Sri. Ashok G Tenginkai, Hubli V. ITO-Ward-3(2), Hubli

ITA 1909/BANG/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8534 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 15-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AR V SREENIVAS
• Keywords: Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.1909/BANG/2016 ASSESSMENT YEAR : 2007-08 SHRI ASHOK G TENGINKAI, PROP: M/S. G.S. TENGINKAI JEWELLERS, JAVALI SAL, HUBLI. PAN: ABTPT 3158Q VS. THE INCOME-TAX OFFICER, WARD 3(2), HUBLI. APPELLANT RESPONDENT APPELLANT BY : SMT. SHEETAL BORKAR, ADVOCATE RESPONDENT BY : SHRI AR.V. SREENIVAS, JCIT (DR) DATE OF HEARING : 16.02.2017 DATE OF PRONOUNCEMENT : 23.02.2017 O R D E R THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF CIT (APPEALS), HUBLI DATED 26.08.2016 FOR THE ASSESSMEN T YEAR 2006-07. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. THE LEARNED COMMISSIONER OF INCOME-TAX (A) ERRE D IN PASSING THE ORDER IN THE MANNER HE DID. 2. THE LEARNED CIT(A) ERRED IN VALUING THE INVENTOR Y ON THE BASIS OF AVERAGE PURCHASE COST METHOD AS ON 31.03.2007 WI THOUT APPRECIATING THE SUBMISSIONS OF THE APPELLANT THAT THE APPELLANT WAS CONSISTENTLY FOLLOWING THE AVERAGE CO ST METHOD SINCE COMMUNICATION OF HIS BUSINESS I.E. FROM 1938. ITA NO.1909/BANG/2016 PAGE 2 OF 5 3. THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED TH AT THE STOCK OF GOLD ORNAMENT OF 8,986.107 GRMS WAS ACCEPTED BY THE ASSESSING OFFICER WHO HAS NOT NOTICED ANY DISCREPAN CY EITHER IN THE STOCK ACCOUNT OR IN THE BOOKS OF ACCOUNT FOR THE RELEVANT ASSESSMENT YEAR. 4. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE AVERAGE COST METHOD ADOPTED BY THE APPELLANT HAD BEEN ACCEP TED BY THE DEPARTMENT IN EVERY ASSESSMENT PROCEEDINGS IN T HE PAST IN THE CASE OF THE APPELLANT SINCE THE SAME STOCK W AS CONSIDERED IN THE COURSE OF SURVEY AS ALSO IN THE S CRUTINY PROCEEDINGS. 5. THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED TH AT THE STATEMENT OF THE APPELLANT WAS SUBSEQUENTLY RETRACT ED AND SAME CANNOT BE TAKEN AS PIECE OF EVIDENCE TO MAKE A N ADDITION WITHOUT ANY COLLABORATE MATERIAL TO SUPPOR T THE SAME. FURTHER THE LEARNED CIT (A) ERRED IN NOT CONSIDERIN G THE VARIOUS JUDICIAL DECISIONS RELIED ON BY THE APPELLA NT IN SUPPORT OF HIS CONTENTION. 6. THE LEARNED CIT (A) ERRED IN CONFIRMING THE LEVY OF INTEREST UNDER SECTIONS 234B, 234C OF THE ACT. 7. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 3. IT WAS SUBMITTED BY THE LD. AR OF ASSESSEE THAT ASSESSEE IS CONSISTENTLY FOLLOWING THE METHOD OF VALUATION OF S TOCK ON AVERAGE COST BASIS INCLUDING THE VALUE OF OPENING STOCK AND THE VALUE OF PURCHASE DURING THE RELEVANT YEAR. BUT THE AO MADE AN ADDITION BY ADOPTING A DIFFERENT METHOD OF VALUATION OF INVENTORY I.E. ON THE BASIS OF ONLY AVERAGE PURCHASE COST OF THE PRESENT YEAR, EXCLUDING THE OPENING STO CK VALUE AND QUANTITY. IT IS SUBMITTED THAT THE METHOD CONSISTENTLY FOLLOWED BY THE ASSESSEE AND ACCEPTED BY THE DEPARTMENT IS AN ACCEPTED METHOD AN D THEREFORE, THE ACTION OF THE AO IN ADOPTING A DIFFERENT METHOD IS NOT JUSTIFIED. ITA NO.1909/BANG/2016 PAGE 3 OF 5 4. AS AGAINST THIS, THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. HE HAS ALSO DRAWN OUR ATTENTION TO PAGE 3 OF THE ASSESSMENT ORDER WHERE THE AO HAS REPRODUCED THE RE PLY TO QUESTION NO.9 OF THE SWORN STATEMENT RECORDED ON 23.10.2009 WHEREIN IT IS STATED BY ASSESSEE THAT HE AGREES FOR THE PROPOSED REVALUATIO N OF CLOSING STOCK AS ON 31.3.2007 AND AGREED TO OFFER ADDITIONAL INCOME OF RS.27,48,869 FOR AY 2007-08 AND PAY TAXES ACCORDINGLY. IT WAS SUBMITTE D THAT IN VIEW OF THIS STATEMENT OF ASSESSEE AS PER WHICH, HE HAS AGREED F OR THIS ADDITION, THE ASSESSEE CANNOT DISPUTE THIS ADDITION IN APPEAL. H E PLACED RELIANCE ON THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT RENDERED I N THE CASE OF SANJEEV AGRAWAL V. INCOME TAX SETTLEMENT COMMISSIONER AS REPORTED IN 231 TAXMAN 71 (ALLAHABAD). 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT IT IS NOT IN DISPUTE THAT THE METHOD OF VALUATION OF STOCK ADOPTED BY TH E ASSESSEE CONSISTENTLY AND ACCEPTED BY THE DEPARTMENT IS AN ACCEPTED METHO D OF VALUATION OF STOCK. UNDER THESE FACTS, THE AO IS NOT JUSTIFIED TO REJECT THIS METHOD OF VALUATION OF STOCK CONSISTENTLY FOLLOWED BY THE ASS ESSEE AND ACCEPTED BY THE DEPARTMENT AND FOLLOW A DIFFERENT METHOD OF VAL UATION OF STOCK. 6. REGARDING THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT CITED BY THE LD. DR OF REVENUE, I FIND THAT AS PER THIS JUDG MENT, IT WAS HELD BY THE HONBLE ALLAHABAD HIGH COURT THAT THE BURDEN LAY UP ON THE ASSESSEE TO ESTABLISH THAT STATEMENT MADE BY HIM AT THE TIME OF SURVEY WAS WRONG AND ITA NO.1909/BANG/2016 PAGE 4 OF 5 IN FACT THERE WAS NO ADDITIONAL INCOME. IN THAT CA SE, THIS BURDEN WAS NOT DISCHARGED BY THE ASSESSEE AND THEREFORE, ADDITION MADE BY THE AO ON THE BASIS OF STATEMENT IN THE CASE OF SANJEEV AGRAWAL (SUPRA) WAS CONFIRMED BY THE HONBLE ALLAHABAD HIGH COURT. BUT IN THE PR ESENT CASE, THE ASSESSEE HAS DISCHARGED HIS BURDEN BY SHOWING THAT THE METHOD OF VALUATION OF INVENTORY ADOPTED BY THE ASSESSEE CONS ISTENTLY IS ACCEPTED BY THE DEPARTMENT AND IT IS A VALID METHOD AND BY ADOP TING THIS METHOD, THERE IS NO EXTRA INCOME AS STATED IN STATEMENT RECORDED IN COURSE OF SURVEY. THEREFORE, I AM OF THE CONSIDERED OPINION THAT THIS JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IS NOT RENDERING ANY HELP TO T HE REVENUE IN THE PRESENT CASE. HENCE, I HOLD THAT THE ADDITION MADE BY THE AO BY ADOPTING A DIFFERENT METHOD OF VALUATION OF STOCK BY ARBITRA RILY REJECTING THE METHOD OF VALUATION OF STOCK CONSISTENTLY ADOPTED BY THE ASSE SSEE FOR THE LAST 30 YEARS AND ACCEPTED BY THE REVENUE IS NOT JUSTIFIED. HENCE, THE ADDITION MADE BY THE AO IS DELETED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF FEBRUARY, 2017. SD/- ( A.K. GARODIA ) ACCOUNTANT MEMBER BANGALORE, DATED, THE 23 RD FEBRUARY, 2017. ITA NO.1909/BANG/2016 PAGE 5 OF 5 / D ESAI S MURTHY / MS / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.