ITO, Patiala V. Shri Madan Lal, Patiala

ITA 126/CHANDI/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8412 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 31-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: RAKESH JAIN
• Keywords: Rejection of books of accounts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.126/CHD/2014 (ASSESSMENT YEAR : 2009-10) THE INCOME TAX OFFICER, VS. SHRI SUNIL AGGARWAL, WARD-3, PATIALA. L/H OF SHRI MADAN LAL PROP. M/S WALAITI RAM MADAN LAL, DARSHANI GATE, PATIALA. PAN: AAUPL7461N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. MITTAL, DR RESPONDENT BY : SHRI RAKESH JAIN DATE OF HEARING : 06.10.2016 DATE OF PRONOUNCEMENT : 04.01.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), PATIALA DATED 26.11.2013 RELATING TO ASS ESSMENT YEAR 2009-10. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A JEWELLER. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. THE BASIC CONTENTION OF THE ASSESSING OFFICER WAS THAT THE ASSESSEE JEWELLER IS NOT FOLLOWING FIFO METHOD FOR VALUATION OF ARTICLES OF 2 JEWELLERY. THE ASSESSEE HAD INSTEAD ADOPTED WEIGHTE D AVERAGE COST (WAC) METHOD FOR VALUATION OF ARTICLES OF JEWELLERY WHICH IN THE OPINION OF THE ASSESSING OFF ICER WAS NOT CORRECT. IN THIS CONNECTION THE ASSESSING O FFICER NOTED THAT THE ASSESSEE HAD VALUED THE CLOSING STOC K IN GRAMS WHEREAS THE PURCHASES AND SALES WERE MADE ITEMWISE. THE ASSESSING OFFICER THEREFORE CONTENDED THAT THE VALUATION OF CLOSING STOCK IS NOT VERIFIABLE. T HE ASSESSING OFFICER ALSO NOTED THAT NO STOCK REGISTER HAD BEEN MAINTAINED AND NO SPECIFIC DETAILS OF OPENING AND CLOSING STOCK HAD BEEN MAINTAINED ITEMWISE. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE VALUE O F OPENING STOCK AND CLOSING STOCK SHOWN DURING THE YE AR AS ALSO IN THE PRECEDING THREE ASSESSMENT YEARS REVEAL ED THAT THE AVERAGE RATE OF OPENING STOCK AND CLOSING STOCK OF GOLD ORNAMENTS WAS MUCH LESS THAN THE AVERAGE RATE OF PURCHASE OF GOLD ORNAMENTS MADE IN THE RESPECTIVE Y EARS. THE ASSESSING OFFICER, THEREFORE, CONCLUDED THAT TH E STOCK WAS UNDERVALUED. HE THEREAFTER CONTENDED THAT FIRST LY THE OLD ORNAMENTS WERE SOLD BY THE ASSESSEE AND ONLY THEREAFTER THE NEW ORNAMENTS PURCHASED WERE SOLD. H E THEREFORE REVALUED THE CLOSING STOCK BY APPLYING TH E FIFO METHOD FOR DETERMINING THE VALUE OF THE CLOSING STO CK AND DETERMINED THE SAME AT RS.2,52,14,976/-. THE ASSESS ING OFFICER THEREAFTER RECASTED THE TRADING ACCOUNT OF THE ASSESSEE AND DETERMINED THE GROSS PROFIT AT RS.98,18,712/- AS AGAINST RS.60,31,483/- SHOWN BY T HE ASSESSEE AND ADDITION MADE OF THE DIFFERENCE AMOUNT ING TO 3 RS.37,87,229/-. SIMILARLY IN THE CASE OF GEMSTONES THE ASSESSING OFFICER OBSERVED THAT THE SALES BILL VARI ED FROM RS.101/- TO RS.2585/-. THE ASSESSING OFFICER TOOK T HE HIGHEST SALE CONSIDERATION OF RS.2585/- AS SALE CONSIDERATION RECEIVED BY THE ASSESSEE ON SALES OF ALL GEMSTONES AND ADDED AN AMOUNT OF RS.1,54,206/- ON ACCOUNT OF SUPPRESSED SALES OF GEMSTONES ACCOUNTED FOR BY THE ASSESSEE. SIMILARLY ON ACCOUNT OF DIAMOND JE WELLERY THE ASSESSING OFFICER TOOK THE AVERAGE OF THE HIGHE ST SALE BILL OF RS.49,995/- AND THE LOWEST SALE BILL OF RS. 2121/- I.E. RS.26,058/-, AS SALE CONSIDERATION FOR SALES O F ALL DIAMONDS AND MADE AN ADDITION OF RS.11,45,426/- TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF SUPPRESSED SAL ES OF DIAMOND. 3. BEFORE THE LD. CIT(APPEALS) THE ASSESSEE MADE DETAILED SUBMISSIONS AGAINST THE ACTION OF THE ASSE SSING OFFICER IN REJECTING THE BOOKS OF ACCOUNTS AS WELL AS MAKING ADDITION ON ACCOUNT OF GP RATE AND SUPPRESS ED SALES. THE SUBMISSIONS ARE REPRODUCED AT PARAGRAPH 4.2 OF THE CIT (APPEALS) ORDER. REMAND REPORT WAS CALLE D FOR BY THE LD. CIT (APPEALS) FROM THE ASSESSING OFFICER , AFTER CONSIDERING WHICH THE LD. CIT (APPEALS) ALLOWED THE ASSESSEES APPEAL BY HOLDING THAT THE ASSESSING OFF ICER HAS REJECTED THE BOOKS OF ACCOUNTS BUT THERE WAS NO THING ON RECORD TO DEMONSTRATE THAT THE QUANTITATIVE STOC K OF GOLD DID NOT TALLY OR THAT THERE WAS ANY PURCHASE O R SALE OUTSIDE THE BOOKS. LD. CIT (APPEALS) HELD THAT IN F ACT NO 4 DEFICIENCY IN THE QUANTITATIVE STOCK TALLY COULD BE POINTED OUT BY THE ASSESSING OFFICER. LD. CIT (APPEALS) HEL D THAT THE ASSESSEE ON THE OTHER HAND HAD SHOWN BETTER GRO SS PROFIT IN THIS YEAR AS COMPARED TO THE PRECEDING YE AR AND THAT THE GROSS PROFIT SHOWN BY THE ASSESSEE HAD BEE N ACCEPTED BY THE ASSESSING OFFICER AS A SUITABLE COM PARABLE IN ANOTHER CASE NAMELY IN THE CASE OF SHRI VIVEK JA IN ASSESSMENT YEAR 2009-10. LD. CIT (APPEALS), THEREFO RE, HELD THAT THERE WAS NO DISCREPANCY IN THE QUANTITY OF PURCHASE AND SALE AND THE ONLY ISSUE WAS VIS A VIS THE VALUATION OF STOCK WHICH METHOD THE ASSESSEE HAD BE EN FOLLOWING CONSISTENTLY SINCE INCEPTION AND HAD BEEN ACCEPTED IN ASSESSMENT PROCEEDINGS FOR ASSESSMENT Y EAR 2004-05 AND BY THE CIT (APPEALS) IN A.Y. 2006-07 TH E SAME COULD NOT BE DISTURBED. RELIANCE WAS PLACED O N A NUMBER OF DECISIONS IN THIS REGARD. FURTHER THE LD. CIT (APPEALS) HELD THAT THE GROSS PROFIT OF THE ASSESS EE IN THIS YEAR WAS MORE THAN EARLIER YEAR. LD. CIT (APPEALS) THEREFORE HELD THAT THE ADDITION MADE BY THE ASSESS ING OFFICER WAS UNSUSTAINABLE IN LAW AND ON FACTS. THE RELEVANT FINDINGS OF THE CIT (APPEALS) IN THIS REGA RD REPRODUCED AT PARAGRAPH 4.6 OF THE ORDER ARE AS FOL LOWS: 4.6 THEREFORE, IN THIS CASE FIRSTLY IT IS SEEN THAT ID. CIT(A) ACCEPTED THE BOOK RESULTS UNDER SIMILAR CONDITION I N A.Y. 2006-07. THE CLOSING STOCK IN A.Y. 2006-07 HAS A BEARING IN THE FOLLOWING ASSESSMENT YEARS. FURTHER THIS METHOD OF ACCOUNTING HAS BEEN ACCEPTED IN SCRUTINY PROCEEDING FOR A.Y. 2004- 05 AND THE APPELLANT IS CONSISTENTLY FOLLOWING THIS PRACTICE O F VALUATION SINCE INCEPTION. 5 SECONDLY, THE G.P. IN THIS YEAR IS MORE THAN EARLI ER YEAR AND IS USED AS A COMPARABLE IN ESTIMATING G.P. IN ANOTHER CASE AS ALREADY CONTENDED EARLIER. THIRDLY, THE A.O. HAS NOT DISPUTED THE QUANT ITY OF STOCK OR PURCHASE/SALE AT ANY POINT. HE HAS ONLY REVALU ED THE STOCK BY ADOPTING A HIGHER FIGURE THAN THE RATE DISCLOSED BY THE APPELLANT ON THE ASSUMPTION THAT ONLY OLD JEWELLERY HAS BEEN SOL D AND FRESH JEWELLERY HAS REMAINED IN STOCK UNTIL THE OLD JEWEL LERY IS EXHAUSTED. THUS THE STOCK IN WEIGHT HAS BEEN ACCEPTED BY THE A .O. THE PRESUMPTION THAT THE JEWELLER HAS KEPT ON PURCHASIN G JEWELLERY IN THE YEARS BUT HAVE NOT SOLD TILL THE OLD JEWELLERY OF A .Y. 2006-07 IS EXHAUSTED BY A.Y. 2009-10 IS A MERE PRESUMPTION WIT HOUT ANY EVIDENCE BROUGHT ON RECORD. THE ONLY CONTENTION OF THE A.O. IS THAT IN PLACE OF WAC METHOD, FIFO METHOD SHOULD BE ADOPTED. AS REGARDS CASH SALES, IN THE CASE OF R.B.JESSARAM FATEHCHAND VS CIT 75ITR 33(BOM) ,IT IS HELD THAT NON-INCLUSION OF ADDRESSES OF CUSTOMERS IN RESPECT OF CASH TRANSACTION CANNOT BE BASIS FOR REJECTION OF BOOKS OF ACCOUNT. THE FIXATION OF AN ARBITRARY R ATE BY THE A.O FOR THE STONES, IN MY OPINION IS NOT CORRECT IN ABSENCE OF ANY EVIDENCE AND FURTHER THE APPELLANT HAS SHOWN SUBSTANTIAL GRO SS PROFIT ON THE BUSINESS. THE SALE OF ARTICLES BEING SOLD IS AS PER MARKET AND CUSTOMER PREFERENCE IN THE TYPE OF BUSINESS OF THE APPELLANT . THEREFORE, LOOKING INTO THE NATURE OF BUSINESS AND TRADING OF ITEMS AS PER CUSTOMERS PREFERENCE, IT DOES NOT LEAVE ANY POSSIBI LITY OF FIFO TO BE APPLIED IN THE MANNER SUGGESTED BY THE A.O HENCE, T HE VERY PRESUMPTION OF THE A.O IS NOT IN TERMS OF BUSINESS REALITY OF APPELLANT'S TRADE. THEREFORE, RELYING ON THE FACTS OF THE CASE, CONSIS TENCY OF METHOD OF VALUATIONS AND JUDICIAL DECISION THE REJECTION OF B OOKS OF ACCOUNT AND THE VALUATION OF JEWELLERY BY THE A.O. IS HELD AS N OT CORRECT AND THE ADDITION MADE BY THE A.O IS UNSUSTAINABLE IN LAW AN D ON FACTS. 4. AGGRIEVED BY THE SAME, THE DEPARTMENT HAS COME UP IN APPEAL, RAISING THE FOLLOWING GROUNDS: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN NOT SUSTAINING THE ACTION OF THE AO REGARDING REJEC TION OF BOOKS OF ACCOUNT U/S 145(3) AND THEREBY DELETING THE ADDITIO N OF 6 RS.78,02,411/-, IGNORING THE FACT THAT NO QUANTITAT IVE AND QUALITATIVE DETAILS OF OPENING STOCK AS WELL AS CLO SING STOCK WAS MAINTAINED OR PRODUCED BY THE ASSESSEE. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN NOT CONFIRMING THE ACTION OF THE AO IN APPLYING FIFO METHOD FOR VALUATION OF THE CLOSING STOCK IGNORING THE FAC T THAT ASSESSEE'S CLAIM THAT SALES MADE WERE OUT OF CURRENT YEAR'S PU RCHASES REMAINS UNPROVED AND UNSUBSTANTIATED. FURTHER, THE ASSESSEE HAD NOT MAINTAINED ANY STOCK REGISTER ON D AY TO DAY BASIS WHICH RENDERS THE IDENTIFICATION OF PURCHASES IMPOSSIBLE AND SINCE THE ASSESSEE WAS DEALING IN SO MANY ITEMS DIF FER IN WEIGHT, PURITY, DESIGN, SPECIFICATION, MATERIAL & BRAND, TH E APPLICATION OF WAC METHOD WAS NOT POSSIBLE AS EVEN THE AS-2 PRESCR IBED WAC METHOD FOR INVENTORY VALUATION IN CASES INVOLVING I DENTICAL GOODS OR ITEMS. 3. IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AND THAT OF THE AO RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY G ROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND FINALLY DISPO SED OF. 5. BEFORE US THE LD.DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND FURTHER STATED THAT THE ASSES SING OFFICER HAS VERY METICULOUSLY BEEN ABLE TO BRING ON RECORD THE FACT THAT THERE WERE SO MANY DISCREPANCIES IN T HE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND ONL Y AFTER THAT HE HAS REJECTED THE BOOKS OF ACCOUNT AND MADE THE ADDITION. 6. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND POINTED OUT THAT ON IDENTICAL FACTS THE ITAT CHANDIGARH BENCH HAD UPHELD THE ORDER OF THE CIT(APPEALS) DELETING THE ADDITION MADE IN THE CASE OF ITO 7 VS M/S SUNNY JEWELLERY HOUSE IN ITA NO. 196/CHD/201 4 DATED 03-05-2016. 7. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIES, PERUSED THE ORDERS OF THE AUTHORITIES BELO W AS ALSO THE DOCUMENTS PLACED BEFORE US. ON PERUSING TH E ORDER OF THE ITAT IN THE CASE OF M/S SUNNY JEWELLER Y HOUSE (SUPRA) WE FIND THAT THE FACTS OF THAT CASE W ERE IDENTICAL TO THAT IN THE PRESENT CASE WHERE THE BOO KS OF ACCOUNTS OF THE ASSESSEE, A JEWELER, WERE REJECTED FOR IDENTICAL REASONS AS STATED IN THE ASSESSEES CASE I.E. THE NON-MAINTENANCE OF ITEMWISE DETAIL OF JEWELLERY PUR CHASED AND SOLD AND STOCK OF THE SAME AS ALSO INCORRECT ME THOD OF VALUATION OF STOCK ADOPTED BEING WAC AS AGAINST FIFO ADOPTED BY THE ASSESSING OFFICER. THE HONBLE ITAT IN THAT CASE AFTER RELYING ON THE ORDER OF THE ITAT, CHANDI GARH BENCH IN THE CASE OF ACIT VS JAGDISH CHAND 90 TTJ 943 (CHD) HAD HELD THAT THERE WAS NO INFIRMITY IN THE O RDER OF THE CIT (APPEALS) IN DELETING THE ADDITION MADE. T HE RELEVANT FINDINGS OF THE ITAT ARE REPRODUCED HEREUN DER: 6. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED BEFORE US A COPY OF THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF JAGDISH CHAND (SUPRA) STATING THAT THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS OF THAT CASE. THEREFORE, THE LEARNED CIT (APPEALS) WAS RIGHT IN DELETING THE ADDITION. AFTER PERUSING TH E ORDER OF THE LEARNED CIT (APPEALS), WE SEE THAT RELEVANT FINDINGS ARE RECORDED AT PAGES 4.5 AND 4.6 OF HIS ORDER, WHICH READ AS UNDER : 8 4.5 I HAVE CONSIDERED THE SUBMISSIONS. IN THE CASE OF ACIT VS. JAGDISH CHAND 90 TTJ (CHD) 943, THE APPELLANT WAS JEWELLER. THE ID. CIT(A ) HELD THAT THE VALUATION WORKED OUT ON THE BASIS OF AVERAGE OF OPENING STOCK AND PURCHASES WAS CONSISTENTLY FOLLOWED BY THE APPELLANT OVER A NUMBE R OF YEARS. HE, THEREFORE, DELETED THE ADDITION MADE BY THE A.O. ON THE BASIS OF AVERAGE RATE OF PURCHASES. THIS VIEW WAS CONFIRMED BY HON'BLE ITAT. IT IS HELD THEREIN THAT 'IT IS CLEAR FROM ABOVE THAT THE ASSES SEE COULD NOT SELL EVEN THE ENTIRE STOCK OF GOLD ORNAMENTS LY ING WITH THE ASSESSEE IN THE OPENING STOCK. A PART OF IT WAS CARRIED TO THE CLOSING STOCK OF THE YEAR UNDER CONSIDERATIO N. THERE IS NO JUSTIFICATION FOR APPLYING PURCHASE RATE TO AB OVE STOCK, AS THE ASSESSEE COULD NOT BE SAID TO HAVE EARNED AN Y PROFIT FROM THE ABOVE CARRY FORWARD STOCK. BUT, IF AVERAGE RATE OF PURCHASES OF THIS YEAR IS APPLIED EVEN TO ABOVE STOC K, THEN SOME ADDITION AUTOMATICALLY FOLLOWS IN THE INCOME O F THE ASSESSEE. IT IS NOT PERMISSIBLE AND IS CONTRARY TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CH AINRUP SAMPATRAM VS. CIT (1953) 24ITR 481 (SC). THE AVERAG E COST OF OPENING AND PURCHASES IS ALSO AN ACCEPTED METHOD OF VALUATION AT COST APPROVED BY THE ACCOUNTING STANDA RDS ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA. IN THE PRESENT CASE, IT IS FURTHER NOT CONTESTED BY TH E REVENUE THAT SIMILAR METHOD OF ACCOUNTING WAS FOLLOWED BY T HE ASSESSEE IN EARLIER YEAR. FOR ALL THE ABOVE REASONS , WE ARE OF THE VIEW THAT THE METHOD OF VALUATION ADOPTED BY THE ASSESSEE WAS CORRECT AND ADDITION MADE ON ACCOUNT OF ENHANCEMENT OF VALUE OF STOCK IS NO JUSTIFIED. THE I D. CIT(A) RIGHTLY DELETED THE ADDITION. HIS ACTION IS HEREB Y CONFIRMED. ' IN THIS CONNECTION, RELIANCE MAY BE MADE ON THE DECISION OF ITAT AHMEDABAD IN THE CASE OF INCOME TAX OFFICER VS CHOKSHI HIRACHAND & BROS. (37 TTJ, 415) WHEREIN IT HAS BEEN HELD THAT 9 'WHEN THE VALUATION OF CLOSING STOCK ACCORDING TO TH E ACCOUNTING SYSTEM CONSISTENTLY FOLLOWED WAS ACCEPTED BY THE REVENUE IN EARLIER AS WELL AS SUBSEQUENT ASSESSMENT YEAR, ITO WAS NOT JUSTIFIED IN MAKING ADDITIONS BY ADOPTING A DIFFERENT METHOD FOR ASSESSMENT YEAR IN QUESTION.' SIMILAR VIEW IS TAKEN AS IN THE OTHER CASES E.G. IN THE CASE OF SHANTILAL NAGARDAS & CO. (ITA NO.3362/AHD/2009) I.T.A.T. B-BENCH AHMADABAD. 4.6 THEREFORE, IN THIS CASE FIRSTLY, IT IS CONTENDED THAT SAME METHOD OF ACCOUNTING IS BEING CONSISTENTLY FOLLOWED. SECONDLY, THE REASON FOR VARIANCE OF NET PROFIT VIS A VIS THE CASE OF M/S MADAN LAL IS DULY EXPLAINED BY THE APPELLANT WHICH IS NOT REBUTTED BY THE A.O FURTHER THERE IS NO CASE OF ANY DISCREPANCY IN THE PURCHASE O R SALE ACCOUNT. THIRDLY, THE A.O. IN THIS CASE HAS ONLY REVALUED THE STOCK BY ADOPTING A HIGHER FIGURE THAN THE RATE DISCLOSED BY THE APPELLANT ON THE ASSUMPTION THAT ON LY OLD JEWELLERY HAS BEEN SOLD FIRST AND FRESH JEWELLER Y HAS REMAINED IN STOCK UNTIL THE OLD JEWELLERY IS EXHAUSTED. HE HAS NOT DISPUTED THE QUANTITY OF STOC K OR PURCHASE/SALE AT ANY POINT. THUS THE STOCK IN WEIGHT HAS BEEN ACCEPTED BY THE A.O. THE PRESUMPTION THAT THE JEWELLER HAS KEPT ON PURCHASING JEWELLERY IN THE YEARS BUT HAVE NOT SOLD TILL THE OL D JEWELLERY IS EXHAUSTED IS A MERE PRESUMPTION WITHOU T ANY EVIDENCE ON RECORD. THE ONLY CONTENTION OF THE A.O. IS THAT IN PLACE OF WAC METHOD FIFO METHOD SHOULD BE ADOPTED. AS REGARDS CASH SALES, IN THE CASE OF R.B.JESSARAM FATEHCHAND VS. CIT 75 ITR 33(BOM) ,IT IS HELD THAT NON-INCLUSION OF ADDRESSES OF CUSTOMERS IN RESPECT O F CASH TRANSACTION CAN NOT BE BASIS FOR REJECTION OF BOOKS 10 OF ACCOUNT. THE FIXATION OF AN ARBITRARY RATE BY T HE A.O FOR THE STONES/DIAMOND AND FURTHER ADDING 10% OF GOLD IN DIAMOND JEWELLERY WITHOUT ANY EVIDENCE, IN MY OPINION IS NOT CORRECT. THE APPELLANT IS VALUING THE CLOSING STOCK ON THE BASIS OF WEIGHTED AVERAGE COST METHOD CONSISTENTLY. FURTHER, THE SALE OF ARTICLES B EING SOLD IS AS PER MARKET AND CUSTOMER PREFERENCE IN TH E TYPE OF BUSINESS OF THE APPELLANT. THEREFORE IN VIE W OF NATURE OF BUSINESS AND TRADING OF ITEMS AS PER CUSTOMERS PREFERENCE DOES NOT LEAVE ANY POSSIBILITY O F FIFO TO BE APPLIED IN THE MANNER SUGGESTED BY THE A. O HENCE, THE VERY PRESUMPTION OF THE A.O IS NOT IN TERM S OF BUSINESS REALITY OF APPELLANT'S TRADE. THEREFORE, RELYING ON THE FACTS OF THE CASE, CONSISTENCY OF METHOD OF VALUATIONS AND JUDICIAL DECISION THE REJECTION OF BOOKS OF ACCOUNT AND THE VALUATION OF JEWELLERY BY THE A.O. IS HELD AS NOT C ORRECT AND THE ADDITION MADE BY THE AO IS UNSUSTAINABLE IN LAW AND ON FACTS. THEREFORE, GROUND NO.1 TO 4 AND IS ALLOWED 5. GROUND NO. 5 AND 6(II) ARE CONSEQUENTIAL IN NATURE AND A.O. IS DIRECTED TO CHARGE INTEREST AS P ER LAW. GROUND NO. 7 IS GENERAL IN NATURE AND, THERE FORE, NO COMMENTS ARE MADE. 6. IN THE RESULT, APPEAL IS ALLOWED. 7. ON PERUSAL OF THE SAME, WE DO NOT FIND ANY INFIRMITY AS THE RELIANCE HAS BEEN PLACED ON THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF JAGDISH CHAND (SUPRA), A COPY OF WHICH WAS ALSO PLACED ON RECORD BEFORE US. AFTER GOING THROUGH THE SAME, WE SEE THAT THE FACTS AND CIRCUMSTANCES OF THAT CASE ARE IDENTICAL TO THE FACTS OF THE PRESENT CASE AND NO DISTINGUISHING FACTORS BEING BROUGHT TO OUR NOTICE, RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH WE 11 ARE INCLINED TO DISMISS THE APPEAL OF THE REVENUE. 8. SINCE THE FACTS IN THE PRESENT CASE ARE IDENTIC AL TO THAT IN THE CASE OF M/S SUNNY JEWELLERY HOUSE (S UPRA) THE DECISION RENDERED IN THAT CASE SQUARELY APPLIES IN THE PRESENT CASE ALSO AND FOLLOWING THE SAME WE HOLD TH AT THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT ( APPEALS) SETTING ASIDE THE REJECTION OF BOOKS OF ACCOUNTS OF THE ASSESSEE AND DELETING THE ADDITION MADE. THE GROUND S RAISED BY THE REVENUE ARE THEREFORE DISMISSED. 9. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 4 TH JANUARY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH