The Asstt. Commissioner of Income-tax, Jalandhar V. M/s. Bishan Dass Hide& Skin P.Ltd, Jalandhar

ITA 481/ASR/2011

• Counselvise Citation: 48120914 RSA 2011
• Duration Of Justice: 2 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 07-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.481(ASR)/2011 ASSESSMENT YEAR:2008-09 PAN :AACCB9888N ASSTT. COMMR. OF INCOME TAX, VS. M/S. BISHAN DASS HIDE & SKIN P. LTD. RANGE-1, JALANDHAR. BOOTAN MANDI, JALANDHAR. (APPELLANT) (RESPONDENT) C.O. NO.25(ASR)/2011 (ARISING OUT OF I.T.A. NO.481(ASR)/2011) ASSESSMENT YEAR:2008-09 PAN :AACCB9888N M/S/ BISHAN DASS HIDE & SKIN P.LTD. VS. ASSTT. COMM R. OF INCOME TAX, JALANDHAR. JALANDHAR. (APPELLANT) (RESPONDENT) DEPARTMENT BY:SH.MAHAVIR SINGH, DR ASSESSEE BY:SH.SURINDER MAHAJAN, CA DATE OF HEARING: 21/08/2013 DATE OF PRONOUNCEMENT:13/09/2013 ORDER PER BENCH ; THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER OF THE CIT(A), JALANDHAR, DATED 30.06.2011 FOR THE ASSESSMENT YEA R 2008-09. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ITA NO.481(ASR)/2011 CO NO.25(ASR)/2011 2 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1 ,35,44,524/- MADE BY THE AO ON ACCOUNT OF SUPPRESSION OF THE V ALUE OF CLOSING STOCK. 2. THAT, IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE A.O. RESTORED. 3. THAT THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AME ND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AN D DISPOSED OF. 2. THE ASSESSEE HAS ALSO FILED C.O. NO.25(ASR)/2011 IN WHICH FOLLOWING GROUNDS HAVE BEEN RAISED: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, LD. CIT(A), JALANDHAR, HAS RIGHTLY DELETED THE ADDITION OF RS .1,35,44,524/- MADE BY THE AO IN THE TRADING ACCOUNT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD . CIT(A), JALANDHAR, HAS ERRED IN REJECTING GROUND OF APPEAL NO.2 FILED BY THE ASSESSEE WHEREIN THE ASSESSEE HAS CHALLENGED TH AT ADDITION OF RS.1,35,44,524/- MADE BY THE AO IN THE TRADING A CCOUNT WITHOUT INVOKING THE PROVISIONS OF SECTION 145(3) O F THE ACT IS ILLEGAL AND BAD IN LAW. 3. THAT FINDING OF THE CIT(A) WHILE REJECTING GROUND O F APPEAL NO.2 FILED BY THE ASSESSEE IS OPPOSED TO THE DECISI ON OF ITAT, AMRITSAR BENCH, AMRITSAR IN THE CASE OF M/S. DRP MA LLEABLES PVT. LTD. VS. ACIT RANGE IV, JALANDHAR IN ITA NO.177/ASR/2008 DATED 27.06.2008. 4. THAT THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AME ND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AN D DISPOSED OF. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS IN THE BUSINESS OF TRADING IN HIDES AND HAD FILED RETURN OF INCOME FOR A.Y.2008-09 SHOWING ITA NO.481(ASR)/2011 CO NO.25(ASR)/2011 3 LOSS FROM BUSINESS AT RS.7,47,376/- ON SALES OF RS. 9,41,51,742/-. AFTER EXAMINING THE VALUE AND QUANTITATIVE PARTICULARS OF THE OPENING AND CLOSING STOCK, PURCHASES AND SALES, THE AO FOUND THAT THE A VERAGE VALUE OF THE CLOSING STOCK AT RS.296.91 WAS LESSER THAN THE AVER AGE VALUE OF BOTH THE OPENING STOCK AT RS.366.93 AND OF PURCHASES AT RS. 401.81. HE WAS, THEREFORE, OF THE VIEW THAT THE CLOSING STOCK VALUE HAD BEEN SUPPRESSED BY RS.107.84 PER PIECE, TOTALLY AMOUNTING TO RS.1,35,4 3,625.60. THE AO ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY ADDITION OF TH IS AMOUNT SHOULD NOT BE MADE TO THE TOTAL INCOME. THE ASSESSEE SUBMITTED TH AT IT WAS DEALING IN PURCHASE AND SALE OF SKIN & HIDES OF COWS AND BUFFA LOS HAVING DIFFERENT SIZES AND VARIETIES. IT WAS SUBMITTED THAT THE PER PIECE RATE OF DIFFERENT HIDES AND DIFFERENT VARIETIES VARIED. IT WAS SUBMITTED TH AT THE RATES VARIED ALSO ON THE AVAILABILITY AND ON WHETHER THEY WERE OF DEAD A NIMALS OR SLAUGHTERED ANIMALS. IT WAS CONTENDED THAT APPLYING THE AVERAGE OF PER PIECE RATE BY MIXING THE HIDES OF DIFFERENT ANIMALS AND OF DIFFER ENT SIZES WAS NOT PROPER AND THAT THE AVERAGE OF THE SAME TYPE COULD BE ARRI VED AT. IT WAS FURTHER CONTENDED THAT THE ASSESSEE MAINTAINED ALL STOCK RE CORDS AND TRADING RESULTS WHERE VERIFIABLE FROM THE SAME. THE AO WAS NOT SATI SFIED WITH THE REPLY HOLDING THAT IT WAS GENERAL IN NATURE AND THAT THE SUPPRESSION OF THE VALUE OF THE CLOSING STOCK HAD NOT BEEN EXPLAINED. AS PER TH E AO, THE ASSESSEE HAD ITA NO.481(ASR)/2011 CO NO.25(ASR)/2011 4 NOT FURNISHED ANY DATA CHART FROM THE STOCK RECORDS CLAIMED TO BE MAINTAINED SHOWING THE SAME BASE FOR CALCULATING AVERAGE RATE. THE AO ASKED THE ASSESSEE TO FURNISH THE SAME BASE DATA CHART AND TO GET IT VERIFIED WITH RESPECT TO THE STOCK RECORDS. THE ASSESSEE SUBMITTE D FURTHER TO ITS EARLIER SUBMISSIONS THAT HIDES & SKINS WAS PURCHASED IN LOT S AND SORTED OUT IN DIFFERENT QUALITIES AND SOLD ACCORDINGLY WHICH MEAN T THAT AT TIMES SOME PIECES WERE SOLD AT A LOSS. IT WAS STATED THAT DIFF ERENT KINDS OF HIDES PURCHASED IN TERMS OF PIECES HAD BEEN RECORDED IN T HE PURCHASE ACCOUNT IN THE LEDGER ITSELF AND THAT SIMILARLY THE NUMBER OF PIECES HAD BEEN NOTED IN THE SALE REGISTER. THE BOOKS WERE PRODUCED BEFORE T HE AO. IT WAS FURTHER SUBMITTED THAT FROM THE PURCHASE ACCOUNT, IT COULD BE SEEN THAT THE RATES OF DIFFERENT KINDS OF HIDES VARIED FROM RS.100 TO RS.1 300 PER PIECE. THE AO WAS NOT SATISFIED AND WAS OF THE OPINION THAT IN TH E ABSENCE OF ANY DATA IN SUPPORT OF THE GENERAL CLAIMS THE PRODUCTION OF BOO KS WAS NOT OF MUCH USE. HE ASKED FOR THE PRODUCTION OF THE RELEVANT DATA. T HEREAFTER, THE ASSESSEE COMPILED MONTH WISE DATA OF PURCHASE AND SALE OF HI DES AND SKINS IN THREE PRICE RANGES OF RS.100/- TO RS.400/-, RS.401/- TO R S.800/-, AND MORE THAN RS.801/-. THE DETAILS WERE COMPARED WITH THE STOCK REGISTER CLOSING STOCK AND IT WAS SUBMITTED THAT THUS TOTAL STOCK TALLIED. THE AO WAS OF THE OPINION THAT THE DATA FURNISHED BY THE ASSESSEE WENT AGAINS T IT HOLDING THAT THE ITA NO.481(ASR)/2011 CO NO.25(ASR)/2011 5 DIFFERENT PRICE RANGES WERE NOT LOGICAL OR RELEVANT , AS PER THE AO BY MULTIPLYING THE MIDDLE OF THE PRICE RANGES BY THE Q UANTITY OF GOODS REMAINING IN CLOSING STOCK IN THAT RANGE COULD LEAD TO A CLOSING STOCK VALUE OF RS.5,33,43,000/- AS AGAINST THE DECLARED CLOSING STOCK OF RS.3,72,88,604/-. AS PER THE AO, THE VALUATION OF THE OPENING AND CLO SING STOCK WAS STILL NOT SUBMITTED. AS PER THE AO, THE VALUATION OF THE OPEN ING AND THE CLOSING STOCK WAS STILL NOT SUBMITTED. HE HELD THAT THE ASSESSEE HAD NOT FURNISHED THE REQUISITE DATA AND ITS SUBMISSIONS WERE BASELESS. A S PER THE AO, THE ISSUE WAS THE VALUATION OF THE CLOSING STOCK AND NOT THE TALLYING OF THE OVERALL STOCK. THE AO NOTED THAT THE NUMBER OF PIECES IN TH E OPENING STOCK IN THE FIRST AND SECOND PRICE BANDS HAD DECREASED BY 4084 AND INCREASE BY THE SAME AMOUNT IN THE HIGHEST PRICE BAND. THIS DISCREPANCY WAS FOUND BY THE AO TO BE NOT BELIEVABLE. THE AO, THEREFORE, COMPUTED THE GROSS PROFIT ON THE SALE OF ITEMS IN THE OPENING STOCK AND IN THE CLOSING ST OCK ARRIVE AT AN ADDITION OF RS.1,35,44,524/-. THE PER PIECE SALE PRICE WAS COMP UTED AT RS.490.40 AND THE AVERAGE COST OF ITEMS IN THE OPENING STOCK AND OF PURCHASES WAS CONSIDERED FOR DETERMINING THE COST OF SALES. 4. BEFORE THE LD. CIT(A), THE ASSESSEE FILED THE WR ITTEN SUBMISSIONS, WHICH WERE FORWARDED TO THE A.O. WHO SUBMITTED THE REMAND REPORT AND THE REJOINDER OF THE ASSESSEE WERE ALSO OBTAINED AND T HE LD. CIT(A) AFTER ITA NO.481(ASR)/2011 CO NO.25(ASR)/2011 6 CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE REMAND REPORT REVERSED THE ORDER OF THE A.O. FOR REJECTION OF BOOKS OF ACC OUNT AS WELL AS DELETED THE ADDITION OF RS.1,35,44,524/- VIDE PARAS 4 TO 9 OF H IS ORDER MADE BY THE AO 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE OBJECTION OF THE ASSESEE IN ITS C.O. IN GROUNDS NO. 2 & 3 THAT THE A.O. HAS NOT INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT, IN THIS REGARD, THE AO ISSUED SHOW CAUSE NOTICE WHICH WAS SERVED ON 12.08.2010, WHICH IS A MATTER OF RECORD AND THE ASSESSEE HAS S UBMITTED HIS REPLY IN THIS REGARD AND THE AO HAS MENTIONED IN HIS ORDER THAT T HE EXPLANATION SUBMITTED IS NOT VERIFIABLE FROM THE LEDGER AND THE STOCK REG ISTER. THOUGH THE AO HAS NOT SPECIFICALLY MENTIONED THAT THE BOOKS OF ACCOUN T ARE REJECTED BUT IN FACT GIVING A SHOW CAUSE NOTICE FOR REJECTION OF THE APP LICABILITY OF PROVISIONS OF SECTION 145(3) OF THE ACT. THE REPLY OF THE ASSESSE E AND MENTIONING THAT THE SAID REPLY/EXPLANATION IS NOT VERIFIABLE TANTAMOUNT TO REJECTION OF BOOKS OF ACCOUNT AND THEREFORE, GROUNDS NO. 2 & 3 OF THE ASS ESSEE ARE DISMISSED. 6. AS REGARDS GROUNDS NO.1 IN THE C.O. OF THE ASSES SEE, THE SAME IS SUPPORTIVE IN NATURE AND, THEREFORE, THE SAME IS I NFRUCTUOUS. 7. GROUND NO.4 OF THE C.O. IS GENERAL IN NATURE, TH EREFORE, DOES NOT REQUIRE ANY ADJUDICATION. ACCORDINGLY, THE C.O. OF THE ASSESSEE IS DISMISSED. ITA NO.481(ASR)/2011 CO NO.25(ASR)/2011 7 8. AS REGARDS REVENUES APPEAL, THE ONLY REASON FOR REJECTION OF BOOKS OF ACCOUNT WAS UNDER VALUATION OF CLOSING STOCK IN WHI CH THE ASSESSEE HAS NOT SUBMITTED THE REQUIRED INFORMATION OR EXPLANATION. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT THE ASSESSEE IS ENTITL ED TO VALUE THE CLOSING STOCK AT COST OR AT MARKET VALUE, WHICHEVER IS LESSER. IT IS ALSO USUAL TO VALUE THE CLOSING STOCK BY FOLLOWING THE FIFO (FIRST IN FIRST OUT METHOD) METHOD OF DETERMINING THE GOODS LYING IN STOCK, I.E. IT IS P RESUMED THAT FOR THE SAME GOODS, THE GOODS PURCHASED FIRST HAVE BEEN SOLD FI RST AND THE GOODS LYING IN STOCK ARE FROM THE GOODS WHICH HAVE BEEN PURCHASED LATER. THE ASSESSEE MAINTAINS BOOKS OF ACCOUNT WHICH HAVE BEEN AUDITED. IT ALSO MAINTAINS QUANTITATIVE DETAILS OF STOCK. THE TAX AUDIT REPORT U/S 44AB HAS GIVEN A QUANTITATIVE TALLY OF THE OPENING STOCK, PURCHASES, SALES AND CLOSING STOCK AND THE SHORTAGE HAS BEEN SHOWN AT NIL. THIS IMPLIE S THAT THE TAX AUDITOR HAD EXAMINED THE QUANTITATIVE PARTICULARS. THE ASSE SSEE HAD ALSO PRODUCED BOOKS OF ACCOUNT BEFORE THE AO IN SUPPORT OF THE PU RCHASES AND SALES AND THE VALUE OF THE CLOSING STOCK. THE AO WAS NOT SATI SFIED BECAUSE, AS PER HIM, THE REQUISITE DATA WAS NOT SUBMITTED. IN MY OPINION , THE APPROACHES OF THE AO AS WELL AS OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS WERE WRONG TO SOME EXTENT. WHILE THE AO INSISTED ON A PROPER E XPLANATION FOR THE LOW VALUE OF THE GOODS IN THE CLOSING STOCK, HE DID NOT SPECIFY THE EXACT ITA NO.481(ASR)/2011 CO NO.25(ASR)/2011 8 INFORMATION WHICH HE WANTED FROM THE ASSESSEE ON TH E ISSUE AT HAND. THE STATEMENT OF OPENING AND CLOSING STOCK OF DIFFERENT TYPES OF PRODUCTS WERE SUBMITTED BEFORE THE AO BY THE ASSESSEE AND IT REL IED UPON ITS BOOKS OF ACCOUNT AND THE STOCK DETAILS AVAILABLE WITH IT. T HE ASSESSEE DID NOT PRODUCE THE NECESSARY DETAILS OF ITS LAST PURCHASES OF DIFF ERENT TYPES OF HIDES IN SUPPORT OF THE VALUATION OF ITS CLOSING STOCK. THE AO WAS ALSO WRONG IN REFUSING TO EXAMINE THE BOOKS AND BILLS PRODUCED BE FORE HIM IN THE ABSENCE OF THE REQUISITE DATA AND IN INSISTING THAT THE DAT A SHOULD BE FIRST PRODUCED BEFORE THE BOOKS COULD BE EXAMINED. THE AO WAS TRYI NG TO PROVE THAT THE ASSESSEES BOOK RESULT WERE INCORRECT WITH REFERENC E TO THE VALUATION OF THE CLOSING STOCK AND HE SHOULD HAVE, BY EXAMINING THE BILL OF PURCHASES, COME TO A FINDING THAT THE VALUATION OF THE GOODS IN CLO SING STOCK WAS IMPROPER. IT IS SEEN THAT THE AO RELIED UPON THE AVERAGE RATES A CROSS ALL CATEGORIES OF GOODS WHEN EVEN THE DETAILS OF OPENING AND CLOSING STOCK BEFORE HIM REVEALED THAT THE RATES VARIED SIGNIFICANTLY. IT IS ALSO OBVIOUS THAT IF THERE ARE MORE GOODS OF LOWER QUALITY AND LOWER PRICE IN THE STOCK, THE AVERAGE RATE OF GOODS IN THE CLOSING STOCK MAY BE LOWER THAN THE AV ERAGE RATES OF PURCHASES. THIS CAN HAPPEN IF THE ASSESSEE HAS BEEN ABLE TO SE LL MOST OF THE GOODS PURCHASED AT HIGHER PRICES AND IS LEFT WITH MORE GO ODS PURCHASED AT LESSER PRICES IN THE STOCK. THE QUANTITATIVE DETAILS OF OP ENING STOCK, PURCHASES, ITA NO.481(ASR)/2011 CO NO.25(ASR)/2011 9 SALES AND CLOSING STOCK IN DIFFERENT PRICE HANDS SU BMITTED BEFORE THE AO SHOW THAT OUT OF THE OPENING STOCK OF 23045 PIECES AND PURCHASE OF 163320 PIECES OF GOODS COSTING UPTO RS.400/-, 92287 PIECES (APPROX 49.6%) WERE LEFT IN CLOSING STOCK. ON THE OTHER HAND, OUT OF OP ENING STOCK OF 24767 PIECES WERE LEFT IN STOCK. IN THE PRICE BAND OF RS.800/- A ND ABOVE, THE OPENING STOCK WAS NIL, PURCHASES WERE 40,842 PIECES AND CL OSING STOCK WAS 9356 PIECES. THUS, ONLY ABOUT 50% OF THE LOWEST PRICED G OODS WERE SOLD, WHEREAS ABOUT 75% OF THE MID PRICED GOODS AND MORE THAN 80% OF THE HIGHEST PRICES GOODS WERE SOLD. WITH THE LARGE NO. OF LOW PRICED G OODS IN CLOSING STOCK AND MORE PERCENTAGE OF THE HIGH PRICES GOODS HAVING BE EN SOLD, THE AVERAGE PRICE OF GOODS IN THE CLOSING STOCK WAS BOUND TO BE LOWER THAN THE AVERAGE PRICE OF OPENING STOCK AND PURCHASES. THIS DATA WA S BEFORE THE AO AND COULD HAVE BEEN VERIFIED FROM THE BOOKS OF ACCOUNT PRODUCED BEFORE HIM. YET, THE AO STUCK TO THE AVERAGE PRICE THEORY, WHER EAS A SIMPLE ANALYSIS OF THE PURCHASE AND SALE OF GOODS IN DIFFERENT PRICE C ATEGORY SHOWS THAT THE VALUE OF THE CLOSING STOCK OF THE ASSESSEE WAS BOUN D TO BE LOWER THAN THE AVERAGE VALUE OF THE OPENING STOCK AND THE PURCHASE S SINCE MOST OF THE HIGH VALUE GOODS HAD BEEN SOLD OFF LEAVING MAINLY LOW VA LUE GOODS IN STOCK. AS NOTED BY THE AO IN HIS COMMENTS DATED 16.3.2011, TH E ASSESSEE HAD ONLY SUBMITTED MONTHLY DETAILS OF OPENING STOCK, PURCHAS ES, SALES AND CLOSING ITA NO.481(ASR)/2011 CO NO.25(ASR)/2011 10 STOCK IN DIFFERENT VALUE BRACKET, BUT DID NOT SUBMI T THE BREAK UP REQUIRED TO JUSTIFY ITS VALUATION OF THE CLOSING STOCK. THE ASS ESSEES CONTENTION IN THIS REGARD IS THAT IT WAS NEVER ASKED TO PRODUCE INFORM ATION IN THE SAID MANNER AND THAT IT PRODUCED ALL THE SPECIFIC INFORMATION I N THE SAID MANNER AND THAT IT PRODUCED ALL THE SPECIFIC INFORMATION CALLED FOR BY THE AO AND ALSO PRODUCED THE BOOKS OF ACCOUNT ALONGWITH BILLS AND V OUCHERS. THE ASSESSEE ALSO SUBMITTED BILL-WISE DETAILS OF ALL ITS PURCHAS ES FROM THE MONTH OF 1.10.2007 TILL 31.3.2008, GIVING THE DESCRIPTION OF THE GOODS AND ITS QUANTITY, IN SUPPORT OF THE VALUATION OF THE ITEMS LYING IN T HE CLOSING STOCK. THESE WERE DIRECTED TO BE VERIFIED BY THE AO, AS HAS BEEN NOTED EARLIER. THE AO CARRIED OUT THE VERIFICATION AND THERE IS NO DISCRE PANCY NOTED BY HIM FROM THE PURCHASE BOOKS AND BILLS. THE AO HAS, OF COURSE , REPORTED THAT THE GOODS WERE PURCHASED IN CASH FOR WHICH EXCEPTION WAS AVAI LABLE IN RULE 6DD. HE HAS NOT REPORTED THAT THE PARTIES FORM GOODS WERE P URCHASED WERE NOT IDENTIFIABLE. IT IS, THEREFORE, PRESUMED THAT THE S ELLERS TO THE ASSESSEE ARE IDENTIFIABLE AND VERIFIABLE. HENCE, THE ITEM-WISE VALUATION OF CLOSING STOCK IS VERIFIABLE FROM THE PURCHASE BOOK OF THE ASSESSE E WITH REFERENCE TO THE RATES OF PURCHASES AND THUS THE LOWER AVERAGE RATE OF VALUATION OF THE CLOSING STOCK IS FOUND TO BE SUPPORTED BY THE BOOKS OF ACCO UNTS OF THE ASSESSEE. THUS, NOT ONLY THE QUANTITY OF THE LOWER PRICE GOO DS SUPPORTED BY THE DATA ITA NO.481(ASR)/2011 CO NO.25(ASR)/2011 11 SUBMITTED BEFORE THE AO DURING THE ASSESSMENT PROCE EDINGS, THE VALUATION OF THE CLOSING STOCK IS ALSO VERIFIABLE FROM THE BOOKS OF ACCOUNTS AND BILLS OF PURCHASE OF GOODS. THE UNDER VALUATION OF CLOSING S TOCK WAS THE ONLY REASON WHY THE AO REJECTED THE BOOK RESULTS AND APPLIED A HIGHER G.P. RATE TO MAKE THE IMPUGNED ADDITION TO THE TOTAL INCOME. AS NOTED FROM THE ANALYSIS OF THE VALUE WISE BREAK-UP OF THE TRANSACTIONS OF PURCHASE AND SALE OF GOODS, THE AVERAGE VALUE OF THE CLOSING STOCK IS JUSTIFIABLY L OWER THAN THE AVERAGE VALUE OF THE OPENING STOCK AND PURCHASES ACROSS ALL PRODU CTS CATEGORIES. 9. IN OUR VIEW, SINCE THE VALUATION OF THE CLOSING STOCK SHOWN IN THE PROFIT & LOSS ACCOUNT HAS BEEN VERIFIED WITH REFERE NCE TO THE BILLS OF PURCHASES BY THE AO WHICH IS CORROBORATED BY THE DA TA SUBMITTED BEFORE THE AO IN THE VALUE-WISE BREAK-UP, THE BASIS OF REJECTI ON OF THE BOOK RESULTS DOES NOT REMAIN. THE G.P. RATE DECLARED BY THE ASS ESSEE AT 4.98% IS COMPARABLE TO THE GP RATE OF 5% IN AY 2007-08. THE AOS OBSERVATION IN THE ASSESSMENT ORDER ABOUT THE DECREASE IN THE QUAN TITATIVE TALLY OF LOWER PRICE GOODS WITH INCREASE IN THE QUANTITY OF HIGHE R PRICE GOODS HAS BEEN MADE WITHOUT CONSIDERING THE FACT THAT WHEN THE VA LUE OF THE LOWER PRICE GOODS OF RS.800/- IS SOLD AT RS.820/-, THE GOODS M OVED FROM THE LOWER PRICE BRACKET OF RS.401/- TO R.800/- IS SOLD TO THE HIGHE R PRICE BRACKET OF MORE THAN RS.800/- IN SALES, LEADING TO THE DIFFERENCE WHICH IS NORMAL AND SHOULD ITA NO.481(ASR)/2011 CO NO.25(ASR)/2011 12 BE EXPECTED. THE AOS OBSERVATION REGARDING RS.1/- PRICE BAND IS ALSO UNCALLED FOR SINCE IT IS ONLY A METHOD OF NORMAL ST ATISTICAL DATA REPRESENTATION. THE APPLICATION OF THE AVERAGE RATE OF THE PRICE BAND BY THE AO TO ARRIVE AT CLOSING STOCK VALUE OF RS.5.33 CROR ES IS ALSO IMPROPER SINCE THE DATA GIVEN BY THE ASSESSEE DID NOT SUGGEST THE AVERAGE OF THE PRICE BAND WAS THE AVERAGE RATE OF PURCHASES AND SALES OF GOOD S IN THAT BAND. 10. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HAS RIGHTLY DELETED TH E ADDITION MADE BY THE A.O. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DIS MISSED. 11. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE I N ITA NO.481(ASR)/2011 AS WELL AS C.O. NO.25(ASR)/2011OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13TH SEPT., 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13TH SEPT., 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. BISHAN DASS HIDE & SKIN PVT. LTD. JALANDHAR. 2. THE ACIT, R-1, JALANDHAR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDERS