SUDHIR H. SHAH, MUMBAI V. INCOME TAX OFFICER, WARD-25(3)(4), MUMBAI

ITA 5677/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48414 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 16-12-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 22-10-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K SINGH PER R K
• Assessee Lawyers: KETAN L VAJANI
• Keywords: Business income; Cost of acquisition

Judgement Text

1 ITA NO.5677/MUM/2009 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI I II I BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE SHRI R K PANDA, AM BEFORE SHRI R K PANDA, AM BEFORE SHRI R K PANDA, AM BEFORE SHRI R K PANDA, AM & SMT ASHA VIJAYARAGHAVAN, JM & SMT ASHA VIJAYARAGHAVAN, JM & SMT ASHA VIJAYARAGHAVAN, JM & SMT ASHA VIJAYARAGHAVAN, JM ITA NO. ITA NO. ITA NO. ITA NO. 5677/MUM/2009 5677/MUM/2009 5677/MUM/2009 5677/MUM/2009 (ASST YEAR (ASST YEAR (ASST YEAR (ASST YEAR 2006 2006 2006 2006- -- -07 0707 07) )) ) SUDHIR H SHAH 6 GOKULDHAM BEHIND BHATHIA HIGH SCHOOL BHATT LANE KANDIVALI (W) MUMBAI VS THE INCOME TAX OFFICER WARD 25(3)(4), MUMBAI ( (( (APPELLANT APPELLANT APPELLANT APPELLANT) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO.AAEPS9054J AAEPS9054J AAEPS9054J AAEPS9054J A SSESSEE BY SHRI KETAN L VAJANI REVENUE BY SHRI S K SINGH PER R K PANDA, AM PER R K PANDA, AM PER R K PANDA, AM PER R K PANDA, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 4.8.2009 OF THE CIT(A) XXV, MUMBAI RELATING TO ASSE SSMENT YEAR 2006-07. 2 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSE E IS HAVING BUSINESS OF IMPORT, EXPORT AND TRADING IN DIAMONDS. THE ASSESSI NG OFFICER NOTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOW N OPENING STOCK OF RS. 46,60,708/- AND PURCHASES OF RS. 64,17,771/-. THE TOTAL SALES WERE SHOWN AT RS. 70,07,883/- AND THE CLOSING STOCK WAS DISCLOSED AT RS. 46,34,760/-. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE IS PURC HASING THE CUT AND POLISHED DIAMONDS WHICH WERE EXPORTED TO OTHER COUNTRIES. F ROM THE PURCHASE BILLS AND SALE BILLS, THE ASSESSING OFFICER NOTED THAT THE AS SESSEE HAS PURCHASED AND SOLD THE CUT AND POLISHED DIAMONDS ON THE BASIS OF AVER AGE PRICE. HE COMPARED THE VALUE OF OPENING STOCK AND PURCHASES AS WELL AS SAL ES AND CLOSING SOCK AND 2 ITA NO.5677/MUM/2009 NOTED THAT THE ASSESSEE HAS SHOWN OPENING STOCK OF DIAMOND AT RS. 4700/- PER CT. THE PURCHASES WERE MADE BETWEEN RS. 4500 TO RS. 6660/- PER CT. THE ASSESSEE HAS SOLD DIAMONDS @ RS 6068 TO RS. 7440/- PER CT. HOWEVER, THE CLOSING STOCK OF DIAMONDS OF 1128 CTS WERE SHOWN @ RS. 4000/- ONLY. SINCE APPARENTLY THE VALUATION OF THE CLOSING STOCK WAS L ESS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE SAME. IN REPLY, THE ASSESSEE SUBMITTED THE VALUATION OF CLOSING STOCK AS ON 31.3.2006, THE DET AILS OF WHICH ARE AS UNDER: DATE DATE DATE DATE INWARD GOODS INWARD GOODS INWARD GOODS INWARD GOODS CTS CTS CTS CTS SALES CTS SALES CTS SALES CTS SALES CTS STOCK CTS STOCK CTS STOCK CTS STOCK CTS RATE PER CTS RATE PER CTS RATE PER CTS RATE PER CTS AMOUNT IN AMOUNT IN AMOUNT IN AMOUNT IN RS. RS. RS. RS. 1.4.2005 276.6 145.69 130.91 3225 422185 1.4.205 275.91 NIL 275.91 3800 1048458 1.4.2005 130.22 53.05 16.79 2850 47852 60.38 1.4.2005 192.29 32.39 86.33 2850 246041 25.38 48.19 1.4.2005 116.62 NIL 116.62 4250 495635 991.64 PURCHASES 19.4.2005 277.8 NIL 277.8 4250 1180650 2.5.2005 297.87 172.5 125.37 4500 564165 22.8.2005 80.05 NIL 80.05 4825 386241 5.12.2005 140.5 104.1 36.04 4551 165656 12.12.2005 400.14 387.63 12.51 6225 77878 1196.36 1029.31 1158.69 4634760 2.1 HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCE D WITH THE EXPLANATIONS GIVEN BY THE ASSESSEE. HE NOTED FROM THE PURCHASE AS WELL AS SALE BILLS THAT THE ASSESSEE HAS PURCHASED THE CUT AND POLISHED DIAMOND S ON AVERAGE COST PER CARAT AND IN RESPECT OF SALE CUT AND POLISHED DIAMO NDS WERE SOLD AS PER AVERAGE RATE PER CARAT. HE NOTED THAT THE NUMBERS OF DIAMON DS WERE NOT MENTIONED IN ANY BILL AND THERE IS NO CARAT-WISE DESCRIPTION. AC CORDING TO HIM, WHEN THE CUT AND POLISHED DIAMONDS WERE PURCHASED, THE RATE OF T HE PACKET OF DIAMONDS FIXED ON AVERAGE BASIS. SECONDLY, THE DIAMONDS WERE ASSO RTED BEFORE PURCHASED AND THERE WILL BE NOMINAL DIFFERENCE BETWEEN THE WEIGHT I.E CARATS OF THE DIAMONDS. 3 ITA NO.5677/MUM/2009 ON THE OTHER HAND, THE DIAMONDS WERE SOLD IN SIMILA R MANNER. IN THE INSTANT CASE, THE ASSESSEE HAS PURCHASED THE ASSORTED DIAMO NDS AT AVERAGE COST VALUE. HOWEVER, WHILE CALCULATING VALUATION FOR CLOSING ST OCK, THE ASSESSEE HAS ADJUSTED LESS VALUE THEN THE AVERAGE PURCHASE COST OF DIAMON DS. HE REJECTED THE CONTENTION OF THE ASSESSEE THAT THE GOOD QUALITY DI AMONDS WERE EXPORTED AND THE STOCK REMAINS WITH HIM ARE OF IMPURE QUALITY. ACCORDING TO THE ASSESSING OFFICER, SINCE THE ASSESSEE IS AN EXPORTER OF DIAMO NDS FOR THE LAST THREE YEARS, THEREFORE, THE ASSESSEE MUST HAVE PURCHASED GOOD QU ALITY DIAMONDS FOR EXPORTING. FURTHER, THE STATEMENT GIVEN BY THE ASS ESSEE INDICATES THE AVERAGE COST PRICE AND NO BIFURCATION OF DIAMONDS AS PER PI ECE; WEIGHT OR THE QUALITY WISE WERE GIVEN. HE, ACCORDINGLY REJECTED THE CONTENTIO N OF THE ASSESSEE AND VALUED THE CLOSING STOCK AS PER THE AVERAGE COST PRICE AS ADOPTED BY THE ASSESSEE FOR PURCHASE AND SALE OF THE DIAMONDS AND DETERMINED TH E CLOSING STOCK AT RS. 58,66,783/-. AFTER DEDUCTING THE VALUE DISCLOSE D BY THE ASSESSEE OF RS 46,34,760/- HE ADDED THE BALANCE AMOUNT OF RS. 12,3 2,023/-. 3 IN APPEAL, THE CIT(A) GAVE PART RELIEF TO THE ASS ESSEE BY HOLDING AS UNDER: AFTER CONSIDERING THE SUBMISSIONS OF THE REPRESENT ATIVE AND THE POINTS RAISED BY THE ASSESSING OFFICER AND THE DETAILED S TATEMENT OF PURCHASES AND SALES AND GROSS PROFIT IN RESPECT OF EACH TRANS ACTION WHICH HAS BEEN MENTIONED IN THE PRECEDING PARA, I FIND THAT THE AP PELLANT HAS VALUED CLOSING STOCK AT COMPARATIVELY LESS PRICE EVEN IN R ESPECT OF ITEMS FOR WHICH THERE IS NO PURCHASE AND SALE DURING THE YEAR. THE OPENING STOCK WHICH REMAINED INTACT WAS VALUED AT FEWER PRICES. WHEN SP ECIFICALLY QUESTIONED, THE REPRESENTATIVE COULD NOT SUBSTANTIATE THE REASO N FOR REDUCTION IN VALUE OF SUCH STOCK AND HE COULD NOT ADDUCE EVIDENCE TO S HOW THAT THE MARKET RATE WAS LESS THAN THE EARLIER YEAR. THE FACT THAT THE GROSS PROFIT VARIED FROM 6.69% TO 16.3% IN DIFFERENT LOTS SHOWS THAT THE CLO SING STOCK WAS NOT VALUED CORRECTLY. THE VALUATION OF CLOSING STOCK CANNOT BE ENTIRELY LEFT TO THE SWEET WILL AND DISCRETION OF THE APPELLANT. THE APPELLANT HAS ADMITTED OPENING STOCK OF RS. 11,47,786/- IN RESPECT OF 275.91 CARAT S OF DIAMONDS AND THIS STOCK REMAINED AS SUCH DURING THE YEAR BUT AT THE END OF THE YEAR WHILE VALUING THE CLOSING STOCK, HE HAS ADOPTED THE RATE OF RS. 10,48,458/- FOR WHICH THERE IS NO REASONABLE EXPLANATION FROM THE REPRESENTATIVE. SIMILARLY, IN RESPECT OF OPENING STOCK OF 192.29 CA RATS OF DIAMOND WHICH WAS VALUED AT RS. 5500/- PER CARAT IN THE BEGINNIN G OF THE YEAR, AFTER 4 ITA NO.5677/MUM/2009 SELLING 105.96 CARATS OF DIAMOND, THE CLOSING STOCK WAS VALUED AT RS. 2850 PER CARAT. SIMILARLY, IN RESPECT OF OPENING STOCK OF 130.22 CARATS OF DIAMOND WHICH WAS VALUED AT RS.5267 PER CARAT, THE APPELLANT AFTER SELLING 113.43 CARATS OF DIAMOND VALUED THE CLOSING STOCK O NLY AT RS. 2,850 PER CARAT. IN THE CIRCUMSTANCES, I HOLD THAT THE CLOSI NG STOCK WAS NOT VALUED CORRECTLY AND AT THE SAME TIME, I FIND THAT THE AO HAS ADOPTED AVERAGE PURCHASE COST WHICH CANNOT BE APPLIED IN THE CASE O F DIAMOND TRADE FOR WHICH THE APPELLANT HAS MAINTAINED STOCK REGISTER A ND IT IS POSSIBLE TO IDENTIFY THE PURCHASE LOT TO WHICH THE CLOSING STOC K BELONGED. THE ADOPTION OF AVERAGE PURCHASE COST WOULD GIVE THE CORRECT AMO UNT OF PROFIT IN GOLD BUSINESS WHERE THE SELLING RATE IS UNION FOR A PART ICULAR QUALITY AS IT IS NOT POSSIBLE TO ASCERTAIN THE PURCHASE RATE FOR WHICH T HE CLOSING STOCK BELONGED BUT IN THE CASE OF DIAMOND TRADE, THE PURCHASE AND SALE RATE VARIES DEPENDING ON THE QUALITY F DIAMOND AND IT IS POSSIB LE TO IDENTIFY THE LOT TO WHICH THE CLOSING STOCK BELONGED AND, THEREFORE, AD OPTION OF AVERAGE PURCHASE COST WOULD NOT GIVE THE CORRECT AMOUNT OF PROFIT AS THE PURCHASED ITEM WHICH REMAINED AS CLOSING STOCK CON SIST OF DIFFERENT QUALITIES. THE APPELLANT HAS PURCHASED DIAMONDS FRO M RS. 4,160 PR CARAT TO RS. 6,660 PER CARAT AND IF THE STOCK OF RS. 4160 PE R CARAT REMAINED WITH THE APPELLANT, THE ADOPTION OF AVERAGE PURCHASE WILL NO T GIVE THE CORRECT AMOUNT OF PROFIT. THEREFORE, I AM OF THE CONSIDERED OPINION THAT THE STOCK SHOULD BE VALUED BY EACH PURCHASE LOT-WISE. THE OPE NING STOCK WHICH REMAINED UNSOLD THROUGH THE YEAR SHOULD BE VALUED A T THE SAME VALUE AS OPENING STOCK. THE STOCK WHICH WERE PURCHASED AND P ARTLY SOLD DURING THE YEAR SHOULD BE VALUED AT PURCHASE COST EVEN THOUGH PART OF THE DIAMONDS WERE SOLD AT HIGHER RATE OR LESS RATE. WHILE DOING SO, THE CLOSING STOCK VALUATION IS WORKED OUT AS UNDER: VALUATION OF CLOSING STOCK: VALUATION OF CLOSING STOCK: VALUATION OF CLOSING STOCK: VALUATION OF CLOSING STOCK: SR.NO SR.NO SR.NO SR.NO QTY OF QTY OF QTY OF QTY OF DIAMOND AS DIAMOND AS DIAMOND AS DIAMOND AS AT THE END OF AT THE END OF AT THE END OF AT THE END OF THE YEAR THE YEAR THE YEAR THE YEAR (CLOSING (CLOSING (CLOSING (CLOSING STOCK) STOCK) STOCK) STOCK) CAR CAR CAR CARAT ATAT AT RATE OF OPENING RATE OF OPENING RATE OF OPENING RATE OF OPENING STOCK OR STOCK OR STOCK OR STOCK OR PURCHASE RATE PURCHASE RATE PURCHASE RATE PURCHASE RATE RS/CARAT RS/CARAT RS/CARAT RS/CARAT VALUATION OF VALUATION OF VALUATION OF VALUATION OF CLOSING STOCK CLOSING STOCK CLOSING STOCK CLOSING STOCK ON PURCHASE ON PURCHASE ON PURCHASE ON PURCHASE RATE OR AS PER RATE OR AS PER RATE OR AS PER RATE OR AS PER THE OPENING THE OPENING THE OPENING THE OPENING STOCK RATE STOCK RATE STOCK RATE STOCK RATE RS RSRS RS RATE RATE RATE RATE ADOPTED BY ADOPTED BY ADOPTED BY ADOPTED BY THE THE THE THE APPELLANT APPELLANT APPELLANT APPELLANT RS/CARAT RS/CARAT RS/CARAT RS/CARAT VALUATION OF VALUATION OF VALUATION OF VALUATION OF STOCK BY THE STOCK BY THE STOCK BY THE STOCK BY THE APPELLANT APPELLANT APPELLANT APPELLANT RS RSRS RS DIFFERENCE DIFFERENCE DIFFERENCE DIFFERENCE RS. RS. RS. RS. 1 11 1 2 22 2 3 33 3 4 44 4 5 55 5 6 66 6 7 77 7 1 130.91 4500 589095 3225 422185 166910 2 275.91 4160 1147786 3800 1048458 99328 3 16.79 5267 88433 2850 47852 40581 4 86.33 5500 474815 2850 246041 228774 5 116.62 450 524790 4250 495635 29155 6 277.80 4500 1250100 4250 1180650 69450 7 125.37 4700 589239 4500 564165 25074 8 80.05 5000 400250 4825 386241 14009 9 36.40 5000 182000 4551 165666 16344 10 12.51 6660 83317 6225 77877 5440 695065 5 ITA NO.5677/MUM/2009 IN VIEW OF THE ABOVE WORKING, THE ASSESSING OFFICER SHALL ADD ONLY RS. 6,95,065/- AS AGAINST RS. 12,32,020/- IN THE AS SESSMENT ORDER. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 4 AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSE SSEE IS IN APPEAL HERE BEFORE US WITH THE FOLLOWING GROUNDS: I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION ON ACCOUNT F CLOSING STO CK TO THE EXTENT OF RS. 6,95,065/-. II YOUR APPELLANT RESPECTFULLY SUBMITS THAT THE CIT (A) HAS WRONGLY APPLIED AVERAGE RATE FOR THE PURPOSE OF VALUATION OF CLOSIN G STOCK AS AGAINST THE VALUATION OF STOCK AT COST OR NET REALIZABLE VALUE AS FOLLOWED BY THE APPELLANT SINCE LAST MANY YEARS ON A CONSISTENT BAS IS. III) YOUR APPELLANT ALSO SUBMITS THAT THE CIT(A) HA S FAILED TO APPRECIATE THE FACT THAT THE APPELLANT BUYS THE DIAMONDS IN MIXED LOST, CONTAINING DIAMONDS WITH WIDE RANGE OF COST PER CARAT AND ACCO RDINGLY THE APPLICATION OF AVERAGE RATE FOR THE PURPOSE OF VALU ATION OF CLOSING STOCK IS NOT APPROPRIATE IN THE CASE OF THE APPELLANT SINCE THE SAME DISTORTS THE POSITION OF PROFIT. IV) IN VIEW OF THE ABOVE, YOUR APPELLANT PRAYS THAT THE IMPUGNED ADDITION OF RS. 6,95,065/- SHALL BE DELETED. 5 THE LD COUNSEL FOR THE ASSESSEE REITERATED THE SA ME SUBMISSIONS AS MADE BEFORE THE ASSESSING OFFICER AND THE CIT(A). REFERR ING TO THE CHART FILED EXPLAINING THE JUSTIFICATION OF VALUATION OF CLOSIN G STOCK AS ON 31.3.2006, HE DREW THE ATTENTION OF THE BENCH TO THE REASONS FOR THE R ATE OF VALUATION OF EACH AND EVERY ITEM. 5.1 REFERRING TO THE CHART SHOWING COMPARATIVE GROS S PROFIT FROM ASSESSMENT YEAR 2004-05 TO 2008-09, HE SUBMITTED THAT THE GROS S PROFIT FOR ASSESSMENT YEAR 2004-05 AND SALES DURING THE YEAR IS MUCH HIGHER TH AN THE GP SHOWN AT 3.29% 6 ITA NO.5677/MUM/2009 FOR ASSESSMENT YEAR 2004-05; 6.02% FOR ASSESSMENT Y EAR 2005-06 AND 7.76% FOR ASSESSMENT YEAR 2007-08. HE SUBMITTED THAT ONL Y DURING THE ASSESSMENT YEAR 2008-09 THE GP WAS DISCLOSED AT 8.17%. HE SUB MITTED THAT THE ASSESSEE IS CONSISTENTLY FOLLOWING THIS TYPE OF VALUATION. 5.2 REFERRING TO PAGES 17 & 22 OF THE PAPER BOOK, H E DREW THE ATTENTION OF THE BENCH TO THE NOTE ANNEXED TO THE AUDIT REPORT ON T HE VALUE OF CUT AND POLISHED DIAMONDS; ACCORDING TO WHICH WHEREVER THE STOCK CAN BE IDENTIFIED, THE SAME HAS BEEN VALUED AT LOWER OF ACTUAL COST OR ESTIMAT ED NET REALIZABLE VALUE AND WHEREVER THE STOCK IS MIXED ESTIMATED NET, THE SAME IS VALUED AT LOWER OF ESTIMATED COST OR REALIZABLE VALUE. RELYING ON THE DECISIONS REPORTED IN 300 ITR 180 AND 318 ITR 149, HE SUBMITTED THAT VALUATION A DOPTED BY THE ASSESSEE IS CORRECT AND THE CIT(A) SHOULD HAVE DELETED THE ENTI RE ADDITION AS MADE BY THE ASSESSING OFFICER INSTEAD OF GIVING PART RELIEF. 5.3 THE LD DR, ON THE OTHER HAND, SUBMITTED THAT TH E CLOSING STOCK OF THE DIAMONDS HAS TO BE VALUED IN A SCIENTIFIC MANNER AN D IT CANNOT BE VALUED JUST AT THE WHIMS OF THE ASSESSEE. THE ARGUMENTS ADVANCED B Y THE LD COUNSEL CANNOT BE ACCEPTED AT FACE-VALUE WITHOUT ANY SUPPORTING MATER IAL. SO FAR AS THE SUBMISSION OF THE LD COUNSEL FOR THE ASSESSEE THAT IN THE PRECEDING AND SUBSEQUENT YEARS SUCH VALUE HAS BEEN ACCEPTED AND THE RATE OF GP ADOPTED BY THE ASSESSEE IS MORE THAN THE PRECEDING YEAR AND I MMEDIATELY SUCCEEDING YEAR, HE SUBMITTED THAT THE ASSESSEE CANNOT TAKE SHELTER ON THE BASIS OF THE VALUATION ADOPTED IN THE PRECEDING AND SUBSEQUENT YEARS. HE SUBMITTED THAT THE CIT(A) 7 ITA NO.5677/MUM/2009 HAS VERY REASONABLY BROUGHT DOWN THE ADDITION MA DE BY THE ASSESSING OFFICER; THEREFORE, THE ORDER OF THE CIT(A) SHOULD BE UPHELD . 6 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE PARTIES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONS IDERED THE DECISIONS CITED BEFORE US. WE FIND THE VALUATION OF CLOSING STOCK ADOPTED BY THE ASSESSEE IS LESS THAN THE PURCHASE PRICE OR THE SALE PRICE. WE FIND , THE CIT(A) HAS CATEGORICALLY MENTIONED THAT WHEN SPECIFICALLY QUESTIONED AS TO WHY THE CLOSING STOCK HAS BEEN VALUED AT COMPARATIVELY LESS PRICE EVEN IN RE SPECT OF ITEMS FOR WHICH THERE IS NO PURCHASE AND SALE DURING THE YEAR AND THE OPE NING STOCK REMAINED INTACT, THE LD COUNSEL FOR THE ASSESSEE COULD NOT SUBSTANT IATE THE REASONS FOR REDUCTION IN VALUE OF SUCH STOCK AND HE COULD NOT ADDUCE ANY EVIDENCE TO SHOW THAT THE MARKET RATE WAS LESS THAN THE EARLIER YEARS. NO D OUBT, THE VALUATION HAS TO BE ADOPTED AT COST OR MARKET PRICE WHICHEVER IS LESS, AS PER THE METHOD ADOPTED BY THE ASSESSEE. BUT HE HAS TO JUSTIFY THE SAME WITH C REDIBLE EVIDENCES. IN THE INSTANT CASE, THE ASSESSEE HAS FAILED TO DISCHARGE THE SAME. HE HAS MERELY STATED THAT BECAUSE OF SLOW MOVING ITEMS THE VALUAT ION WAS MADE AT LESS RATE SINCE BETTER QUALITY STOCK HAS BEEN SOLD AND INFERI OR QUALITY WAS LYING IN THE CLOSING STOCK. THIS STATEMENT IS WITHOUT ANY CORRO BORATIVE EVIDENCE OR SUPPORTED BY ANY SUBSEQUENT SALES BILL TO JUSTIFY THE SAME. N OTHING HAS BEEN PRODUCED BEFORE THE ASSESSING OFFICER OR BEFORE THE CIT(A) O R EVEN BEFORE US TO SUBSTANTIATE THAT THE VALUATION ADOPTED IS SCIENTIF IC THEREFORE, THE VALUATION ADOPTED BY THE ASSESSEE CANNOT BE ACCEPTED. 8 ITA NO.5677/MUM/2009 6.1 AT THE SAME TIME, THE METHOD OF AVERAGE PRICE A DOPTED BY THE ASSESSING OFFICER ALSO CANNOT BE ACCEPTED SINCE THE ASSESSEE IS MAINTAINING STOCK REGISTER AND IT IS POSSIBLE TO IDENTIFY THE PURCHASE LOT TO WHICH THE CLOSING STOCK BELONGS TO. WE, THEREFORE, FIND MERIT IN THE VALUATION ADO PTED BY THE CIT(A) AS PER TABLE, WHICH HAS BEEN REPRODUCED AT PARA 3 OF THIS ORDER. IN OUR OPINION, THE VALUATION ADOPTED BY THE CIT(A) IS MORE SCIENTIFIC THAN THE VALUATION ADOPTED BY THE ASSESSING OFFICER OR THE ASSESSEE. IN ABSENCE OF A NY DISTINGUISHABLE FEATURES BROUGHT BEFORE US, EITHER BY THE LD COUNSEL FOR TH E ASSESSEE OR BY THE LD DR TO TAKE A DIFFERENT VIEW OTHER THAN THE VIEW TAKEN B Y THE CIT(A), THE SAME IS UPHELD. THE GROUNDS RAISED BY THE ASSESSEE ARE ACC ORDINGLY DISMISSED. 7 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S DISMISSED. ORDER PRONOUNCED ON THE 13 TH , DAY OF APRIL 2011. SD/- SD/- ( (( ( SMT ASHA VIJAYARAGHAVAN SMT ASHA VIJAYARAGHAVAN SMT ASHA VIJAYARAGHAVAN SMT ASHA VIJAYARAGHAVAN ) )) ) JUDICIAL MEMBER ( (( ( R K PANDA R K PANDA R K PANDA R K PANDA ) )) ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED:13 TH , APRIL 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI