Appeal Details
Counselvise Citation
2123514 RSA 2015
Assessee PAN
Bench
Appeal Number
Duration Of Justice
9 month(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-10-2015
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Assessment Year
2009-2010
Appeal Filed On
07-01-2015
Judgement Text
I.T.A. NO. 21/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 21/KOL/ 2015 ASSESSMENT YEAR : 2009-2010 ROY BROTHERS JEWELLERS,............................ ..............................APPELLANT 200, G.T. ROAD, ASANSOL, PIN-713 301, DIST. BURDWAN [PAN : AAGFR 7332 A] -VS.- INCOME TAX OFFICER,................................ .........................RESPONDENT WARD-2(3), ASANSOL, PARMER BUILDING, 54, G.T. ROAD (WEST), ASANSOL-713 304 APPEARANCES BY: SHRI J.M. THARD, ADVOCATE, FOR THE ASSESSEE SHRI DEBASISH LAHIRI, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : SEPTEMBER 17, 201 5 DATE OF PRONOUNCING THE ORDER : OCTOBER 19, 2015 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), ASANSOL DATED 29.10.2014 FOR THE ASSESSMENT YEAR 2009-10 AND THE SOLITARY ISSUE ARIS ING OUT OF THE SAME RELATES TO THE ADDITION OF RS.6,76,256/- MADE BY TH E ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(APPEALS) ON ACCOUNT OF ALL EGED UNDER VALUATION OF CLOSING STOCK. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM, WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF GOLD ORNAMENTS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATI ON WAS FILED BY IT ON 18.09.2009 DECLARING TOTAL INCOME OF RS.4,74,510/-. IN THE BALANCE-SHEET I.T.A. NO. 21/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 2 OF 4 FILED ALONG WITH THE SAID RETURN, CLOSING STOCK OF JEWELLERY OF 9841.25 GMS WAS SHOWN BY THE ASSESSEE AT RS.78,73,000/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE DETAILS OF CLOSING STOC K FURNISHED BY THE ASSESSEE WERE VERIFIED BY THE ASSESSING OFFICER AND ON SUCH VERIFICATION, HE FOUND THAT FINISHED JEWELLERY KEPT FOR FREE SALE OF 2031.82 GMS AND RAW GOLD UNDER PRODUCTION OF 630.39 GMS WERE VALUED BY THE ASSESSEE AT THE RATE OF RS.1,162/- PER GRAM. ACCORDING TO THE ASSES SING OFFICER, RAW GOLD REQUIRED FOR MAKING FINISHED JEWELLERY OF 2031.82 G MS WAS PURCHASED BY THE ASSESSEE DURING THE PERIOD FROM 06.03.2009 TO 2 8.03.2009, WHILE THE RAW GOLD UNDER PRODUCTION OF 630.39 GMS WAS PURCHAS ED DURING THE PERIOD FROM 29.03.2009 TO 31.03.2009. HE, THEREFORE , WORKED OUT THE AVERAGE RATE OF GOLD PURCHASED BY THE ASSESSEE DURI NG THE PERIOD FROM 06.03.2009 TO 31.03.2009 AT RS.1,417/- PER GRAM AND HELD THAT THE RATE OF RS.1,162/- PER GRAM ADOPTED BY THE ASSESSEE WAS MUC H LOWER THAN THE ACTUAL COST. HE ALSO NOTED THAT LABOUR CHARGES INCU RRED BY THE ASSESSEE FOR PRODUCTION OF 2031.82 GMS OF GOLD SHOULD HAVE B EEN MINIMUM OF RS.3,35,250/- CALCULATED AT THE RATE OF RS.165/- PE R GRAM. ACCORDINGLY, BY APPLYING THE RATE OF RS.1,417/- PER GRAM TO THE STO CK OF FINISHED JEWELLERY KEPT FOR FREE SALE OF 2031.82 GMS AND ADDING LABOUR CHARGES OF RS.3,35,250/-, THE VALUE OF FINISHED JEWELLERY KEPT FOR FREE SALE WAS DETERMINED BY THE ASSESSING OFFICER AT RS.32,22,012 /-. SIMILARLY THE STOCK OF RAW GOLD UNDER PRODUCTION OF 630.39 GMS WAS VALU ED BY HIM AT RS.8,85,298/- BY APPLYING THE RATE OF RS.1,417/- PE R GRAM. THE VALUATION OF THESE ITEMS OF JEWELLERY LYING IN THE CLOSING ST OCK THUS WAS DETERMINED BY THE ASSESSING OFFICER AT RS.41,07,310/- AS AGAIN ST RS.30,95,704/- SHOWN BY THE ASSESSEE AND THE DIFFERENCE OF RS.10,1 1,606/- WAS ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSEE IN THE ASSE SSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 24.11.2011 . 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) DISPUTING THE ADDITION OF RS.10,11,606 /- MADE BY THE I.T.A. NO. 21/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 3 OF 4 ASSESSING OFFICER ON ACCOUNT OF ALLEGED UNDER VALUA TION OF STOCK. BEFORE THE LD. CIT(APPEALS), IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE VALUATION OF CLOSING STOCK OF JEWELLERY WAS BEING D ONE BY THE ASSESSEE BY FOLLOWING THIS PARTICULAR METHOD OF VALUATION OVER THE YEARS AND THERE WAS NO JUSTIFICATION ON THE PART OF THE ASSESSING O FFICER TO CHANGE THE SAID METHOD IN THE YEAR UNDER CONSIDERATION. THE LD. CIT (APPEALS) DID NOT FIND MERIT IN THIS CONTENTION OF THE ASSESSEE. ACCORDING TO HIM, THE VALUATION OF CLOSING STOCK OF JEWELLERY WAS DONE BY THE ASSES SING OFFICER AT THE ACTUAL COST, WHICH WAS WORKED OUT BY HIM BY TAKING THE AVERAGE RATE OF THE RAW GOLD PURCHASED BY THE ASSESSEE DURING THE R ELEVANT PERIOD, I.E. MARCH, 2009. HE, HOWEVER, DID NOT FIND THE ENHANCEM ENT MADE BY THE ASSESSING OFFICER IN THE VALUATION OF CLOSING STOCK BY INCLUDING LABOUR CHARGES. ACCORDINGLY, HE SUSTAINED THE ADDITION OF RS.10,11,606/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED UNDE R VALUATION OF CLOSING STOCK TO THE EXTENT OF RS.6,76,256/-. STILL AGGRIEV ED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEA L BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE VALUATION OF CLOSING STOCK OF JEW ELLERY WAS MADE BY THE ASSESSEE AT THE AVERAGE RATE OF PURCHASE OF GOLD MA DE DURING THE PERIOD OF LAST SIX MONTHS AND THIS METHOD ADOPTED BY THE A SSESSEE WAS CONSISTENTLY FOLLOWED IN THE EARLIER YEARS AS WELL AS IN THE SUBSEQUENT YEARS. THE ASSESSING OFFICER, HOWEVER, ADOPTED THE AVERAGE RATE OF PURCHASE OF GOLD MADE BY THE ASSEESSEE DURING THE L AST ONE MONTH, I.E. MARCH, 2009 AND ENHANCED THE VALUE OF CLOSING STOCK OF JEWELLERY THEREBY MAKING THE IMPUGNED ADDITION. IN THIS REGARD, LD. C OUNSEL FOR THE ASSESSEE HAS RELIED ON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS.- SANT RAM MANGAT RAM REPORTED IN 275 ITR 312, WHEREIN IT WAS HELD THAT THE ASSESSEE HAVING CONTIN UOUSLY ADOPTED ONE METHOD OF VALUATION OF CLOSING STOCK CONSISTENTLY F ROM THE INCEPTION OF ITS BUSINESS AND THE SAME HAVING BEEN ACCEPTED BY THE D EPARTMENT IN THE EARLIER YEARS, IT COULD NOT BE REJECTED FOR PARTICU LAR ASSESSMENT YEAR. I.T.A. NO. 21/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 4 OF 4 KEEPING IN VIEW THE RATIO OF THIS DECISION OF THE H ONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS.- SANT RA M MANGAT RAM, WE RESTORE THE ISSUE INVOLVED IN THIS APPEAL TO THE FI LE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY THE CLAIM OF THE ASSESSEE OF HAVING FOLLOWED THE SAME METHOD OF VALUATION OF CLOSING ST OCK IN THE EARLIER YEARS AS WELL AS IN SUBSEQUENT YEARS. IF THE ASSESS EE IS FOUND TO HAVE FOLLOWED THE SAME METHOD OF VALUATION OF CLOSING ST OCK, THE ASSESSING OFFICER SHALL DELETE THE ADDITION MADE IN THE YEAR UNDER CONSIDERATION BY CHANGING THE SAID METHOD CONSISTENTLY FOLLOWED BY T HE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 19, 2015. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 19 TH DAY OF OCTOBER, 2015 COPIES TO : (1) ROY BROTHERS JEWELLERS, 200, G.T. ROAD, ASANSOL, PIN-713 301, DIST. BURDWAN (2) INCOME TAX OFFICER, WARD-2(3), ASANSOL, PARMER BUILDING, 54, G.T. ROAD (WEST), ASANSOL-713 304 (3) COMMISSIONER OF INCOME-TAX (APPEALS), ASANSOL , (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.
