SUPREME CARPETS, Jaipur V. DCIT, Jaipur

ITA 509/JPR/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9045 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 14-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S L PODDAR DH R LS

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES SMC, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA- @ ITA NO. 509/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 M/S SUPREME CARPETS 534, MAHAVEER NAGAR, JAIPUR. CUKE VS. THE D.C.I.T. CENTRAL CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: ABCFS 4973 R VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI S.L. PODDAR (ADVOCATE) JKTLO DH VKSJR LS @ REVENUE BY : SHRI RAJESH OJHA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 28/01/2015 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 29/01/2015 VKNS'K @ ORDER PER: R.P. TOLANI, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 03/06/2014 BY THE LEARNED CIT(A)-CENTRAL, JAIPUR FO R A.Y. 2009-10. THE SOLE GROUND OF APPEAL IS AS UNDER:- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN SUSTAINING THE ADDITION ON ACCOU NT OF ITA 509/JP/2014_ M/S SUPREME CARPETS VS. DCIT 2 EXCESS STOCK OF RS. 2,30,780/- WITHOUT CONSIDERING T HE SUBMISSION OF THE ASSESSEE. 2. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT T HERE WAS NO ACTIVITY OF SALE IN RESPECT OF RAW MATERIAL UTILIZED BY THE ASSESSEE FOR ITS CARPET MANUFACTURING ACTIVITY, CONSEQUENTLY STOCK O F SUCH RAW MATERIAL ON THE DATE OF SURVEY I.E. 27/08/2008 WAS QUANTITY WI SE SAME TO OPENING STOCK AS ON 1/4/2008. THE SURVEY TEAM WRONGL Y VALUED IT ON MARKET VALUE AND NOT ON OB VALUE, WHICH IS AGAINST T HE SETTLED PRINCIPLES OF METHOD OF STOCK VALUATION AND ACCOUNT ANCY. THE ASSESSEES BONAFIDES IS PROVED BY THE FACT THAT IMMEDIATELY TH EREAFTER ON 30/09/2010, A LETTER WAS WRITTEN IN THIS BEHALF TO AD IT FOR REVERIFICATION OF THE STOCK. THE ASSESSEE FILED ITS RETURN OF INCOM E ACCORDINGLY, ON THE OPENING VALUE AS THERE WAS NO MANUFACTURING ACTIVITY OR SALES IN THIS BEHALF. THE LEARNED ASSESSING OFFICER, HOWEVER, ARBIT RARILY ADOPTED THE HIGHER STOCK VALUATION FIGURE AND MADE THE ADDITION , WHICH WAS CONFIRMED BY THE LEARNED CIT(A). 2.1 LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE FACTS AND REFERRED TO PAGE NOS. 7 AND 8 BEING THE TRADING ACCOUNTS FOR PRECEDING AND CURRENT YEAR, WHICH DEMONSTRATES THAT THE OPENING AN D CLOSING STOCK OF ITA 509/JP/2014_ M/S SUPREME CARPETS VS. DCIT 3 RAW MATERIAL REMAINED THE SAME. THE ASSESSEES REPRES ENTATION ABOUT THE INCONSISTENCY IN THE VALUATION OF STOCK IN THIS BEHALF HAS NOT BEEN ADVERTED TO AT ALL, THEREFORE, THERE IS NO JUSTIFIC ATION IN THE ADDITION. IT IS FURTHER PLEADED THAT THE ASSESSEE HAS NOT TAKEN ANY BENEFIT OF INCREASE VALUE OF CLOSING STOCK IN SUBSEQUENT YEAR. 3. THE LEARNED SR.DR SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 4. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. FROM THE TRAD ING ACCOUNT SUBMITTED BY THE ASSESSEE, IT EMERGES THAT THERE WAS NO ACTIVITY OF MANUFACTURING OR SELLING OR THE CARPETS. IT IS STAN DARD ACCOUNTING PRACTICE THAT THE VALUE OF CLOSING STOCK SHALL BE A DOPTED AT THE COST OR THE MARKET VALUE, WHICHEVER IS LOWER. UNDER THESE CIR CUMSTANCES, MERELY BECAUSE, A SURVEY CONDUCTED, THESE WELL SETTL ED ACCOUNTING PRINCIPLES, CANNOT BE GIVEN A GO BYE. 4.1 IMMEDIATELY AFTER THE SURVEY, THE ASSESSEE FILE D A LETTER EXPLAINING THE POSITION IN THIS BEHALF, WHICH IS NOT ADVERTED BY AUTHORITIES BELOW. THE INCREASE IN CLOSING STOCK OF ONE YEAR WILL HAVE AUTOMATIC EFFECT OF INCREASING THE VALUE OF OPENING STOCK OF SUBSEQUENT YEAR THUS THIS ADDITION AT THE MOST HAS LIMITED EFF ECT OF PROPONING OR ITA 509/JP/2014_ M/S SUPREME CARPETS VS. DCIT 4 POSTPONING THE ACCESSIBILITY AND IN SUBSTANCE A REV ENUE NEUTRAL EXERCISE. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCE S OF THE CASE, THE ADDITION ON ACCOUNT OF INCREASE OF STOCK VALUE IS N OT SUSTAINABLE, WHICH IS DELETED. HOWEVER, IF THE ASSESSEE HAS BEEN GIVEN ANY SUBSEQUENT BENEFIT IN THAT CASE THAT MAY BE WITHDRAWN. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/01/2015. SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 29 TH JANUARY, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S SUPREME CARPETS, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE D.C.I.T., CENTRAL CIRCLE-3, JAIPU R. 3. VK;DJ VK;QDR @ CIT(A)-CENTRAL, JAIPUR 4. VK;DJ VK;QDR @ CIT, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 509/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR