ITO, Kendrapada Ward, Paradeep V. Jugal Kishore Das, Kendrapada

ITA 16/CTK/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3674 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 15-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SASWAT ACHARYA
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ./ ITA NO. 1 6 / CTK /20 1 6 ( [ [ / ASSESSMENT YEAR : 20 1 0 - 20 1 1 ) INCOME TAX OFFICER, KE NDRAPARA WARD, MADHUBAN, PARADEEP (ERSTWHILE WARD - 2 PARADEEP) VS. SRI JUGAL KISHORE DAS, PROP. M/S PARBATI JEWELLARY, AT/PO: TINIMUHANI, DIST: KENDRAPARA - 754211 ./ ./ PAN/GIR NO. : A BRPD 2065 Q ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI SUBHENDU DUTTA, CITDR [ /AS SESSEE BY : SHRI SASWAT ACHARYA , AR / DATE OF HEARING : 2 7 / 0 7 /201 7 / DATE OF PRONOUNCEMENT 28 / 0 7 /201 7 / O R D E R PER SHRI PAV AN KUMAR GADALE, JM : TH E REVENUE HAS FILED AN APPEAL AND AGAINST THE ORDER OF CIT( A) , CUTTACK PASSED IN I.T.APPEAL NO. 249 /201 3 - 1 4 , DATED 30.10.2015, U/S.143(3)/250 OF THE I.T.ACT AND RAISED THE FOLLOWING GROUNDS OF APPEAL : - 01. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.40,10,298/ - MADE BY THE AO FOR DIFFERENCE IN CLOSING STOCK VALUATION AND DIRECTED TO THE AO TO ADOPT WEIGHTED AVER AGE P RICE METHOD OF V ALUATION OF CLOSING STOCK WHEN THE AO HAD TAKEN THE VALUATION OF CLOSING STOCK AS PER THE MARKET PRICE OF THE GOLD AT THE TIME OF SURVEY OPERATION AS THE GOLD CAN EASILY BE LIQUIDATED TO CASH AT ITS PRESENT MARKET PRICE NOT AT THE COST PRICE OF THE PURCH ASES MADE OF SUCH ITEMS. 02. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, HE CIT(A) IS NOT JUSTIFIED TO HOLD THAT AS THE AO HAS ACCEPTED THE QUANTITATIVE CLOSING STOCK OF GOLD, THE METHOD OF VALUATION OF CLOSING STOCK IS TO BE ADOPTED AS FOLLOWED BY THE AS SESSEE. 2 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PROPRIETOR AND DEALS IN JEWELLERY AND DERIV ES INCOME FROM TRADING IN GOLD ORNAMENTS AND ITA NO. 1 6 /CTK/2016 2 FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 201 0 - 201 1 ON 28.03.2011 WITH TOTAL INCOME OF RS. 3 , 75 , 533 / - . THERE WAS A SURVEY OPERATION U/S.133A ON 26.03.2010 AND AS PER THE BOARDS GUIDELINES THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND AO ISSUED NOTICES U/S.143(2) & 142(1) OF THE ACT. IN COMPLIANCE TO THE SAME, LD. AR APPEARED FROM TIME TO TIME AND FURNISHED THE DOCUMENTS AND THE AO CALLED INFORMATION U/S.133(6) OF THE ACT FROM DIFFERENT BANKS AND DISCUSSED THE CASE OF THE ASSESSEE AND FURTHER ON PERUSAL OF THE FINANCIAL STATEMENTS THE AO FOUND THAT THE DISCLOSED CLOSING STOCK OF RS. 19,55,887/ - A S AGAINST THE VALUE OF STOCK OF RS. 60,02,987/ - AND THEREFORE ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE. THE ASSESSEE FILED SUBMISSION EXPLAINING THAT THE ASSESSEE IS A REGULAR LY ASSESSE D TO TAX FROM 1996 - 97 AND T HE CLOSING STOCK OF GOLD IS CONTINUED FROM 20 04 - 05 TO THE DATE OF SURVEY, AND THEREFORE, THE ASSESSEE HAS VALUED THE STOCK BASED ON THE OPENING BALANCE. THE AO WAS NOT SATISFIED WITH THE EXPLANATION ON THE CLOSING STOCK AND, THEREFORE, CONSIDERED THE DIFFERENCE IN THE VALUATION OF CLOSING STOCK AS IN COME AND MADE ADDITION OF RS. 40,10,298/ - WITH OTHER ADDITIONS AND ASSESSE D TOTAL INCOME OF RS. 51,88,150/ - AND PASSED ORDER U/S.143(3) OF THE ACT, DATED 08.03.2013. 3 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE LD. CIT(A) CONSIDERED THE FACTS AND SUBMISSIONS OF THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS AND THE INFORMATION OF THE SURVEY PROCEEDINGS AND APPLIED WEIGHTED AVERAGE METHOD FOR VALUATION OF STOCK AND RELIED ON THE DECISION OF THE COORDINATE BENCH OF THE TR IBUNAL IN ITA NO. 1 6 /CTK/2016 3 CASE OF KHIMJI DAYABHAI JEWELLERS VS. ITO, ITA NO.501/CTK/2012 FOR A.Y.2008 - 09, ORDER DATED 14.12.2012 , WHEREIN THE ITAT HAS ACCEPTED THE WEIGHTED AVERAGE METHOD FOR VALUATION OF CLOSING STOCK AND LD. CIT(A) DEALT ON THE DISPUTED ISSUE AT PAGES 3 & 4 OF THE ORDER AND DIRECTED THE AO TO ADOPT THE WEIGHTED AVERAGE PRICE METHOD AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AFTER OBSERVING AS UNDER : - CONSIDERING THE CASE OF THE APPELLANT AND THE ABOVE JUDGMENT OF THE JURISDICTIONAL ITAT; I AM OF THE OPINION THAT WEIGHTED AVERAGE PRICE METHOD OF VALUATION OF CLOSING STOCK IS MORE APPROPRIATE FOR VALUATION OF GOLD AND SILVER ORNAMENTS AS THEIR PRICE IS EVER CHANGING. THE AO IS THEREFORE DIRECTED TO ADOPT THE WEIGHTED AVERAGE PRICE METHOD FOR VALUATION OF THE CLOSING STOCK AND FIND OUT THE DIFFERENCE BETWEEN THE CLOSING STOCK AS DETERMINED IN THIS METHOD AND THE CLOSING STOCK SHOWN BY THE APPELLANT. THE DIFFERENCE IF ANY SHOULD BE ADDED TO THE TOTAL INCOME OF THE APPELLANT AS UNEXPLAINED PURCHASES. 4 . AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5 . BEFORE US, LD.DR SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO AND ADOPTED THE WEIGHTED AVERAGE PRICE METHOD, WHEREAS THE AO WAS CORRECT IN FO LLOWING AT THE MARKET PRICE AND PRAYED THAT THE ORDER OF CIT(A) BE SET ASIDE AND APPEAL OF THE REVENUE BE ALLOWED. 6 . CONTRA, LD. AR RELIED ON THE ORDERS OF THE LD. CIT(A) AND RELIED ON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL . 7 . WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND THE JUDICIAL DECISIONS . THE LD. DRS SOLE GRIEVANCE THAT THE CIT(A ) HAS ERRED IN APPLYING WEIGHTED AVERAGE PRICE METHOD FOR VALUATION OF CLOSING STOCK WHICH IS NOT IN ACCORDANCE WITH LAW AND THE FACTS. HOWEVER, THE ITA NO. 1 6 /CTK/2016 4 ASSESSEE HAS RELIED ON THE PRICE OF GOLD FOR THE YEAR 2004 - 05 AS EVIDENT FROM THE ASSESSMENT ORDER WHEREAS LD. A R RELIED ON DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SHRI ASHOKA JEWELLERS , ITA NO.488/CTK/2014, ORDER DAT ED 28.4.2017 WHERE THE WEIGHTED AVERAGE PRICE METHOD HAS BEEN APPLIED TO THE VALUATION OF STOCK. WE FOUND THAT THE LD.CIT(A) HAS DISCUSSED ELABORATELY ON THE DISPUTED ISSUE WITH THE JUDICIAL DECISIONS AND RELIED ON THE COORDINATE BENCH DECISION OF THE TRIB UNAL IN THE CASE OF KHIMJI DAYABHAI JEWELLERS VS. ITO, ITA NO. 501/CTK/2012 FOR A.Y.2008 - 09, ORDER DATED 14.12.2012. ACCORDINGLY, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF CIT(A) AND UPHOLD THE SAME. ACCORDINGLY, THE GROUNDS OF APPEAL OF THE REVENU E ARE DISMISSED. 8 . THUS, APPEAL OF THE REVENUE IS DISMISSED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 28 /07 / 201 7 . SD/ - ( N. S. SAINI ) SD/ - ( PA V AN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 28 / 0 7 /201 7 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, 1. / THE APPELLANT - INCOME TA X OFFICER, KENDRAPARA WARD, MADHUBAN, PARADEEP (ERSTWHILE WARD - 2 PARADEEP) 2. / THE RESPONDENT - SRI JUGAL KISHORE DAS, PROP. M/S PARBATI JEWELLARY, AT/PO: TINIMUHANI, DIST: KENDRAPARA - 754211 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. [ / GUARD FILE. //TRUE COPY// ITA NO. 1 6 /CTK/2016 5 ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK