISSIBLE SINCE THE ASSESSEE WAS ALL ALONG, IN THE PAST FOLLO WED THE COST METHOD OF VALUATION OF CLOSING STOCK. FURTHER, THE ASSESSEE D ID NOT DISCARD OR DESTROY THE CLOSING STOCK AS ON 31-03-1997. IN FACT , THE ASSESSEE STILL HOLDS THE STOCKS AS IT IS CLEAR FROM THE ASSESSEES LETTER DATED 6-1-2000 AND AN AFFIDAVIT FILLED IN SUPPORT OF THE CONTENTIO N RAISED IN THE SAID LETTER. HAD THE VALUE OF THIS STOCK BECOME ZERO THE ASSESSEE WOULD HAVE CERTAINLY DISCARDED OR DESTROYED THE STOCK AND CLAI MED THE LOSS. THE FACT THAT THE ASSESSEE CONTINUED TO HOLD THE STOCK WITH HIM ON ONE HAND AND CLAIMED THAT IT HAS NO VALUE IS NOT AN ACCEPTABLE P ROPOSITION. IN VIEW OF THIS POSITION, THE AO MADE ADDITION OF RS.6,13,300/ - WHICH REPRESENTS THE VALUE OF CLOSING STOCK AS ON 31-03-1997. ITA NO.1006/AHD/2007 M/S. SANTRAM FINE CHEMICALS VS ITO W-1, NADIAD 4 5. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE MATERIAL AVAILABLE ON RECORD CONFIRMED THE ADDITION. HIS FINDINGS IN THE IMPUGNED ORDER IN PARA 3.2 5O 3.5 ARE REPROD UCED AS UNDER: 3. FROM THE ASSESSMENT ORDER OF THE ASSESSING OFFI CER, IT IS CLEAR THAT THE APPELLANT HAS BEEN FOLLOWING THE MET HOD OF VALUING CLOSING STOCK AT COST PRICE IN THE PAST. THIS SIGNIFICANT ACCOUNTING POLICY FORMS PART OF THE FIN ANCIAL STATEMENTS FILED BY THE ASSESSEE. IT IS STRANGE THA T DURING THE YEAR UNDER CONSIDERATION, THE APPELLANT CHANGED THE METHOD OF VALUING THE CLOSING STOCK FROM COST METHOD TO MARKET METHOD. ACCORDING TO THE PROVISIONS OF SECTION 145 OF THE INCOME TAX ACT, THE APPELLANT HAS TO FOLLOW A CONSI STENT METHOD OF VALUATION OF CLOSING STOCK. THE CHOICE OF THE METHOD OF ACCOUNTING LIES WITH THE ASSESSEE BUT THE ASSESS EE MUST SHOW THAT HE HAS REGULARLY FOLLOWED THE METHOD OF A CCOUNTING CHOSEN BY HIM. IN OTHER WORDS, ONCE A PARTICULAR ME THOD OF ACCOUNT IS FOLLOWED BY THE ASSESSEE, HE MUST FOLLOW IT ON A CONSTANT BASIS. 3.3 THE SUPREME COURT IN THE CASE OF UNITED COMMERC IAL BANK VS. COMMISSIONER OF INCOME-TAX (1999) CTR 380 HAS HELD THAT THE METHOD OF ACCOUNTING ADOPTED BY THE T AX PAYER CONSISTENTLY SHOULD BE ACCEPTED BY THE REVENUE. IN THE ASSESSEES CASE, SINCE, HE IS FOLLOWING THE METHOD OF CLOSING STOCK AT COST, CHANGING IT IN THE CURRENT YEAR TO M ARKET VALUE, IS NOT ACCEPTABLE. 3.4 THE APPELLANT HAD FILED AN AFFIDAVIT STATING TH AT THE PURITY OF THE STOCK WHICH WAS 72% AS PER THE TEST ING REPORT DATED 22.4.1996 HAS BECOME NIL AS PER T4ESTING REPO RT DATED 6.12.1996. IN VIEW OF THIS, THE VALUE OF THE SAID M ATERIAL IS TAKEN AS NIL AS ON 31.3.1997. THE AUTHORIZED REPRES ENTATIVE OF THE APPELLANT FIRM WAS ASKED TO EXPLAIN THE REAS ONS FOR SUCH A DRASTIC LOSS IN PURITY. IT WOULD BE NOTICED FROM THE TABLE ABOVE THAT SINCE A. Y. 1991-92, THE APPELLANT IS CA RRYING FORWARD LARGE QUANTITIES OF STOCK. NEVER HAS IT WRI TTEN OFF THE SAME TAKING THE PLEA THAT THE STOCK HAS LOST PURITY . THE CHEMICAL CHANGES SHOULD CONTINUE TO BE THE SAME IN ALL THE ASSESSMENT YEARS. THEREFORE, CLOSING STOCK SHOULD H AVE LOST ITS PURITY EVEN IN THE EARLIER YEARS AND SHOULD HAV E BEEN WRITTEN OFF. NO EVIDENCE OF ANY SUCH ACTION IS SEEN . FROM THE TABLE ABOVE, IT IS ALSO SEEN THAT THE APPELLANT HAD MADE ITA NO.1006/AHD/2007 M/S. SANTRAM FINE CHEMICALS VS ITO W-1, NADIAD 5 PURCHASES AMOUNTING TO RS.11,09,792/- IN THE IMMEDI ATELY PRECEDING PREVIOUS YEAR. THIS IS HIGHEST PURCHASE M ADE BY THE APPELLANT FROM A. Y. 1991-92 TILL 1997-98. THE APPELLANT CLAIMED THAT IT COULD NOT SELL ITS PRODUCT SINCE TH E ORGANIZATION FOR WHICH THEY WERE DOING THE JOB WORK NAMELY ATUL, STOPPED DOING BUSINESS WITH APPELLANT. THE APPELLANT WAS AS KED TO GIVE EVIDENCE TO SHOW WHEN THE BUSINESS WAS STOPPED BY ATUL. THE AUTHORIZED REPRESENTATIVE STATED HIS INAB ILITY TO PROVIDE ANY DETAILS. 3.5 IN VIEW OF THE ABOVE, I HOLD THAT THE DISALLOWA NCE MADE BY THE ASSESSING OFFICER IS IN ORDER AND IS THEREFO RE, CONFIRMED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T THE NAME OF THE COMMODITY WHOSE VALUE WAS CONSIDERED NIL IS CHLORI NATED PHENOL AND SUBMITTED THAT IT WAS A PHARMACEUTICAL ITEM AND USE D AS ANTISEPTIC/ANTIFUNGAL ITEM. PB 1 TO PB -3 ARE THE CERTIFICATE OF DR. DINESH PATEL WHO HAS CERTIFIED THAT PURITY OF THE A BOVE COMMODITY HAS BECOME NIL. THEREFORE, IT COULD NOT BE USED FOR ANY BUSINESS PURPOSE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE MADE A BONA FIDE CLAIM AND THE METHOD OF ACCOUNTING HAS NOT BEEN DISPUTED. HE HAS REFERRED TO THE AFFIDAVIT OF THE ASSESSEE WH EREBY THE ASSESSEE MADE A REQUEST TO THE REVENUE DEPARTMENT TO DEPUTE SOME INSPECTORS OR VALUER TO CONDUCT SURVEY OF THE SAID CLOSING STOCK WHOSE PURITY HAS BECOME NIL AND AS SUCH VALUATION OF THE CLOSING STO CK WAS ALSO CONSIDERED AS NIL. HOWEVER, NO VALUER OR INSPECTOR WAS DEPUTED TO VERIFY THE SAME. THE LEARNED COUNSEL FOR THE ASSESSEE, THE REFORE, SUBMITTED THAT THE CLAIM OF THE ASSESSEE IS SUPPORTED BY THE CERTIFICATE OF THE EXPERT. THEREFORE, METHOD OF VALUATION OF THE CLOSI NG STOCK SHOULD NOT BE DISBELIEVED BY THE AUTHORITIES BELOW. HE HAS RELIED UPON THE ORDER OF THE ITAT DELHI BENCH IN THE CASE OF PEPPRI + FUCHS ((IN DIA) LTD. VS DCIT (6 SOT 10). ITA NO.1006/AHD/2007 M/S. SANTRAM FINE CHEMICALS VS ITO W-1, NADIAD 6 7. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT IN THE CHEMICA L FIFO METHOD IS APPLIED. THE ASSESSEE HAS NOT PRODUCED ANY SUFFICIE NT EVIDENCE TO PROVE THE NIL VALUE OF THE CLOSING STOCK. THE LEARNED DR SUBMITTED THAT CERTIFICATE OF THE EXPERT NOW FILED BEFORE THE LEAR NED CIT(A) WAS NOT FILED BEFORE THE AO AND EVEN THERE IS NO MENTION OF SUCH REPORT IN THE SUBMISSION OF THE ASSESSEE. THE LEARNED DR SUBMITTE D THAT THERE IS A PROPER PROCEDURE FOLLOWED IN THE CASE OF DISPOSAL O F CHEMICALS. IN THE CASE OF THE ASSESSEE, NO SUCH PROCEDURE IS MAINTAIN ED. THE LEARNED DR SUBMITTED THAT THE ASSESSEE WAS FOLLOWING COST METH OD FOR VALUATION OF THE OPENING STOCK AND CLOSING STOCK WHICH METHOD IF APPLIED IN THE ASSESSMENT YEAR UNDER APPEAL, ADDITION WOULD BE JUS TIFIED. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS NOT EXPLAINED AN Y BONA FIDE IN CHANGE OF METHOD OF ACCOUNTING AND NO RELIABLE EVID ENCE IS FILED TO CLAIM NIL VALUE OF THE CLOSING STOCK. THE LEARNED DR SUBM ITTED THAT THE ASSESSEE KEPT THE STOCK AS ON 31-03-1997. THEREFORE , THERE IS NO QUESTION OF CONSIDERING ITS VALUE TO BE NIL. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND THE MATERIALS AVAILABLE ON RECORD. IT IS ADMITTED FACT THAT THE A SSESSEE HAS BEEN CONSISTENTLY FOLLOWING COST METHOD FOR THE PURPOSE OF VALUING THE CLOSING STOCK. THE VALUATION IS, THEREFORE, MADE AT COST. T HEREFORE, THE ASSESSEE SHALL HAVE TO STICK TO ITS METHOD OF VALUATION OF C LOSING STOCK AND SHOULD NOT CHANGE IT ACCORDING TO ITS CONVENIENCE. NO REAS ON HAS BEEN EXPLAINED AS TO WHY IN THE ASSESSMENT YEAR UNDER APPEAL ONLY SUCH METHOD WAS CHANGED BY THE ASSESSEE. THE AO HAS RIGHTLY NOTED T HAT THE STOCK WAS VALUED AT RS.6,13,300/- AS ON 31-03-1996. BUT SUDDE NLY, WITHOUT REASONS THE SAME HAS GONE OUT TO ZERO VALUE IN THE NEXT ASSESSMENT YEAR. THEREFORE, THE METHOD OF VALUATION CHANGED BY THE ASSESSEE WITHOUT ANY SUPPORTING REASON COULD NOT BE APPROVED IN THE FACTS AND CIRCUMSTANCES OF THE CASE, PARTICULARLY WHEN THE AS SESSEE DID NOT ITA NO.1006/AHD/2007 M/S. SANTRAM FINE CHEMICALS VS ITO W-1, NADIAD 7 DISCARD/DESTROY THE STOCK AS ON 31-03-1997. THE AO NOTED FROM THE LETTER OF THE ASSESSEE THAT THE ASSESSEE STILL HELD THE STOCK WITH IT. THEREFORE, SUDDENLY GOING DOWN THE VALUE TO BE NIL WOULD NOT BE JUSTIFIED. NO EVIDENCE WAS FILED BEFORE THE AUTHORITIES BELOW AS TO HOW SUDDENLY THE VALUE OF THE CLOSING STOCK HAS GONE TO ZERO VALUE. THEREFORE, CHANGE OF METHOD OF VALUATION OF STOCK WAS NOT PROVED TO BE B ONA FIDE. SINCE THE STOCK WAS STILL HELD IN THE CLOSING STOCK AT THE EN D OF THE YEAR, THEREFORE, THERE WAS NO REASON TO DEVIATE FROM THE COST METHOD FOR THE PURPOSE OF VALUING THE CLOSING STOCK. THE ASSESSEE REFERRED TO THE REPORT OF DR. DINESH PATEL, PB 1, 2 AND 3 WHICH ARE HAVING DATED 22-04-1996, 06-12-1996 AND 20-04-2000 IN SUPPORT OF THE CLAIM T HAT PURITY OF CHLORINATED PHENOL WAS 72.8% OUT OF QUANTITY OF 1 K G AND IT HAS BECOME NIL LATER ON. THE ASSESSEE FILED AFFIDAVIT BEFORE T HE REVENUE DEPARTMENT SEEKING DEPUTATION OF SOME INSPECTORS OR VALUER TO CONDUCT SURVEY OF THE CLOSING STOCK. THE STORY PUT FORTH BY THE ASSESSEE IS CLEARLY AFTERTHOUGHT BECAUSE NO SUCH EVIDENCE WAS FILED BEFORE THE AO DE SPITE THE FIRST TWO REPORTS DATED 22-04-1996 AND 06-12-1996 WERE PRIOR TO THE PASSING OF THE ASSESSMENT ORDER ON 24-03-2000. NO REASONS HAVE BEEN EXPLAINED AS TO WHY THESE TWO REPORTS WERE WITHHELD FROM THE AO. THE ASSESSEE IN THE EXPLANATION BEFORE THE AO STATED THAT BECAUSE OF TH E OLDNESS OF THE MATERIAL, THE VALUE OF THE STOCK HAS ALMOST REACHED NIL AS ON 31-03- 1997. HOWEVER, NO EVIDENCE OR MATERIAL WAS FILED BE FORE HIM IN SUPPORT OF THE CONTENTION. PB -3 IS THE REPORT DATED 20-04- 2000 WHICH WAS CLEARLY OBTAINED AFTER PASSING OF THE ASSESSMENT ORDER. NO STEP HAS BEEN TAKEN BEFORE THE LEARNED CIT(A) UNDER RULE 46A OF THE INC OME TAX RULES FOR ADMISSION OF THE ADDITIONAL EVIDENCE. THE GENUINENE SS AND AUTHENTICITY OF SUCH REPORT HAS NOT BEEN PROVED BY THE ASSESSEE. NO EVIDENCE OR MATERIAL HAS BEEN FILED BEFORE THE AUTHORITIES BELO W THAT THE TEST REPORT MENTIONED ABOVE WAS WITH REGARD TO THE SAME STOCK H ELD BY THE ASSESSEE IN THE CLOSING STOCK. SAMPLES WERE DRAWN BY THE ASS ESSEE FOR THE PURPOSE OF CONDUCTING ANALYSIS AND TESTING AND NO INDEPENDE NT AGENCY WAS CALLED ITA NO.1006/AHD/2007 M/S. SANTRAM FINE CHEMICALS VS ITO W-1, NADIAD 8 TO TAKE THE SAMPLE TO PROVE THAT THE SAMPLES HAVE B EEN TAKEN OUT OF THE CLOSING STOCK HELD BY THE ASSESSEE. NO QUALIFICATIO N OR EXPERIENCE OF THE EXPERT HAS BEEN EXPLAINED TO PROVE THAT HE WAS AUTH ORIZED TO DO THE TESTING OF THE PARTICULAR ITEM. NO REASON HAS ALSO BEEN GIVEN AS TO WHY THE PURITY OF THE ARTICLE IN QUESTION HAS GONE NIL. THEREFORE, THE TEST REPORTS FILED BEFORE THE LEARNED CIT(A) WERE HIGHLY DOUBTFUL AND NOT RELIABLE. THE LEARNED CIT(A) NOTED FROM THE DETAILS OF THE OPENING STOCK, PURCHASES, SALES AND CLOSING STOCK THAT FROM THE AS SESSMENT YEAR 1991- 92 AND ONWARDS THE ASSESSEE WAS CARRYING FORWARD LA RGE QUANTITY OF THE CLOSING STOCK BUT IT WAS NEVER WRITTEN OFF ON THE S IMILAR PLEA THAT THE STOCK HAS LOST PURITY. SINCE THE CHEMICAL WAS SAME AS USED BY THE ASSESSEE, THEREFORE, THERE WAS NO JUSTIFICATION TO MAKE THE CLAIM THAT ONLY IN ONE YEAR UNDER APPEAL THE VALUE OF THE STOC K HAS GONE DOWN TO NIL. THE LEARNED COUNSEL FOR THE ASSESSEE DURING TH E COURSE OF ARGUMENT PRODUCED ONE PACKET OF SOME POWDER AND DEMONSTRATED THAT AFTER LAPSE OF TIME, THE POWDER HAS BECOME LIQUID. THEREFORE, T HE CLOSING STOCK HAS NIL VALUE. BUT NO SUCH FACT HAS BEEN NOTED IN THE R ELATED REPORT AS FILED BY THE LEARNED COUNSEL FOR THE ASSESSEE I. E. PB 1 , 2 AND 3. THE LEARNED COUNSEL FOR THE ASSESSEE ADMITTED THE ASSESSMENT YE AR UNDER APPEAL WAS LAST YEAR OF BUSINESS OF THE ASSESSEE, IT WOULD SUP PORT FINDINGS OF THE AUTHORITIES BELOW THAT THE ASSESSEE MADE A CLAIM OF NIL VALUE OF CLOSING STOCK IN ORDER TO AVOID LEGITIMATE PAYMENT OF TAXES . THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF ITAT DELH I BENCH IN THE CASE OF PEPPRI + FUCHS (INDIA) LTD. (SUPRA) IN WHICH ACCOUN TING POLICY OF THE ASSESSEE WAS WITH REGARD TO VALUATION OF INVENTORIE S OF OBSOLETE SOCK WAS FOUND BONA FIDE AND CONSISTENT. THEREFORE, SUCH DEC ISION WOULD NOT SUPPORT THE CASE OF THE ASSESSEE BECAUSE OF THE FAC TS NOTED ABOVE. CONSIDERING THE ABOVE DISCUSSIONS, WE DO NOT FIND I T TO BE A FIT CASE FOR INTERFERENCE. IN THE ABSENCE OF ANY RELIABLE AND CO GENT EVIDENCE ON RECORD, WE DO NOT INTEND TO INTERFERE WITH THE ORDE RS OF THE AUTHORITIES BELOW. WE CONFIRM THEIR FINDINGS AND DISMISS THE CL AIM OF THE ASSESSEE. ITA NO.1006/AHD/2007 M/S. SANTRAM FINE CHEMICALS VS ITO W-1, NADIAD 9 9. GROUND NO.2 OF THE APPEAL IS REGARDING CHARGING OF INTEREST WHICH IS CONSEQUENTIAL AND IS REJECTED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED ON 09-09-2010. SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 09-09-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DISPATCH OF THE ORDER: