ACIT, Patiala V. Shri Kewal Singh, Patiala

ITA 664/CHANDI/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8325 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 30-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Business income; Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.664/CHD/2016 (ASSESSMENT YEAR : 2012-13) THE A.C.I.T., VS. M/S KEWAL SINGH PROP. CIRCLE PATIALA. M/S PUNJAB JEWELLERS, PATILA. #914, NEAR GOL GAPPA CHOWK, TRIPURI TOWN, PATIALA. PAN: AMMPS6605D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUSHIL KUMAR, CIT DR RESPONDENT BY : SHRI ASHOK GOYAL DATE OF HEARING : 09.11.2016 DATE OF PRONOUNCEMENT : 08.02.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), PATIALA DATED 28.3.2016 RELATING TO ASSE SSMENT YEAR 2012-13. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.74,17,671/-MADE BY THE ASSESSING OFFICER AFTER REJECTING ASSESSEE'S BOOKS OF ACCOUNT U/S 145(3) OF THE INCOME TAX ACT, 1961. 2 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN NOT UPHOLDING THE REJECTI ON OF BOOKS OF ACCOUNT U/S 145(3) OF THE INCOME TAX ACT, 1961, DESPITE THE FACT THAT DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THE AO HAS POINTED OUT CERTAIN DEFICIE NCIES IN ASSESSEE'S BOOKS. 3. IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AND THAT OF THE AO RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY G ROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND FINALLY DI SPOSED OF. 3. THE BRIEF FACTS RELATING TO THE CASE ARE THAT T HE ASSESSEE IS AN INDIVIDUAL IN THE BUSINESS OF RETAIL TRADE OF GOLD, SILVER AND DIAMOND JEWELLERY. THE ASSESSING OFFICER FOR VARIOUS REASONS GIVEN IN THE ASSESSMENT ORDER R EJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE AND APPLIED 30 % GROSS PROFIT RATE TO WORK OUT ITS GROSS PROFIT RESU LTING IN A NET ADDITION OF RS.74,17,671/- TO ITS RETURNED INCO ME. 4. DURING THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT (APPEALS) THE ASSESSEE MADE DETAILED SUBMISSION S REPRODUCED AT PARA 5.1 OF THE ORDER OF THE CIT (APP EALS) REBUTTING EVERY GROUND RAISED BY THE AO FOR REJECTI NG THE BOOKS OF THE ASSESSEE. THE LD. CIT (APPEALS) AFTER CONSIDERING THE DETAILED SUBMISSIONS OF THE ASSESSE E HELD THAT THE ASSESSING OFFICER HAD FAILED TO PUT-FORTH ANY DOCUMENTARY EVIDENCE ESTABLISHING SUPPRESSION OF PR OFITS WHICH CALLED FOR ESTIMATION OF INCOME BY INVOKING S ECTION 145(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT). 3 HE, THEREFORE, SET ASIDE THE ACTION OF THE ASSESSIN G OFFICER IN REJECTING BOOKS OF THE ASSESSEE AND ESTIMATING G ROSS PROFIT, THUS ALLOWING THE ASSESSEES APPEAL. THE F INDINGS OF THE LD. CIT (APPEALS) AT PARA 5.3 OF THE ORDER A RE AS FOLLOWS : 5.3 I HAVE CONSIDERED THE WRITTEN SUBMISSIONS PUT F ORTH BY THE APPELLANT AND COMMENTS OF THE ASSESSING OFFICER AND ALSO THE FACTS OF THE CASE. THE BASIC ISSUE INVOLVES REJECTION OF BOO KS OF ACCOUNTS OF THE APPELLANT AND THEREAFTER APPLICATION GP RATE OF 30% BASED ON THE RESULTS SHOWN BY THE OTHER ASSESSEES WHO ARE ALSO S AID TO BE IN SIMILAR BUSINESS. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE APPELLANT HAD INDEED FURNISHED QUANTITATIVE DETAIL OF THE STOCK, PURCHASES, SALES AND CLOSING STOCK. THE BOOKS OF AC COUNT WERE REJECTED ON THE GROUND THAT THE SAME INFORMATION HAS NOT BEE N FURNISHED ITEMWISE AS DEMANDED BY THE AO. THE APPELLANT SUBMI TTED THAT THE PURCHASES WERE MADE ON THE BASIS OF WEIGHT WHICH AR E CONFIRMED FROM THE PURCHASE BILLS. THE PHOTOCOPIES OF THE PURCHASE BILLS OF GOLD ORNAMENTS, SILVER ORNAMENTS AND RETAIL PURCHASES OF GOODS WERE SUBMITTED. IT WAS ARGUED THAT IT WAS NOT POSSIBLE T O GIVE ITEMWISE DETAILS OF BANGLES, NECKLACES, EAR RINGS, RINGS, BR ACELETS ETC. THESE BEING LARGE IN VARIETY AND NUMBER OF SIZES ETC. THE AO RE JECTED THE BOOKS OF ACCOUNT ALSO ON THE GROUND OF NON MENTION OF FULL D ESCRIPTION OF ITEMS SOLD AND PURCHASED IN THE BILLS THOUGH THE WEIGHT W AS MENTIONED AND FOR NON MAINTENANCE OF STOCK ITEM WISE. NO SPECIFIC DEFECT WAS POINTED OUT BY THE AO BY BRINGING ON RECORD ANY ADVERSE MAT ERIAL. THE BOOKS OF ACCOUNT OF THE APPELLANT ARE DULY AUDITED. THERE IS NO FINDING TO THE EFFECT THAT THE APPELLANT HAS INFLATED THE COST OF RAW MATERIAL OR COST OF PROCESSING OR THAT HE HAS MADE SALES OUTSIDE THE BO OKS OR THAT THE SALE PRICE IS SUPPRESSED. THE ASSUMPTION OF THE ASSESSIN G OFFICER IS SANS DOCUMENTARY PROOF. THE GP RATE SHOWN BY THE APPELLA NT IS PROGRESSIVE. IT HAS SHOWN A GROWTH OF 1.82% FROM 12.48% IN THE P RECEDING YEAR TO 14.30% IN THE YEAR UNDER CONSIDERATION. THE APPELLA NT FURTHER SUBMITTED THAT HIS TURNOVER AND GROSS PROFIT HAVE I NCREASED SIGNIFICANTLY IN COMPARISON TO THOSE IN THE PRECEDI NG TWO YEARS. 4 THE APPELLANT FURTHER CONTENDED THAT HIS BOOK RESUL TS HAVE SHOWN PROGRESSIVE GROSS PROFIT RATE. EVEN OTHERWISE AUDIT ED BOOKS OF ACCOUNTS CANNOT BE REJECTED MERELY BECAUSE OF FALL IN GROSS PROFIT RATE. HE RELIED UPON THE DECISION OF HON'BLE JURISDICTION AL PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT, KARNAL VS. OM OVERSE AS (2009) 315 ITR 185 (PUNJAB &. HARYANA HIGH COURT). RELIANCE WAS AL SO PLACED ON THE JUDGMENT REPORTED AT [2010] 326 ITR 223(DELHI) -COMMISSIONER OF INCOME-TAX VS SMT. POONAM RANI, IN THE MATTER. THE ASSESSING OFFICER RELIED ON THE FOLLOWING DECIS IONS OF THE SUPREME COURT E DISCUSSED AS UNDER: CIT V. BRITISH PAINTS INDIA LTD (1991) 188 ITR 44 ( SC): IN THIS CASE APPELLANT WHO WAS IN THE BUSINESS OF MANUFACTURE AN D SALE OF PAINTS, HAD VALUED THE GOODS IN PROCESS AND FINISH ED PRODUCTS EXCLUSIVELY AT COST OF RAW MATERIALS TOTALLY EXCLUD ING OVERHEAD EXPENDITURE. THUS STOCK IN TRADE WAS VALUED AT 84.4 9% OF THE ACTUAL COST RESULTING IN ITS UNDERVALUATION BY 15.51%. IT WAS HELD BY THE APEX COURT THAT 'ANY SYSTEM OF ACCORDING WHICH EXCLUDES FOR THE VALUATION THE STOCK-IN-TRADE, ALL COSTS OTHER THAN THE COST OF RAW MATERIAL FOR THE GOODS IN PROCESS AND FURNISHED PRODUCTS, IS LIK ELY TO RESULT IN A DISTORTED PICTURE OF THE TRUE STATE OF THE BUSINESS FOR THE P URPOSE OF COMPUTING CHARGEABLE INCOME. KACHHWALA GEMS VS 3CIT 288 ITR 10 (SC): THE APPELLANT DEALT IN PRECIOUS AND SEMI-PRECIOUS STONES. APPELLANT DID NO T MAINTAIN QUANTITATIVE DETAILS/STOCK REGISTER FOR TH E GOODS TRADED BY IT, THERE WAS NO EVIDENCE/DOCUMENTS ON RECORD TO VERIFY THE BASIS OF CLOSING STOCK VALUATION SHOWN BY IT. MOST IMPORTANT LY, THE A.O. HELD THAT THE APPELLANT HAD SHOWN BOGUS PURCHASES FOR RE DUCING THE GROSS PROFITS. THUS, THESE CASES ARE DISTINGUISHABLE ON FACTS AND HENCE THE RATIO LAID DOWN THEREIN CANNOT BE APPLIED IN THE INSTANT CASE. FURTHER, THE UNILATERAL APPLICATION OF THE GP RATE IN TOTO SHOWN BY SOME OTHER FIRMS SAID TO BE IN SIMILAR LINE OF BUSI NESS IS ALSO FALLACIOUS. THE AO CANNOT OMIT TO GIVE DUE OPPORTUNITY TO THE APPELLANT TO FURNISH HIS REBUTTAL IN THIS REGARD. THERE MAY BE DISTINGUI SHING FACTORS SUCH LOCATION OF THE BUSINESS, RANGE OF GOODS TRADED, TY PE OF THE CLIENTELE, 5 VOLUME OF SALES AND EFFICIENCY OF THE MANAGING PERS ONNEL ETC. WHICH IMPACT THE GROSS PROFIT RATE. THUS, NO VALID COMPAR ISON IS POSSIBLE IN THESE CIRCUMSTANCES. THEREFORE, I AM OF THE OPINION THAT THE BOOKS OF ACCOUNTS HAVE WRONGLY BEEN REJECTED BASED ON CONVOL UTED AND THEORETICAL ARGUMENTS WITHOUT BRINGING ON RECORD AN Y MATERIAL DISCREPANCY. THE DECISION OF HON'BLE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT KARNAL VS. OM OVERSEA S (2009) 315 ITR 185 (PUNJAB & HARYANA HIGH COURT) IS FULLY APPLICAB LE ,WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT 'IN THE ABSENCE OF ANY ILLEGALITY AND PERVERSITY IN THE FINDING OF FACT ARRIVED AT BY THE CIT(A) AND THE TRIBUNAL THAT THE ASSESSEE'S BOOKS OF ACCOUNT WERE REJECTED BY THE A.O. AND THE ADDITION WAS MADE WITHOUT POINTING OUT ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT, IMPUGNED ADDITION WAS RIGHTLY DELETED AND NO SUBSTANTIAL QUESTION OF LAW ARISES FOR DETERMINATIO N.' IN THE INSTANT CASE, THE ID. ASSESSING OFFICER HAS FAILED TO PUT F ORTH ANY DOCUMENTARY EVIDENCE ESTABLISHING SUPPRESSION OF PR OFITS WHICH CALL FOR ESTIMATION OF INCOME BY INVOKING SECTION 145(3) OF THE ACT. RELYING ON THE DECISION OF THE HON'BLE PUNJAB & HARYANA COU RT (SUPRA), I AM OF THE VIEW THAT THE LD. ASSESSING OFFICER IS NOT JUST IFIED IN REJECTING BOOKS OF ACCOUNT BY INVOKING SECTION 145(3) OF THE ACT. HENC E THE DECISION OF THE A.O. IN REJECTING THE OF ACCOUNT AND THEREAFTER APPLYING A G.P. RATE OF 30% TO THE TURNOVER IS NOT UPHELD. HENCE, T HIS GROUND OF APPEAL IS ALLOWED. 5. AGGRIEVED BY THE SAME, THE REVENUE HAS NOW COME UP IN APPEAL BEFORE US. DURING THE COURSE OF HEARING, LD.COUNSEL FOR THE ASSESSEE RELIED UPON TH E ORDER OF THE CIT(A) AND FURTHER ON THE DECISION OF THE I. T.A.T., CHANDIGARH BENCH IN THE CASE OF DCIT VS. VIVEK JAI N PROP. VIJAY JEWELLERS IN ITA NO.124/CHD/2015 STATIN G THAT THE ITAT IN THAT CASE HAD SET ASIDE THE REJECTION O F BOOKS OF ACCOUNTS FOR MERE NON-MAINTENANCE OF ITEMWISE DE TAILS OF JEWELLERY SOLD WHEN WEIGHTWISE DETAIL OF ALL STO CK PURCHASED AND SOLD WAS MAINTAINED. 6 6. LD DR ON THE OTHER HAND SUPPORTED THE ORDER OF THE AO AND STATED THAT IN THE ABSENCE OF ITEMWISE R ECORD OF GOODS PURCHASED AND SOLD IT WAS NO POSSIBLE TO V ERIFY THE QUANTITY AS WELL AS VALUE OF STOCK DISCLOSED BY THE ASSESSEE AND HENCE THE BOOKS WERE NOT RELIABLE TO D EDUCE THE BUSINESS INCOME OF THE ASSESSEE AND HAD THEREFO RE BEEN RIGHTLY REJECTED BY THE AO. THE LD DR ALSO ST ATED THAT THE GP RATE OF 30% APPLIED BY THE AO WAS CORRE CT SINCE IT WAS BASED ON GP RATIO SHOWN BY COMPARABLE CASES. 7. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE THROUGH THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF VIVEK JAIN PROP. VIJAY JEWELLERS (SUPRA) WH EREIN THE ASSESSEE BEING A JEWELLER, HIS BOOKS WERE ALSO REJECTED UNDER SECTION 145(3) OF THE ACT AND GROSS PROFIT ESTIMATED. THE HON'BLE I.T.A.T. SET ASIDE THE REJE CTION OF BOOKS OF ACCOUNT AND ESTIMATION OF GROSS PROFIT BY HOLDING AS FOLLOWS : 8. ON PERUSING THE ORDER OF THE I.T.A.T. IN THE CASE OF M/S SUNNY JEWELLERY HOUSE (SUPRA), WE FIND THAT THE FACTS IN THAT CASE WERE IDENTICAL TO THAT IN THE PRESENT CASE, WHERE THE BOOKS OF ACCOUNTS OF THE ASSESSEE, A JEWELER, WERE REJECTED FOR IDENTICAL REASONS AS STATED IN THE ASSESSEES CASE BEING NON-MAINTENANCE OF ITEM- WISE DETAIL OF JEWELLERY PURCHASED AND SOLD AND STOCK OF THE SAME AS ALSO INCORRECT METHOD OF VALUATION OF STOCK ADOPTED BEING WAC AS AGAINST FIFO ADOPTED BY THE ASSESSING OFFICER. THE HON'BLE I.T.A.T., IN THAT CASE, AFTER RELYING ON TH E 7 ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF JAGDISH CHAND (SUPRA) HAD HELD THAT THERE WAS NO INFIRMITY IN THE ORDER OF THE CIT (APPEALS) IN DELETING THE ADDITION MADE. THE RELEVANT FINDING OF THE I.T.A.T. ARE REPRODUCED HEREUNDER : 6. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED BEFORE US A COPY OF THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF JAGDISH CHAND (SUPRA) STATING THAT THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS OF THAT CASE. THEREFORE, THE LEARNED CIT (APPEALS) WAS RIGHT IN DELETING THE ADDITION. AFTER PERUSING THE ORDER OF THE LEARNED CIT (APPEALS), WE SEE THAT RELEVANT FINDINGS ARE RECORDED AT PAGES 4.5 AND 4.6 OF HIS ORDER, WHICH READ AS UNDER : 4.5 I HAVE CONSIDERED THE SUBMISSIONS. IN THE CASE OF ACIT VS. JAGDISH CHAND 90 TTJ (CHD) 943, THE APPELLANT WAS JEWELLER. THE ID. CIT(A ) HELD THAT THE VALUATION WORKED OUT ON THE BASIS OF AVERAGE OF OPENING STOCK AND PURCHASES WAS CONSISTENTLY FOLLOWED BY THE APPELLANT OVER A NUMBE R OF YEARS. HE, THEREFORE, DELETED THE ADDITION MADE BY THE A.O. ON THE BASIS OF AVERAGE RATE OF PURCHASES. THIS VIEW WAS CONFIRMED BY HON'BLE ITAT. IT IS HELD THEREIN THAT 'IT IS CLEAR FROM ABOVE THAT THE ASSES SEE COULD NOT SELL EVEN THE ENTIRE STOCK OF GOLD ORNAMENTS LY ING WITH THE ASSESSEE IN THE OPENING STOCK. A PART OF IT WAS CARRIED TO THE CLOSING STOCK OF THE YEAR UNDER CONSIDERATIO N. THERE IS NO JUSTIFICATION FOR APPLYING PURCHASE RATE TO AB OVE STOCK, AS THE ASSESSEE COULD NOT BE SAID TO HAVE EARNED AN Y PROFIT FROM THE ABOVE CARRY FORWARD STOCK. BUT, IF AVERAGE RATE OF PURCHASES OF THIS YEAR IS APPLIED EVEN TO ABOVE STOC K, THEN SOME ADDITION AUTOMATICALLY FOLLOWS IN THE INCOME O F 8 THE ASSESSEE. IT IS NOT PERMISSIBLE AND IS CONTRARY TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CH AINRUP SAMPATRAM VS. CIT (1953) 24ITR 481 (SC). THE AVERAG E COST OF OPENING AND PURCHASES IS ALSO AN ACCEPTED METHOD OF VALUATION AT COST APPROVED BY THE ACCOUNTING STANDA RDS ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA. IN THE PRESENT CASE, IT IS FURTHER NOT CONTESTED BY TH E REVENUE THAT SIMILAR METHOD OF ACCOUNTING WAS FOLLOWED BY T HE ASSESSEE IN EARLIER YEAR. FOR ALL THE ABOVE REASONS , WE ARE OF THE VIEW THAT THE METHOD OF VALUATION ADOPTED BY THE ASSESSEE WAS CORRECT AND ADDITION MADE ON ACCOUNT OF ENHANCEMENT OF VALUE OF STOCK IS NO JUSTIFIED. THE I D. CIT(A) RIGHTLY DELETED THE ADDITION. HIS ACTION IS HEREB Y CONFIRMED. ' IN THIS CONNECTION, RELIANCE MAY BE MADE ON THE DECISION OF ITAT AHMEDABAD IN THE CASE OF INCOME TAX OFFICER VS CHOKSHI HIRACHAND & BROS. (37 TTJ, 415) WHEREIN IT HAS BEEN HELD THAT 'WHEN THE VALUATION OF CLOSING STOCK ACCORDING TO TH E ACCOUNTING SYSTEM CONSISTENTLY FOLLOWED WAS ACCEPTED BY THE REVENUE IN EARLIER AS WELL AS SUBSEQUENT ASSESSMENT YEAR, ITO WAS NOT JUSTIFIED IN MAKING ADDITIONS BY ADOPTING A DIFFERENT METHOD FOR ASSESSMENT YEAR IN QUESTION.' SIMILAR VIEW IS TAKEN AS IN THE OTHER CASES E.G. IN THE CASE OF SHANTILAL NAGARDAS & CO. (ITA NO.3362/AHD/2009) I.T.A.T. B-BENCH AHMADABAD. 4.6 THEREFORE, IN THIS CASE FIRSTLY, IT IS CONTENDE D THAT SAME METHOD OF ACCOUNTING IS BEING CONSISTENTLY FOLLOWED. SECONDLY, THE REASON FOR VARIANCE OF NET PROFIT VIS A VIS THE CASE OF M/S MADAN LAL IS DULY EXPLAINED BY THE APPELLANT WHICH IS NOT REBUTTED BY THE A.O FURTHER THERE IS NO CASE OF ANY DISCREPANCY IN THE PURCHASE O R SALE ACCOUNT. 9 THIRDLY, THE A.O. IN THIS CASE HAS ONLY REVALUED THE STOCK BY ADOPTING A HIGHER FIGURE THAN THE RATE DISCLOSED BY THE APPELLANT ON THE ASSUMPTION THAT ON LY OLD JEWELLERY HAS BEEN SOLD FIRST AND FRESH JEWELLER Y HAS REMAINED IN STOCK UNTIL THE OLD JEWELLERY IS EXHAUSTED. HE HAS NOT DISPUTED THE QUANTITY OF STOC K OR PURCHASE/SALE AT ANY POINT. THUS THE STOCK IN WEIGHT HAS BEEN ACCEPTED BY THE A.O. THE PRESUMPTION THAT THE JEWELLER HAS KEPT ON PURCHASING JEWELLERY IN THE YEARS BUT HAVE NOT SOLD TILL THE OL D JEWELLERY IS EXHAUSTED IS A MERE PRESUMPTION WITHOU T ANY EVIDENCE ON RECORD. THE ONLY CONTENTION OF THE A.O. IS THAT IN PLACE OF WAC METHOD FIFO METHOD SHOULD BE ADOPTED. AS REGARDS CASH SALES, IN THE CASE OF R.B.JESSARAM FATEHCHAND VS. CIT 75 ITR 33(BOM) ,IT IS HELD THAT NON-INCLUSION OF ADDRESSES OF CUSTOMERS IN RESPECT O F CASH TRANSACTION CAN NOT BE BASIS FOR REJECTION OF BOOKS OF ACCOUNT. THE FIXATION OF AN ARBITRARY RATE BY T HE A.O FOR THE STONES/DIAMOND AND FURTHER ADDING 10% OF GOLD IN DIAMOND JEWELLERY WITHOUT ANY EVIDENCE, IN MY OPINION IS NOT CORRECT. THE APPELLANT IS VALUING THE CLOSING STOCK ON THE BASIS OF WEIGHTED AVERAGE COST METHOD CONSISTENTLY. FURTHER, THE SALE OF ARTICLES B EING SOLD IS AS PER MARKET AND CUSTOMER PREFERENCE IN TH E TYPE OF BUSINESS OF THE APPELLANT. THEREFORE IN VIE W OF NATURE OF BUSINESS AND TRADING OF ITEMS AS PER CUSTOMERS PREFERENCE DOES NOT LEAVE ANY POSSIBILITY O F FIFO TO BE APPLIED IN THE MANNER SUGGESTED BY THE A. O HENCE, THE VERY PRESUMPTION OF THE A.O IS NOT IN TERM S OF BUSINESS REALITY OF APPELLANT'S TRADE. THEREFORE, RELYING ON THE FACTS OF THE CASE, CONSISTENCY OF METHOD OF VALUATIONS AND JUDICIAL DECISION THE REJECTION OF BOOKS OF ACCOUNT AND THE VALUATION OF JEWELLERY BY THE A.O. IS HELD AS NOT C ORRECT 10 AND THE ADDITION MADE BY THE AO IS UNSUSTAINABLE IN LAW AND ON FACTS. THEREFORE, GROUND NO.1 TO 4 AND IS ALLOWED 5. GROUND NO. 5 AND 6(II) ARE CONSEQUENTIAL IN NATURE AND A.O. IS DIRECTED TO CHARGE INTEREST AS P ER LAW. GROUND NO. 7 IS GENERAL IN NATURE AND, THERE FORE, NO COMMENTS ARE MADE. 6. IN THE RESULT, APPEAL IS ALLOWED. 7. ON PERUSAL OF THE SAME, WE DO NOT FIND ANY INFIRMITY AS THE RELIANCE HAS BEEN PLACED ON THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF JAGDISH CHAND (SUPRA), A COPY OF WHICH WAS ALSO PLACED ON RECORD BEFORE US. AFTER GOING THROUGH THE SAME, WE SEE THAT THE FACTS AND CIRCUMSTANCES OF THAT CASE ARE IDENTICAL TO THE FACTS OF THE PRESENT CASE AND NO DISTINGUISHING FACTORS BEING BROUGHT TO OUR NOTICE, RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH WE ARE INCLINED TO DISMISS THE APPEAL OF THE REVENUE. 8. IN THE SAID CASE, THE VALUATION OF STOCK BY THE ASSESSEE BY ADOPTING THE WEIGHTED AVERAGE COST AS AGAINST THE FIFO METHOD PROPOSED BY THE ASSESSING OFFICER WAS UPHELD BY THE I.T.A.T. SINCE THE SAME W AS BEING FOLLOWED CONSISTENTLY AND WAS IN CONSONANCE W ITH THE METHOD PRESCRIBED BY THE ACCOUNTING STANDARD IS SUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. FURTHER, IT WAS HELD THAT THE QUANTITY OF STOCK OF JEWELLERY HAD NEVER BEEN DISPUTED BY THE ASSESSING OFFICER BU T IT WAS ONLY THE VALUATION OF THE SAME, WHICH WAS DISPU TED. IT WAS ALSO HELD THAT VIS--VIS CASH SALE NON INCLU SION OF 11 ADDRESSES OF CUSTOMERS COULD NOT BE THE BASIS FOR REJECTION OF BOOKS OF ACCOUNT. FURTHER THE FIXATIO N OF ARBITRARY RATE BY THE ASSESSING OFFICER FOR THE STONES/DIAMOND WITHOUT ANY EVIDENCE WAS ALSO HELD T O BE INCORRECT. THE I.T.A.T. HELD THAT IN VIEW OF THE N ATURE OF BUSINESS CARRIED OUT BY THE ASSESSEE AND THE TRADIN G OF ITEMS AS PER CUSTOMERS PREFERENCE THE FIFO METHOD COULD NOT BE APPLIED AS SUGGESTED BY THE ASSESSING OFFICE R. THE HON'BLE I.T.A.T., THEREFORE, HELD THAT THE REJECTIO N OF BOOKS OF ACCOUNT WAS INCORRECT AND ADDITION MADE ON ACCOUNT OF ESTIMATION OF GROSS PROFIT WAS, THEREFOR E, SET ASIDE. 9. IN THE PRESENT CASE, WE FIND THAT THE BASIS FO R REJECTION OF BOOKS IS SIMILAR TO THAT IN THE CASE O F VIVEK JAIN PROP. VIJAY JEWELLERS (SUPRA) BEING THAT ITEM- WISE INFORMATION OF STOCK OF JEWELLERY HAD NOT BEEN FURN ISHED BY THE ASSESSEE. THE LD. CIT (APPEALS), WE FIND, H AS RIGHTLY REJECTED THIS BASIS FOR REJECTION OF BOOKS SINCE UNDISPUTEDLY THE ASSESSEE HAD BEEN MAKING PURCHASES AND SALES WEIGHTWISE AS FOUND BY THE CIT(A) IN THE BILLS RELATING TO THE SAME ALSO AND NOTHING ADVERSE WAS F OUND IN THE QUANTITY IN GRAMS OF THE STOCK OF GOLD . THE REFORE, MERELY BECAUSE ITEM-WISE DETAILS WERE NOT MAINTAINE D, IT COULD NOT BE SAID THAT THE BOOKS DID NOT DISCLOSE T RUE RESULT OF THE ASSESSEE. THE LD. CIT (APPEALS), WE FIND, CORRECTLY HELD THAT NO SPECIFIC DEFECT HAS BEEN POI NTED OUT BY THE ASSESSING OFFICER BY BRINGING ON RECORD ANY ADVERSE 12 MATERIAL. FURTHER, UNDISPUTEDLY, THE BOOKS OF ACCO UNT OF THE ASSESSEE WERE DULY AUDITED AND THERE IS NO FIND ING TO THE EFFECT THAT THE ASSESSEE HAD INFLATED THE COST OF RAW MATERIAL OR COST OF PROCESSING OR THAT HE HAD MADE SALES OUTSIDE THE BOOKS OR THAT THE SALE PRICE WERE SUPPR ESSED. THE ASSUMPTION OF THE ASSESSING OFFICER WAS CLEARLY THEREFORE SANS DOCUMENTARY PROOF. THE LD. CIT (APP EALS) HAS ALSO GIVEN FINDING OF FACT THAT THE GROSS PROFI T RATE SHOWN BY THE ASSESSEE IS PROGRESSIVE HAVING INCREAS ED FROM 12.48% IN THE PRECEDING YEAR TO 14.30% IN THE YEAR UNDER CONSIDERATION. IN VIEW OF THE SAME, WE AGREE WITH THE LD. CIT (APPEALS) THAT THERE IS NO REASON AT AL L TO REJECT THE BOOKS OF ACCOUNT OF THE ASSESSEE AND EST IMATE THE GROSS PROFIT. 10. THE APPEAL FILED BY THE REVENUE IS THEREFORE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 8 TH FEBRUARY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH