Sh. Ravi Kumar Gupta, Jammu V. The Depty Commissioner of Income Tax,

ITA 749/ASR/2014

• Counselvise Citation: 74920914 RSA 2014
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 15-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TARSEM LAL

Judgement Text

I.T.A. NO.749/ASR/2014 ASSESSMENT YEAR 2007-08 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH BENCH, AMRITSAR [CORAM:PRAMOD KUMAR AM AND A.D. JAIN JM] I.T.A. NO.749/ASR/2014 ASSESSMENT YEAR:2007-08 RAVI KUMAR GUPTA, ..APPELLANT PROP. M/S. RAVI JEWELLERS, LAKHDATTA BAZAR, JAMMU (J&K) [PAN:ADVPG 8292 L ] VS. DY. COMMISSIONER OF INCOME-TAX, .RESPONDENT CIRCLE-2, JAMMU. APPEARANCES BY: NONE FOR THE APPELLANT TARSEM LAL FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: JUNE 03, 2015 DATE OF PRONOUNCING THE ORDER : JUNE 04, 2015 ORDER PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CALLED INTO QUESTION CORRECTNESS OF LEARNED CIT(A) S ORDER DATED 26 TH SEPTEMBER, 2014, CONFIRMING PENALTY OF RS.90,244/- IMPOSED ON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, FOR THE ASSE SSMENT YEAR 2007-08. 2. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIA L FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE IS ENG AGED IN BUSINESS AS JEWELLER. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT I.T.A. NO.749/ASR/2014 ASSESSMENT YEAR 2007-08 PAGE 2 OF 3 WHILE VALUING THE CLOSING STOCK, THE ASSESSEE WAS O NLY TAKING INTO ACCOUNT VALUE OF THE GOLD AND DID NOT F ACTOR FOR THE MAKING CHARGES OF THE JEWELLERY. ON THESE F ACTS, THE ASSESSING OFFICER ADDED THE MAKING CHARGES OF JEWELLERY, COMPUTED ON ESTIMATED BASIS @ RS 25 PER GRAM, TO THE VALUE OF CLOSING STOCK. THE MATTER DID NOT R EST THERE. THE ASSESSING OFFICER ALSO IMPOSED PENALTY O F RS.90,244 IN RESPECT OF THIS ADDITION. AGGRIEVED, A SSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS I N FURTHER APPEAL BEFORE US. 3. NONE APPEARED FOR THE ASSESSEE BUT WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE, PERUSED THE MA TERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 4. WE FIND THAT IT IS AN UNDISPUTED POSITION THAT T HE VALUATION OF CLOSING STOCK IS TO BE DONE AT COST OR AT MARKET PRICE, WHICHEVER IS LESS, AND THAT MARKET PR ICE AS IS THE SETTLED LEGAL POSITION, NET REALISABLE VALUE OF THE CLOSING STOCK. IN THE LIGHT OF THIS UNDISPUTED POSI TION AND HAVING REGARD TO THE FACT THAT IT IS A POSSIBLE VIEW OF THE MATTER THAT NET REALISABLE VALUE IN RESPECT OF GOLD JEWELLERY IS ONLY INTRINSIC VALUE OF GOLD, THE COUR SE OF ACTION ADOPTED BY THE ASSESSEE IN VALUING GOLD JEWE LLERY ON THE BASIS OF COST PRICE OR MARKET PRICE OF GOLD- WHICHEVER IS LESS, IS ONE OF THE POSSIBLE VIEW OF T HE MATTER. THE MERE FACT THAT THE ASSESSEE HAS ACCEPTE D THE ADDITION MADE BY THE ASSESSING OFFICER, THOUGH BY SPECIFICALLY OBSERVING THAT SUCH A VALUATION IS TAX NEUTRAL BECAUSE CORRESPONDING HIGHER STOCK VALUE IS TAKEN INTO ACCOUNT IN THE NEXT YEAR, IT DOES NOT NECESSAR ILY IMPLY THAT THERE WAS A LAPSE ON THE PART OF THE ASS ESSEE I.T.A. NO.749/ASR/2014 ASSESSMENT YEAR 2007-08 PAGE 3 OF 3 THE VALUATION OF CLOSING STOCK, IN THE PRESENT CASE , MAY THUS BE INCORRECT BUT NOT NECESSARILY MALAFIDE OR EVEN LACKING BONAFIDES . THE EXPLANATION IN SUPPORT OF SUCH A VALUATION METHOD CANNOT BE REJECTED AS UNACCEPTABLE . AS A MATTER OF FACT, AS THE ASSESSEE RIGHTLY CONTENDED B EFORE THE ASSESSING OFFICER, SUCH A VALUATION IS OVERALL TAX NEUTRAL AS WELL, AND IT IS ONLY ON ACCOUNT OF DIFFE RENCE OF OPINION ON THE APPROACH TO STOCK VALUATION. KEEP ING IN VIEW THESE DISCUSSIONS, AS ALSO ENTIRETY OF THE CAS E, WE DEEM IT FIT AND PROPER TO DELETE THE IMPUGNED PENAL TY OF RS.90,244. THE ASSESSEE GETS THE RELIEF ACCORDINGLY . 5. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCE D IN THE OPEN COURT TODAY ON 4 TH DAY OF JUNE, 2015. SD/- SD/- A D JAIN PRAMOD KUMAR JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 4 TH DAY OF JUNE, 2015 *AKS/- COPIES TO: (1) THE APPELLANT (2) THE RESPONDE NT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR