ARUN BAHIRWANI, MUMBAI V. ASST CIT 15(2), MUMBAI

ITA 2232/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8525 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIPUL SHAH
• Keywords: Tax effect
• Section: 143(3); 142(1); 147; 148

Judgement Text

I IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.2232/ MUM/2015 ( / ASSESSMENT YEAR : 2007-08) SHRI ARUN BAHIRWANI (PROP. SATYA TEX), UNIT NO. 605 BUSINESS SUITES,PLOT NO. 83, S.V. ROAD, SANTACRUZ (W), MUMBAI 400 054. / V. ASST. COMMISSIONER OF INCOME TAX 15(2), AAYAKAR BHAWAN, MUMBAI 400 020. ./ PAN : AGJPB7487M ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI VIPUL SHAH REVENUE BY : SHRI SAURABHKUMAR RAI ,DR / DATE OF HEARING : 04-01-2017 / DATE OF PRONOUNCEMENT : 31-01-2017 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 2232/MUM/2015, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 19-02-20 15 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 17, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2007-08, THE APPE LLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ASSESSMENT ORDE R DATED 22 ND MARCH, 2013 PASSED U/S 147 R.W.S. 143(3)(II) OF THE INCOME-TAX ACT,1961 (HEREINAFTER CALLED THE ACT). ITA 2232/MUM/2015 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE HON' BLE CIT (A) ERRED IN DISALLOWING A SUM OF RS. 38,87,031/- BEING THE UNDERVALUATION OF STOCK. THE APPELLANT PRAYS THAT THE ABOVE DISALLOWA NCE BE DELETED. GROUND NO. 2 : ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE HON'BLE CIT (A) ERRED IN NOT 'QUOTING UNDER WHICH SECTION OF THE INCOME TAX ACT, 1961 SAID AMOUNT IS DISALLOWED. GROUND NO. 3 : WITHOUT PREJUDICE TO ABOVE, ON THE FACTS AND CIRCUMSTANC ES OF THE CASE THE HON'BLE CIT (A) ERRED IN DISALLOWING RS 38,87,03 1/ - AND ERRED TO UNDERSTAND THE CONCEPT OF AS 2, VALUATION OF INVENTOR IES UNDER FIFO BASIS OF ACCOUNTING. GROUND NO. 4 : ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE HON'BLE CIT (A) ERRED IN INITIATING PENALTY PROCEEDINGS U/ S 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSM ENT U/S 143(3) OF THE ACT WAS COMPLETED IN THE CASE OF THE ASSESSEE ON 27 TH NOVEMBER, 2011 , WHICH WAS REOPENED U/S 147 OF THE ACT AND NOTICE U/S 148 OF THE ACT WAS ISSUED ON 19 TH MARCH, 2012 WHEREIN THE REASONS FOR RE-OPENING ARE RECORDED AS UNDER:- 'FOR THE A.Y. 2007-08, ASSESSEE HAD FILED ITS RETU RN OF INCOME DECLARING TOTAL INCOME OF RS.13,07,685/- WHICH WAS ASSESSED U/S 143(3) AT RS. 14,09,174/. THE ASSESSEE HAD CREDITE D RS. 1,31,36,283/- AS CLOSING STOCK IN P&L ACCOUNT AND A LSO DISCLOSED IN NOTES ON ACCOUNTS THAT THE VALUATION OF THE CLOS ING STOCK WAS CERTIFIED BY THE PROPRIETOR. ALSO, TAX AUDITOR HAD MENTIONED THAT THE METHOD OF VALUATION OF CLOSING STOCK WAS AT COS T AND ALSO FURNISHED THE QUANTITY DETAILS IN ANNEXURE 'F' TO F ORM 3CD. THE ITA 2232/MUM/2015 3 ASSESSEE HAD OFFERED THE VALUE OF CLOSING STOCK @ R S. 119.69 PER MT. HOWEVER, IT WAS NOTICED THAT THE OPENING STOCK AND PURCHASES WAS MADE AT THE AVERAGE RATE OF RS. 160.4 4 AND RS. 149.78 PER MT RESPECTIVELY. THUS, THE ASSESSEE HAS UNDERSTATED THE VALUE OF CLOSING STOCK OF RS. 38,87,031/-. SO VALUATION DIFFERENCE OF CLOSING STOCK IS ESCAPED ASSESSMENT. NOTICE U/S 142(1) OF THE ACT WAS ISSUED TO THE ASSE SSEE ON 29.10.2012 ALONG WITH QUESTIONNAIRE AND IN RESPONSE, THE ASSESSEE SU BMITTED AS UNDER:- 'THE ASSESSEE HAS MAINTAINING THE STOCK ON FIFO BA SIS I.E. FIRST IN FIRST OUT BASIS. AS PER FIFO BASIS OF VALUATION OF INVENTORIES, AT THE TIME OF SALE, THE STOCK WHICH WAS ACQUIRED F IRST GETS REDUCED FROM THE EXISTING STOCK. ACCORDINGLY, THE S TOCK ACQUIRED LAST WILL FORM PART OF CLOSING STOCK. WE WOULD LIKE TO INFORM YOU THAT THE ASSESSEE HAD V ALUED THE CLOSING STOCK AT THE RATE OF RS 119.69/-. BUT ACCO RDING TO THE REASONS FOR REOPENING THE CASE , IT SHOULD BE VALUE D AT RS. 154.5/-. WE WOULD LIKE TO INFORM THAT THE ASSESSEE HAD PURCHASED GOODS AT AN AVERAGE RATE OF RS. 177/- FOR THE FIRST 8 MONTHS OF THE FINANCIAL YEAR I.E. , FROM APRIL TO N OVEMBER. THEN FOR THE NEXT THREE MONTHS I.E. , DECEMBER TO FEBRUA RY THE ASSESSEE HAD PURCHASED GOODS AT AN AVERAGE RATE OF RS 113/-. THEREFORE TO CONCLUDE THE ABOVE, THE ASSESSEE HAD I NITIALLY PURCHASED 3,14,241 MTRS OF GOODS AT AVERAGE COST OF RS. 177/- AND FOR THE LATER QUARTER THE ASSESSEE HAD PURCHASE D 2,33,882/- MTRS OF CLOTH AT THE AVERAGE COST OF RS 113/-. THE CLOSING STOCK AS PER BOOKS OF ACCOUNTS IS 1,09,751 MTRS. WE WOULD LI KE TO SUBMIT THAT AS PER THE FIFO METHOD OF STOCK ACCOUNTING THA T THE ASSESSEE HAS BEEN FOLLOWING , MAJORITY OF CLOSING S TOCK IS OUT OF STOCK PURCHASED DURING THE LAST 3-4 MONTHS, AS EXPL AINED ABOVE, WAS LOW AS COMPARED TO THE COST OF THE GOODS SOLD D URING THE YEAR. HENCE, THE VALUATION OF THE CLOSING STOCK COM ES TO RS 119.69 WHICH IS THE ACTUAL COST OF THE GOODS FORMIN G PART OF THE CLOSING STOCK AS PER THE FIFO METHOD OF INVENTORY A CCOUNTING FOLLOWED BY THE ASSESSEE. THUS, THERE IS NO UNDERVA LUATION OF STOCK. THE A.O. REJECTED THE CONTENTIONS OF THE ASSESSEE A ND OBSERVED THAT IN THE TAX AUDIT REPORT THE ASSESSEE HAD CREDITED RS. 1,31,36, 283/- AS CLOSING STOCK IN THE P&L ACCOUNT WHICH IS UNDERVALUED BY RS. 38,87,0 31/- AS IN THE OPINION ITA 2232/MUM/2015 4 OF THE A.O. THE OPENING STOCK AND PURCHASES WERE MA DE AT THE RATE OF RS. 160.44 AND RS. 149.78 PER METERS RESPECTIVELY , AS AGAINST WHICH THE ASSESSEE HAD OFFERED CLOSING STOCK AT RS. 119.69 PE R METER, VIDE ASSESSMENT ORDER DATED 22-03-2013 PASSED BY THE AO U/S 143(3) R.W.S. 147 OF THE ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 22-03-2 013 PASSED BY THE A.O. U/S 143(3) R.W.S. 147 OF THE ACT, THE ASSESSEE FILE D FIRST APPEAL BEFORE THE LD. CIT(A) WHO REJECTED THE CONTENTIONS OF THE ASSESSEE AND DISMISSED THE APPEAL. BEFORE THE LD. CIT(A) , THE ASSESSEE CONTENDED THAT THE ASSESSEE IS TRADER IN FABRIC AND FOLLOWING THE FIFO METHOD OF COST FORMUL AE FOR VALUATION OF INVENTORY BUT THE A.O. DID NOT ACCEPTED THE SUBMISS IONS OF THE ASSESSEE AND MADE AN ADDITION OF RS. 38,87,031/- BEING DIFFERENC E IN THE VALUATION OF INVENTORY. THE ASSESSEE SUBMITTED FOLLOWING DETAIL S TO EXPLAIN THE METHOD OF ACCOUNTING, MODE OF COMPUTATION OF STOCK QUANTITY A ND ITS VALUATION THEREOF AND SUBMITTED.:- I. QUANTITATIVE DETAILS OF OPENING STOCK WITH IT S VALUE. II. DETAILS OF PURCHASE AND SALES MADE DURING THE Y EAR GIVING THE QUANTITY AND VALUE. III. QUANTITATIVE DETAILS OF CLOSING STOCK WITH ITS VALUE. IT WAS EXPLAINED THAT APPELLANT IS A TRADER IN CLOT H/FABRIC AND HAD EXPLAINED THAT IT IS TRADING ONLY IN CLOTH/FABR IC AND NOT IN ANY OTHER ITEM/PRODUCT. IT WAS SUBMITTED THAT THE ASSESSEE HAS BEEN CONSIST ENTLY FOLLOWING FIFO METHOD FOR THE PAST MANY YEARS WHICH IS ACCEPTED BY THE REVENUE AND THIS METHOD OF ACCOUNTING IS ALSO ALLOWED AS PER THE AS- 2 ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. THE ASSESSEE HA VING SUBMITTED THE MONTHLY SUMMARY OF THE FABRIC PURCHASED AND SOLD DU RING THE YEAR AND ALL OTHER DETAILS IN SUPPORT OF THE CLAIM OF CLOSING ST OCK VALUATION WHICH IS ITA 2232/MUM/2015 5 ABSOLUTELY CLEAR AS THE PROVISIONS OF SECTION 145A OF THE ACT RELATING TO METHOD OF STOCK VALUATION. THE ASSESSEE SUBMITTED T HE ENTIRE SUMMARY AND HAD ALSO FILED COPY OF PURCHASE BILLS IN SUPPORT OF THE CLAIM OF CLOSING STOCK VALUATION. THE ASSESSEE ALSO SUBMITTED THAT ONCE FI FO METHOD OF VALUATION OF INVENTORY IS APPLIED , THEN INVENTORY CANNOT BE VAL UED BASED ON AVERAGE COST METHOD. THE LD. CIT(A), HOWEVER, CONSIDERING THE SU BMISSIONS OF THE ASSESSEE AND THE FACTS OF THE CASE, REJECTED THE CONTENTIONS OF THE ASSESSEE AND OBSERVED THAT THE STOCK IS TO BE VALUED AT COST OR MARKET PRICE WHICHEVER IS LOWER BASED ON THE ARITHMETIC ON THE ONE HAND AND P RUDENCE ON THE OTHER IS ALSO TO BE FOLLOWED FOR COMPUTING INCOME OF THE ASS ESSEE. IN SUPPORT, THE LD. CIT(A) RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CHAINRUP SAMPATRAM V. CIT (1953) 24 ITR 481 (SC) AN D INVESTMENT LIMITED V. CIT (1970) 77 ITR 533 (SC). IT WAS OBSERVED BY L EARNED CIT(A) THAT THE ASSESSEE IS CONTENDING THAT IT IS CONSISTENTLY FOLL OWING FIFO METHOD FOR VALUATION OF INVENTORY WHILE THE AUDITORS OF THE AS SESSEE HAD STATED THAT IT FOLLOWED A COST METHOD AND HENCE THE AO WAS LEFT WI TH NO OPTION BUT TO TAKE AVERAGE RATE FOR VALUATION OF INVENTORY WHICH ASSES SMENT ORDER OF THE AO WAS CONFIRMED BY LEARNED CIT(A), VIDE APPELLATE ORDERS DATED 19-02-2015 PASSED BY THE LEARNED CIT(A). 5. AGGRIEVED BY THE APPELLATE ORDER DATED 19.02.201 5 PASSED BY THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. BEFORE THE TRIBUNAL , THE LD. COUNSEL FOR THE AS SESSEE SUBMITTED THAT THE ASSESSEE IS CONSISTENTLY FOLLOWING FIFO METHOD OF COST FORMULAE FOR VALUATION OF HIS STOCK/INVENTORY. HE SUBMITTED THAT COMPLETE DETAILS WERE SUBMITTED BEFORE THE AUTHORITIES BELOW LIKE SUMMARY OF FABRIC S PURCHASED AND SOLD BY GIVING QUANTITATIVE RATE AND VALUE, COPY OF PURCHAS E BILLS ETC. THE COPY OF TAX AUDIT REPORT WAS ALSO SUBMITTED BEFORE THE AUTHORIT IES BELOW. HE SUBMITTED THAT IN THE CASE OF RELATIVE OF THE ASSESSEE IN ACI T V. DINESH V. BAHIRWANI, THE ITA 2232/MUM/2015 6 MUMBAI BENCH OF THIS TRIBUNAL IN ITA NO. 7479/MUM/2 014 FOR ASSESSMENT YEAR 2010-11 VIDE ORDERS DATED 18-10-2016 HAD ACCEP TED THE CONTENTIONS OF THE ASSESSEE OF FOLLOWING FIFO METHOD FOR VALUATION OF INVENTORY, BY HOLDING AS UNDER:- 4.3. WE HAVE CAREFULLY GONE THROUGH THE FACTS OF T HE CASE AND WELL REASONED FINDINGS RECORDED BY THE LD. CIT(A). IT IS NOTED THAT THE ASSESSEE HAS BEEN FOLLOWING FIFO METHOD FOR VAL UATION OF ITS STOCKS IN ALL EARLIER AND SUBSEQUENT YEARS AND NO A DDITION HAS EVER BEEN MADE. THE ASSESSMENT ORDER WAS PASSED U/S 143(3) FOR A.Y. 2009-10 ACCEPTING FIFO METHOD OF STOCK VALUATI ON. IT IS FURTHER NOTED THAT ASSESSEE HAD SUBMITTED COPIES OF BILLS A ND OTHER EVIDENCES TO JUSTIFY VALUATION BASED UPON FIFO METH OD. FURTHER, NOTHING WRONG COULD BE POINTED OUT BY THE LD. DR IN THE DETAILED AND WELL REASONED FINDINGS OF LD. CIT(A). FURTHER, IT IS NOTED BY US THAT CLOSING STOCK OF THE IMPUGNED YEAR HAD BECOME OPENING STOCK OF THE NEXT YEAR. THUS, VIEWED FROM THIS ANGLE ALSO , OVERALL TAX EFFECT TAKING BOTH THE YEARS INTO ACCOUNT WILL BE T AX-NEUTRAL. UNDER THESE CIRCUMSTANCES, WE DO NOT FIND ANY NECESSITY T O MAKE INTERFERENCE IN THE ORDER OF LD. CIT(A), THEREFORE, THIS GROUND IS REJECTED. THUS, THE TRIBUNAL IN THE AFORESTATED ORDER DATED 1 8.10.2016 HAD , INTER-ALIA, HELD THAT THE CLOSING STOCK OF THE IMPUGNED YEAR HA D BECOME OPENING STOCK OF THE NEXT YEAR AND THE TAX EFFECT IS NEUTRAL. IT IS ALSO HELD IN THAT ORDER THAT THE TAX-PAYER HAD BEEN CONSISTENTLY FOLLOWING THE SAID METHOD OF VALUATION OF INVENTORIES WHICH IS ACCEPTED BY REVENUE. THE LD. COUNSEL SUBMITTED THAT IN THE IMMEDIATELY SUCCEEDING YEAR I.E. ASSESSMENT YEA R 2008-09, THE A.O. HAD FRAMED AN ASSESSMENT ORDER DATED 30-11-2010 U/S 143 (3) OF THE ACT IN THE CASE OF THE ASSESSEE ITSELF WHEREBY HE ACCEPTED THE METHOD OF VALUATION OF STOCK FOLLOWED BY THE ASSESSEE, SAID ASSESSMENT ORD ER IS PLACED IN FILE. 7. THE LD. D.R., ON THE OTHER HAND, SUBMITTED THAT THE METHOD OF VALUATION OF INVENTORY FOLLOWED BY THE ASSESSEE IS FIFO METHO D, HENCE, THE AUTHORITIES BELOW HAD RIGHTLY BROUGHT TO TAX THE DIFFERENTIAL A MOUNT TO TAX AS THE ASSESSEE ITA 2232/MUM/2015 7 IS REQUIRED TO FOLLOW COST OR MARKET PRICE WHICHEVE R IS LESS METHOD FOR VALUATION OF INVENTORY. 8. IN THE REJOINDER, THE LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT ALL DETAILS WERE SUBMITTED BEFORE THE AUTHORITIES BELOW AND IT IS WRONG TO SAY THAT QUANTITATIVE DETAILS AND OTHER SUPPORTING DETAILS W ERE NOT PROVIDED TO THE AUTHORITIES BELOW. HE REFERRED TO THE LD. CIT(A)S ORDER PARA NO. 1.2.1 AND 1.2.2 WHEREIN IT IS MENTIONED THAT ALL DETAILS WERE SUBMITTED, AND THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE SUBS EQUENT YEAR , THE REVENUE HAS ACCEPTED THE SAME METHOD OF VALUING INVENTORIES FOLLOWED BY THE ASSESSEE. IT WAS SUBMITTED THAT THERE IS NO EVASIO N OF TAX AS TAX EFFECT IS REVENUE NEUTRAL AS CLOSING STOCK OF THE CURRENT YEA R IS OPENING STOCK OF THE IMMEDIATELY SUCCEEDING YEAR. THE TRIBUNAL IN ITA N O. 7497/MUM/2014 FOR ASSESSMENT YEAR 2010-11 DATED 18.10.2016 HAS DELETE D THE ADDITION MADE BY THE A.O. ON ACCOUNT OF DIFFERENCE IN THE VALUATION OF THE STOCK IN THE CASE OF RELATIVE OF THE ASSESSEE VIZ. DINESH V. BAHIRWANI(S UPRA). 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE AFORE-STATED TRIB UNAL ORDER. WE HAVE OBSERVED THAT THE ASSESSEE IS FOLLOWING FIFO METHOD OF ACCOUNTING FOR THE PURPOSE OF VALUATION OF STOCK/INVENTORY WHICH IS VA LUED AT COST, AND THE SAID METHOD OF ACCOUNTING FOR VALUATION OF INVENTORY IS CONSISTENTLY FOLLOWED BY THE ASSESSEE AND ACCEPTED BY REVENUE, WHICH COULD NOT B E CONTROVERTED BY AUTHORITIES BELOW AS WELL BY LEARNED DR. THIS METH OD FOR VALUATION OF INVENTORY IS CONSISTENTLY FOLLOWED BY THE ASSESSEE AND REGULARLY ACCEPTED BY THE REVENUE AND REVENUE COULD NOT POINT OUT ANY DEF ICIENCY IN THE METHOD OF ACCOUNTING FOR VALUATION OF INVENTORY FOLLOWED BY T HE ASSESSEE AND HOW THE CORRECT PROFIT COULD NOT BE COMPUTED BY FOLLOWING T HE METHOD ADOPTED BY THE ASSESSEE IN VIEW OF THE MANDATE OF PROVISIONS OF SE CTION 145/145A OF THE ACT. WE FIND THAT THE ASSESSEE HAD SUBMITTED COMPLETE DE TAILS SHOWING SUMMARY ITA 2232/MUM/2015 8 OF FABRIC PURCHASED AND SOLD SPECIFICALLY SHOWING T HE QUANTITY, RATE AND VALUE OF THE OPENING STOCK, PURCHASES AND CLOSING STOCK B EFORE THE AUTHORITIES BELOW AND AS SUCH NO DEFECT HAS BEEN POINTED OUT BY REVEN UE ACCEPT THAT FIFO METHOD OF VALUATION OF INVENTORY IS FOLLOWED BY THE ASSESSEE ON COST BASIS WHILE THE AO FOLLOWED AVERAGE METHOD FOR VALUATION OF INVENTORY. THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF REL ATIVE OF THE ASSESSEE IN ACIT V. DINESH V. BAHIRWANI, , IN ITA NO. 7497/MUM/2014 FOR ASSESSMENT YEAR 2010-11 VIDE ORDERS DATED 18-10-2016 HAD ACCEPTED THE CONTENTIONS OF THE SAID TAX-PAYER BY OBSERVING AS UNDER:- 4.3. WE HAVE CAREFULLY GONE THROUGH THE FACTS OF T HE CASE AND WELL REASONED FINDINGS RECORDED BY THE LD. CIT(A). IT IS NOTED THAT THE ASSESSEE HAS BEEN FOLLOWING FIFO METHOD FOR VAL UATION OF ITS STOCKS IN ALL EARLIER AND SUBSEQUENT YEARS AND NO A DDITION HAS EVER BEEN MADE. THE ASSESSMENT ORDER WAS PASSED U/S 143(3) FOR A.Y. 2009-10 ACCEPTING FIFO METHOD OF STOCK VALUATI ON. IT IS FURTHER NOTED THAT ASSESSEE HAD SUBMITTED COPIES OF BILLS A ND OTHER EVIDENCES TO JUSTIFY VALUATION BASED UPON FIFO METH OD. FURTHER, NOTHING WRONG COULD BE POINTED OUT BY THE LD. DR IN THE DETAILED AND WELL REASONED FINDINGS OF LD. CIT(A). FURTHER, IT IS NOTED BY US THAT CLOSING STOCK OF THE IMPUGNED YEAR HAD BECOME OPENING STOCK OF THE NEXT YEAR. THUS, VIEWED FROM THIS ANGLE ALSO , OVERALL TAX EFFECT TAKING BOTH THE YEARS INTO ACCOUNT WILL BE T AX-NEUTRAL. UNDER THESE CIRCUMSTANCES, WE DO NOT FIND ANY NECESSITY T O MAKE INTERFERENCE IN THE ORDER OF LD. CIT(A), THEREFORE, THIS GROUND IS REJECTED. THE REVENUE HAS ALSO ACCEPTED THE METHOD FOLLOWED B Y THE INSTANT ASSESSEE CONSISTENTLY FOR PAST SEVERAL YEARS AND ALSO FOR SU CCEEDING YEAR AND PER-SE NO SUCH CONTRARIAN STAND OF THE REVENUE WAS BROUGHT ON RECORD EXCEPT FOR THE IMPUGNED ASSESSMENT YEAR BY LEARNED DR OR AUTHORITI ES BELOW TO DISPROVE THIS CONTENTION OF THE ASSESSEE , AND ALSO MORE-SO THE TAX IMPACT IS REVENUE NEUTRAL AS THE CLOSING STOCK/INVENTORY OF THE RELEV ANT PREVIOUS YEAR IS OPENING STOCK/INVENTORY OF THE IMMEDIATELY SUCCEEDING FINAN CIAL YEAR . THE ASSESSMENT ORDER DATED 30-11-2010 PASSED U/S 143(3) OF THE ACT FOR ITA 2232/MUM/2015 9 ASSESSMENT YEAR 2008-09 IN THE CASE OF INSTANT ASS ESSEE WHEREIN NO ADDITION HAS BEEN MADE BY REVENUE ON ACCOUNT OF METHOD OF VA LUATION OF INVENTORY IS PLACED ON RECORD IN FILE. REVENUE HAS NOT BEEN ABL E TO BRING ON RECORD THAT HOW BY FOLLOWING FIFO METHOD OF VALUATION OF INVENT ORY BASED ON COST, THE PROFITS OF THE ASSESSEE COULD NOT BE COMPUTED CORRE CTLY SO AS THAT IT INFRINGES ON SECTION 145/145A OF THE ACT. UNDER THESE CIRCUMS TANCES, WE DO NOT FIND ANY MERIT IN THE CONTENTIONS OF THE REVENUE AND ACC ORDINGLY THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. WE ORDER ACCORDINGLY. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN ITA NO. 2232/MUM/2015 FOR ASSESSMENT YEAR 2007-08 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2017. # $% &' 31-01-2017 ( ) SD/- SD/- (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 31-01-2017 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI I BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI