ACIT, UDAIPUR V. Shri Jitendra Kumar Mehta, DUNGARPUR

ITA 453/JODH/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4920 (ITAT-JODHPUR)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-07-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 31-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Rejection of books of accounts
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 435/JODH/2012 (A.Y. 2009-10) SH. JITENDRA MEHTA VS DCIT, CENTRAL CIRCLE-1, C/O. SHRAWAN KUMAR GUPTA, UDAIPUR. ADVOCATE & TAX CONSULTANT 416, SURYA CHAMBER, RADIO MARKET, NEHRU BAZAR, JAIPUR. PAN NO. ABMPM8063A ITA NO. 453/JODH/2012 (A.Y. 2009-10) ACIT, CIRCLE-1, VS. SHRI JITENDRA KUMAR MEHTA UDAIPUR. S/O. SH. CHIMAN LAL MEHTA, PROP. M/S. PANKAJ JEWELLERS, SARAFA BAZAR, MANK CHOWK, DUNGARPUR. PAN NO. AMBPM8063A (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SHRAWAN KUMAR GUPTA. DEPARTMENT BY : SH. G.R. KOKANI- DR. DATE OF HEARING : 10/07/2013. DATE OF PRONOUNCEMENT : 29/08/2013. O R D E R PER BENCH : THE ABOVE NAMED CROSS APPEALS ARISES OUT OF THE OR DER DATED 31/10/2012 PASSED BY LD. CIT(A), JAIPUR. 2 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS A PROPRIETOR OF M/S. PANKAJ JEWELLERS WHO IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF GOLD / SILVER ORNAMENT S. DURING THE F.Y. 2008-09 THE ASSESSEE HAS SHOWN G.P. RATE OF 37.80% AS AGAINST 30.75% SHOWN IN THE IMMEDIATELY PAST YEAR IN THE GOLD ORNA MENT ACCOUNT. IN THE SILVER ACCOUNT THIS RATE IS 44.48% AGAINST 47.2 3% IN THE PAST YEAR. AS PER THE P&L ACCOUNT AND THE TRADING ACCOUNT THE GOLD STOCK HAS BEEN VALUED AT RS. 41,32,062/- @ RS. 792/- PER GRA M. HE HAS PURCHASED THE SAME @ 1029/- PER GRAM. IN THE SILVER ACCOUNT THE STOCK HAS BEEN VALUED AT RS. 28,42,477/- @ RS. 9154/- PER K.G. AS AGAINST PURCHASE RATE BEING RS. 13,264/- PER K.G. ACCORDING LY, THE A.O. HAS FOUND THAT THE ASSESSEE HAS NOT CORRECTLY VALUED IT S CLOSING STOCK. WITH REFERENCE TO ALLEGED SIMILAR BUSINESS OF M/S. ALANK AR JEWELLERS, UDAIPUR WHO HAS DECLARED G.P. RATE OF 33.74% IN THE GOLD ACCOUNT AND 49.52% IN THE SILVER ACCOUNT THE A.O. HAS REJECTED THE BOOKS OF ACCOUNTS OF THIS ASSESSEE U/S 145. HE HAS ADOPTED P URCHASE PRICE AGAINST AVERAGE WEIGHTED PRICE ADOPTED TO VALUE THE CLOSING STOCK AND HAS ARRIVED AT VALUE OF CLOSING STOCK @ RS. 1029/- AND HAS DETERMINED ITS VALUE AT RS. 53,70,948/- WHICH HAS GIVEN A G.P. RATE OF 86.70% AS AGAINST DECLARED AT 37.8%. LIKEWISE IN THE SILVER A CCOUNT BY ADOPTING 3 PURCHASE PRICE @ RS. 13,264/- PER K.G. HAS ARRIVED AT A G.P. RATE OF 135.72% AS AGAINST 44.48% DECLARED BY THE ASSESSEE. 2.1 AGGRIEVED, THE ASSESSEE FILED FIRST APPEAL AND LD. CIT(A) HAS ADOPTED FIRST IN FIRST OUT (FIFO) METHOD AND HAS RE DUCED THE VALUATION OF THE CLOSING STOCK AND HAS REDUCED TRADING ADDITI ON BEING RS. 10,50,492/- IN GOLD ACCOUNT AND BY RS. 11,90,608/- IN THE SILVER ACCOUNT. HE HAS, THUS, CONFIRMED TRADING ADDITION T O THE EXTENT OF RS. 1,88,394/- IN THE GOLD ACCOUNT AND OF RS. 85,738/- IN THE SILVER ACCOUNT. BOTH THE PARTIES ARE AGGRIEVED AND HAVE FI LED THEIR RESPECTIVE APPEALS IN THIS REGARD. THE ASSESSEE HAS EVEN CHALL ENGED THE REJECTION OF THE BOOKS OF ACCOUNTS AND APPLICATION OF FIFO ME THOD. 2.2 BEFORE US BOTH PARTIES HAVE REITERATED THEIR OR IGINAL STAND. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE CAREFULL Y CIRCUMSPECTED THE ENTIRE RECORD. THE FOLLOWING FACTS ARE NOT AND CANNOT BE DISPUTED IN THIS CASE :- (I) THE ASSESSEE HAS BEEN REGULARLY FOLLOWING THE AVERA GE WEIGHTED I.E., AVERAGE COST PRICE OF OPENING STOCK AND AVERAGE COST PRICE FOR VALUATION OF CLOSING STOCK. THE ASSESSEE HAS BEEN FOLLOWING THIS METHOD FROM A.Y. 2 006-07 4 TO 2008-09 AND THE SAME AHS BEEN ACCEPTED BY THE DEPARTMENT. (II) NO DEFECT, BARRING THE VALUATION OF CLOSING STOCK, MUCH LESS ANY MATERIAL DEFECT HAS BEEN PINPOINTED IN THE BOOK S OF ACCOUNTS REGULARLY MAINTAINED BY THE ASSESSEE DURIN G THE COURSE OF HIS BUSINESS. (III) THAT AFTER REJECTION OF THE BOOKS, THE PAST HISTORY OF THE ASSESSEE HAS TO BE TAKEN AS THE BEST GUIDE. (IV) THE ASSESSEE NEVER APPLIED THE FIFO METHOD FOR VALU ATION OF HIS CLOSING STOCK. IN THE MIDST OF THE ABOVE UNDENIABLE FACTS THE BOOK S OF ACCOUNT OF THE ASSESSEE CANNOT BE REJECTED AND MORE PARTICULARLY E VEN WHEN THERE IS SLIGHT FALL IN THE G.P. RATE AS COMPARED TO THE PAS T YEAR. THERE BEING NO DEFECT MUCH LESS ANY MATERIAL DEFECT BEING POINTED OUT BY THE A.O. IN THE BOOKS OF ACCOUNTS, THE REJECTION OF THE BOOKS C ANNOT BE JUSTIFIED. SINCE THE ASSESSEE HAS BEEN REGULARLY FOLLOWING THE AVERAGE WEIGHTED METHOD FOR VALUATION OF HIS CLOSING STOCK, THE VALU ATION OF THE STOCK CANNOT BE CHANGED AT THE WHIMS OR THE FANCIES OF TH E AUTHORITIES. ACCORDINGLY, THERE CAN BE NO OCCASION TO MAKE ANY T RADING ADDITION EITHER IN THE GOLD OR THE SILVER ACCOUNTS. ACCORDIN GLY, WE ALLOW GROUND 5 NO. 2.1 TO 2.4 OF THE ASSESSEES APPEAL AND THUS, C ANNOT ALLOW GROUND NO. 1 AND 2 OF THE REVENUES APPEAL. 3. GROUND NO. (3) OF ASSESSEES APPEAL CANNOT BE AL LOWED AS CHARGING OF INTEREST U/SS 234A AND 234B AND 234C AN D 234D HAS TO BE AS PER THE LAW. HOWEVER, THE ASSESSEE IS ENTITLED T O CONSEQUENTIAL RELIEF. 3.1 GROUND NO. (1) AND (4) OF ASSESSEES APPEAL ARE GENERAL IN NATURE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH AUGUST, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH AUGUST, 2013. VL/ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT BY ORDER 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR