ACIT, Alwar V. GINNI INTERNATIONAL LIMITED, Alwar

ITA 807/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4999 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 24-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA JCIT DHK
• Keywords: Rule of consistency; Tax effect
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.807/JP/15 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 THE ACIT, CIRCLE-2, ALWAR CUKE VS. M/S GINNI INTERNATIONAL LTD. PLOT NO. SP-2(1A) & (2) RIICO INDUSTRIAL AREA, NEEMARANA, ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACG 0182 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO.747/JP/15 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 M/S GINNI INTERNATIONAL LTD. PLOT NO. SP-2(1A) & (2) RIICO INDUSTRIAL AREA, NEEMARANA, ALWAR CUKE VS. THE ACIT, CIRCLE-2, ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACG 0182 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C.PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. ROSHANTA MEENA (J CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19.10.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 02/11/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. ITA NO. 807/JP/15 & 747/JP/15 ACIT, CIRCLE-2,ALWAR VS. M/S GINNI INTERNATIONAL LT D. ALWAR 2 THESE ARE TWO CROSS APPEALS FILED BY THE REVENUE AS WELL AS BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), ALWAR DATED 23.09. 2015 WHEREIN THE REVENUE AS WELL AS ASSESSEE HAVE TAKEN FOLLOWING GROUNDS OF APPEAL. REVENUES GROUND OF APPEAL: THAT THE LD. CIT(A) HAS ERRED ON THE FACTS AND CIR CUMSTANCES OF THE CASE IN RESTRICTING THE ADDITION OF RS. 42,16,367/- TO R S. 25 LACS ON ACCOUNT OF DISALLOWANCE OUT OF INDIRECT EXPENSES MADE BY THE A O. ASSESSEES GROUNDS OF APPEAL: (I) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CO NFIRMING THE LUMP SUM DISALLOWANCE OF RS. 25 LACS OUT OF VARIOUS EXPENSES . (II) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CO NFIRMING THE ADDITION OF RS.24,78,016/- ON ACCOUNT OF UNDER VALUATION OF STO CK. HE HAS FURTHER ERRED IN IGNORING THE FACT THAT THE ASSESSEE HAS V ALUED THE CLOSING STOCK BY COMPARING THE COST PRICE & MARKET PRICE OF EACH TYPE OF FINISHED GOODS WHEREAS THE AO HAS COMPARED THE COST PRICE & MARKET PRICE OF FINISHED GOODS BY TAKING ALL THE ITEMS TOGETHER. 2. IN RESPECT OF REVENUES SOLE GROUND OF APPEAL AN D ASSESSEES GROUND NO. 1, BRIEFLY THE FACTS OF THE CASE ARE THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT ASSESSEE HAS CLAI MED EXPENDITURE OF RS.8,43,27,342/- UNDER MISC. EXPENSES, FREIGHT AND SELLING, REPAIR AND MAINTENANCE, COMMUNICATION, TRAVEL AND CONVEYANCE E XPENSES AS MENTIONED AT PAGE 6 OF THE ORDER BUT SOME OF THE VOUCHERS ARE SELF MADE WITHOUT ANY SUPPORTING BILLS/RECEIPTS AND THE EXPENSES ARE NOT SUBJECT TO COMPLETE VERIFICATION. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE AO FINALLY OBSERVED THAT SINCE THE ASSESSEE FAILED TO PRODUCE SOME OF THE BILLS AND VOUCHERS AND IN ABSENCE OF THE BILLS AND VOUCHERS, THE EXPENSES ARE NOT VERIFIABLE AS THERE ARE NO SOURCE DOCUMENTS FOR SOM E OF THE EXPENSES. HE, THEREFORE, DISALLOWED 5% OF THE ABOVE EXPENSES WHIC H COMES TO RS.42,16,367/-. 2.1 THE LD. CIT(A) CONSIDERING THAT TURNOVER HAS IN CREASED BY MORE THAN 26% BUT THE CORRESPONDING EXPENSES HAS INCREASED ONLY B Y 17%, THAT EXPENSES ARE PAID BY CHEQUE EXCEPT PETTY EXPENSES AND THAT NO FU RTHER EVIDENCE IS PRODUCED BEFORE HIM TO CONTRADICT THE FINDING OF AO , RESTRICTED THE DISALLOWANCE TO RS. 25 LACS. NOW THE REVENUE AND T HE ASSESSEE ARE IN APPEAL BEFORE US. ITA NO. 807/JP/15 & 747/JP/15 ACIT, CIRCLE-2,ALWAR VS. M/S GINNI INTERNATIONAL LT D. ALWAR 3 2.2 THE AR OF THE ASSESSEE SUBMITTED THAT IN COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE PRODUCED BOOKS OF ACCOUNTS AL ONG WITH BILLS AND VOUCHERS WHICH IS EXAMINED BY THE AO ON TEST CHECK BASIS. ON THE BASIS OF SUCH EXAMINATION, AO IDENTIFIED 5 HEADS OF EXPENSES WHER E HE OBSERVED THAT SOME EXPENSES ARE NOT FULLY VOUCHED. THEREAFTER, ASSESSE E IN REPLY DATED 22.01.2014 SPECIFICALLY POINTED OUT THAT ALL EXPENSES ARE SUPP ORTED BY BILLS, ALL PAYMENTS ARE THROUGH CHEQUE EXCEPT SOME PETTY EXPENSES UNDER THE HEAD COMMUNICATION EXPENSES AND THAT NO EXPENSES IS BOOK ED WITHOUT ANY SUPPORTING DOCUMENTS. STILL THE AO WITHOUT SPECIFYI NG ANY PARTICULAR EXPENSES FOR WHICH BILLS/VOUCHER IS NOT PRODUCED OR SOURCE D OCUMENT IS NOT AVAILABLE WRONGLY HELD THAT ASSESSEE ACCEPTED THE DEFECT POIN TED OUT. THE LD. CIT(A) THOUGH ACCEPTING THE EXPLANATION OF THE ASSESSEE, R EDUCED THE DISALLOWANCE TO RS.25 LACS ON ADHOC BASIS. IT IS A SETTLED PROPOSIT ION OF LAW THAT NO ADHOC DISALLOWANCE SHOULD BE MADE ONLY FOR THE SAKE OF MA KING THE DISALLOWANCE. RELIANCE IN THIS CONNECTION IS PLACED ON THE FOLLOW ING CASES:- ACIT VS. GANAPATI ENTERPRISES LTD. 142 ITD 118 (DEL HI)(TRIB.)(2013) CIT VS. ORACLE INDIA (P) LTD. 199 TAXMAN 181 (DEL) (HC) (MAG.) ARTHUR & ANDERSON & CO. VS. ACIT 2010-TIOL-416-ITAT -MUM. ADOR TECHNOLOGIES LTD. VS. DCIT & ANR. 112 TTJ 24 ( PUNE)(TRIB.) 2.3 THE LD DR SUBMITTED THAT SIMILAR ISSUE OF DISAL LOWANCE OF VARIOUS EXPENSES HAS COME UP EARLIER FOR AY 2008-09 AND AY 2009-10. IN THOSE YEARS, THE AO HAS MADE A SIMILAR DISALLOWANCE OF 5% OF VAR IOUS EXPENSES AND THE SAME WAS REDUCED BY LD CIT(A) TO RS 15,00,000 FROM RS 32,03,350 IN AY 2008- 09 AND REDUCED TO RS 13,00,000 FROM RS 33,22,950 IN AY 2009-10. THE DEPARTMENT HAD MOVED AN APPEAL AGAINST THE SAID ORD ER OF THE LD CIT(A) WHICH WAS DISMISSED BUT AT THE SAME TIME, THE ASSESSEE DI DNT MOVE AN APPEAL AGAINST THE SAID ORDERS OF LD CIT(A) FOR THOSE YEAR S. IT WAS THEREFORE SUBMITTED THAT SINCE THE ASSESSEE HAS ACCEPTED THE POSITION A S UPHELD BY THE LD CIT(A) IN THE PAST YEARS AND HAS NOT APPEALED AGAINST THE SAI D ORDER, THE SAME SHOULD BE ITA NO. 807/JP/15 & 747/JP/15 ACIT, CIRCLE-2,ALWAR VS. M/S GINNI INTERNATIONAL LT D. ALWAR 4 BINDING ON THE ASSESSEE FOR THE YEAR UNDER CONSIDER ATION AS THERE ARE NO CHANGES IN THE FACTS AND CIRCUMSTANCES OF THE CASE. IT WAS FINALLY SUBMITTED THAT THE ASSESSEES GROUND OF APPEAL SHOULD THEREFO RE BE DISMISSED. 2.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT SIMILAR ISSUE OF ADHOC DISALLOWANCES HAS COME UP EARLIER BEFORE THE COORDINATE BENCH IN ITA NO. 746/ JP/13 FOR AY 2008-09 DATED 8.1.2016 AND ITA NO. 60/JP/2014 FOR AY 2009-10 DATE D 22.01.2016. THESE WERE THE MATTERS WHERE THE REVENUE HAS FILED AN APP EAL AGAINST THE ORDER OF THE LD CIT(A) WHICH WAS FINALLY DISMISSED BY THE CO ORDINATE BENCH AND THE ORDER OF LD CIT(A) WAS CONFIRMED. HOWEVER, AS RIGH TLY POINTED OUT BY THE LD DR, THE ASSESSEE HAS NOT MOVED AN APPEAL AGAINST THE SA ID ORDERS OF LD CIT(A) AND THUS HAS ACCEPTED THE ORDERS OF THE LD CIT(A) FOR T HOSE PAST YEARS. WHERE THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES O F THE CASE, THE PRINCIPLE OF CONSISTENCY SHOULD APPLY EQUALLY TO BOTH THE ASSESS EE AND THE REVENUE. WHAT THEREFORE FOLLOWS IS WHERE THE ASSESSEE HAS ACCEPTE D THE POSITION AS UPHELD BY THE LD CIT(A) IN THE PAST YEARS IN TERMS OF PARTIAL DISALLOWANCE OF EXPENSES, THE ASSESSEE SHOULD BE PRECLUDED FROM AGITATING THE SAM E AGAIN IN THE SUBSEQUENT YEARS. IN THE INSTANT CASE, NOTHING HAS BEEN BROUG HT ON RECORD TO SUGGEST THAT THERE ARE ANY CHANGES IN THE FACTS AND CIRCUMSTANCE S OF THE CASE AND ON THE LINES OF PAST YEARS, DISALLOWANCE OF 5% HAS BEEN MA DE BY THE AO WHICH HAS BEEN PARTIALLY CONFIRMED BY THE LD CIT(A). RESPECT FULLY FOLLOWING THE ORDERS OF THE COORDINATE BENCH REFERRED SUPRA, WE CONFIRM THE ORDER OF THE LD CIT(A). HENCE, GROUND OF APPEAL OF REVENUE AS WELL AS OF TH E ASSESSEE IS DISMISSED. 3. IN RESPECT OF GROUND NO. 2 OF THE ASSESSEES APP EAL, THE BRIEF FACTS OF THE CASE ARE THAT ITA NO. 807/JP/15 & 747/JP/15 ACIT, CIRCLE-2,ALWAR VS. M/S GINNI INTERNATIONAL LT D. ALWAR 5 1. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACT URING OF COTTON YARN, WOVEN FABRIC AND DENIM FABRIC. IT VALUES THE STOCK AT LOWER OF COST OR NET REALIZABLE VALUE. 2. THE AO ON PERUSAL OF THE VALUATION SUMMARY OF THE W EAVING STOCK AND DENIM STOCK OBSERVED THAT ASSESSEE HAS UNDERVALUED THE ST OCK BY RS.24,78,016/- BY GIVING THE FOLLOWING TABLE:- PARTICULARS COST MARKET RATE LOWER OF COST OR NRV VALUED BY ASSESSEE AT UNDERVALUED BY WEAVING STOCK FINISHED GOODS SHADE-A RETURN GOODS 2,36,59,122/- 25,55,715/- 2,31,52,716/- 26,90,155/- 2,31,52,716/- 25,55,715/- 2,20,55,450/- 25,14,277/- 10,97,266/- 41,438/- DENIM STOCK FINISHED FABRIC IN GODOWN RETURN GOODS 11,26,83,300/ - 1,47,903/- 12,94,62,952/ - 1,75,520/- 11,26,83,300/- 1,47,903/- 11,13,44,968/- 1,46,923/- 13,38,332/- 980/- TOTAL 24,78,016/- 3. THE ASSESSEE VIDE LETTER DATED 13.01.2014 (AO PAGE 4) SUBMITTED THAT IT VALUES THE STOCK AT LOWER OF LOWER OF COST OR NET R EALIZABLE VALUE AS PER AS-2 BY COMPARING COST AND MARKET PRICE OF EACH VARIETY OF YARN AND FABRICS. THE ITEM WISE LIST OF VALUATION WAS FURNISHED (COPY ENCLOSED) . AS ON 31.03.2011, IT HAS 19 TYPES OF YARN, 140 TYPES OF GREY FABRIC A ND 126 TYPES OF DENIM FABRIC WITH IT. AFTER COMPARISON OF COST PRICE AND MARKET PRICE OF EACH TYPE OF YARN AND FABRIC, A SUMMARY IS PREPARED BUT IN THE SHOW C AUSE NOTICE, SUMMARY IS CONSIDERED BY IGNORING THE DETAILED VARIETY WISE VA LUATION. 4. THE AO, HOWEVER, ON THE BASIS OF SUMMARY OF THE VAL UATION MADE ADDITION OF RS.24,78,016/- BY NOT APPRECIATING THE CALCULATION OF VALUATION OF STOCK AT LOWER OF COST OR NET REALIZABLE VALUE. 3.1 WE NOW REFER TO THE FINDINGS OF THE LD CIT(A): I HAVE CONSIDERED THE ASSESSMENT ORDER AS WELL AS SUBMISSIONS MADE BY THE APPELLANT AND FIND THAT THE ADDITION OF RS. 24, 78,016/- WAS MADE ITA NO. 807/JP/15 & 747/JP/15 ACIT, CIRCLE-2,ALWAR VS. M/S GINNI INTERNATIONAL LT D. ALWAR 6 PRIMARILY ON THE GROUND THAT THE CLOSING STOCK OF F INISHED GOODS SHADE A, SHARE B, RETURNED GOODS, TRADING STOCK, GREY FAB RIC, STOCK OF WORK IN PROGRESS CONSISTING OF LOOSE FABRIC, YARN AND FINIS HED FABRIC IN GODOWN ETC. HAS BEEN UNDER- VALUED. THE PRINCIPLE OF STO CK VALUATION, WHICH IS BASED ON COST OR MARKET PRICE, WHICH EVER IS LOWER HAS NOT BEEN FOLLOWED FOR THE PURPOSES OF STOCK VALUATION. THE AO HAS GI VEN THE FIGURES OF VALUATION OF STOCK OF THESE ITEMS AT COST AND AS WE LL AS MARKET PRICE, BUT THE APPELLANT HAS DECLARED A DIFFERENT VALUE IN THE STOCK STATEMENTS, WHICH HAS BEEN FOUND TO BE LOWER THAN THE TWO VALUE S STATED ABOVE. THE DETAILS OF UNDER VALUATION OF EACH ITEM OF STOCK B Y COMPARING THE SAME WITH THE COST AND MARKET PRICE OF THOSE ITEMS HAS B EEN GIVEN BY THE AO ON PAGE 3 TO 5 OF THE ASSESSMENT ORDER. THE APPELL ANT HAS REITERATED THE SUBMISSIONS FILED BEFORE THE AO AND HAS STATED THAT STOCK HAS TO BE VALUED AT COST OR MARKET PRICE WHICHEVER IS LOWER. ACCOUNTING STANDARD AS-2 ALSO MANDATES THE SAME AS THE BASIS FOR STOCK VALUATION. IT HAS BEEN SUBMITTED THAT THE APPELLANT HAS BEEN FOLLOWING THI S ACCOUNTING PRACTICE CONSISTENTLY SINCE INCEPTION I.E. 1996. THERE HAS BEEN NO CHANGE IN THE METHOD OF VALUATION OF CLOSING STOCK. FURTHER THE STATUTORY AUDITORS HAVE CERTIFIED THIS FACT AND THIS CAN BE CONFIRMED BY TH E TAX AUDITORS REPORT IN FORM 3CD ENCLOSED WITH THE AUDITORS REPORT. I HAV E CONSIDERED THE ASSESSMENT ORDER AS WELL AS SUBMISSIONS MADE BY THE APPELLANT AND FIND THAT THE ADDITION WAS MADE PRIMARILY ON THE GROUND THAT CLOSING STOCK YARN, WOVEN FABRIC, RETURNED GOODS AND DENIM FABRIC HAS BEEN DECLARED AT VALUES WHICH WERE FOUND TO BE LOWER THAN THE COS T AND MARKET PRICE OF THE STOCK. THE APPELLANT HAS FAILED TO JUSTIFY THE BASIS OF VALUATION OF STOCK. I FIND THAT THE ACCOUNTING STANDARD AS-2 AL SO MANDATES THAT STOCK HAS TO BE VALUED AT COST OR MARKET PRICE, WHICHEVER IS LOWER. HOWEVER THE APPELLANT HAS ARBITRARILY SUBSTITUTED A THIRD V ALUE FOR SOME ITEMS OF STOCK, WHICH IS FOUND TO BE EVEN LOWER THAN THE ABO VE MENTIONED TWO VALUES NAMELY COST AND MARKET PRICE. IN THE ABSENC E OF ANY JUSTIFICATION FOR THE SAME, I FIND THAT CLOSING STOCK HAS BEEN UN DER VALUED TO THE EXTENT OF RS. 24,78,016/- WITH A VIEW TO SUPPRESS T HE CURRENT YEARS INCOME. THEREFORE, I CONFIRM THE ADDITION OF RS. 2 4,78,016/- MADE BY THE AO ON THIS ACCOUNT. 3.2 THE LD. AR SUBMITTED THAT THE ASSESSEE VALUES B OTH THE OPENING AND CLOSING STOCK AT LOWER OF COST OR NET REALIZABLE VA LUE ON CONSISTENT BASIS AS PER THE REQUIREMENT OF AS-2 ISSUED BY ICAI. THERE HAS B EEN NO CHANGE IN THE VALUATION POLICY AND THE SAME IS ALSO CERTIFIED BY THE STATUTORY AUDITOR AS ALSO ITA NO. 807/JP/15 & 747/JP/15 ACIT, CIRCLE-2,ALWAR VS. M/S GINNI INTERNATIONAL LT D. ALWAR 7 CONFIRMED BY THE TAX AUDITOR IN FORM NO. 3CD. IN CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED ITEM WISE DETAI LS OF VALUATION OF CLOSING STOCK. BY SUCH ITEM-WISE COMPARISON, THE STOCK HAS BEEN VALUED AT COST OR NET REALIZABLE VALUE WHICHEVER IS LOWER. ON GLOBAL BASI S I.E. ON AGGREGATING COST/NET REALIZABLE VALUE OF ALL ITEMS, THE SAME IS MORE THA N THE VALUE AT WHICH ASSESSEE HAS VALUED THE STOCK BUT AS PER AS-2 AND ACCORDING TO THE CONSISTENT PRACTICE FOLLOWED BY THE ASSESSEE, STOCK IS REQUIRED TO BE V ALUED AT LOWER OF COST OR NET REALIZABLE VALUE BY COMPARING THE INDIVIDUAL ITEM A ND NOT BY AGGREGATING ALL THE ITEMS. THIS METHOD OF VALUATION OF STOCK HAS BE EN ACCEPTED IN PAST. THEREFORE, THE OBSERVATION OF CIT(A) THAT ASSESSEE HAS ARBITRARILY SUBSTITUTED A THIRD VALUE IS INCORRECT AND ERRONEOUS. 3.3 THE LD AR FURTHER SUBMITTED THAT THE SUPREME COURT IN CASE OF CIT VS. EXCEL INDUSTRIES LTD. 358 ITR 295 HAS HELD THAT WHE RE IN SEVERAL A.Y.S, THE REVENUE ACCEPTED THE ORDER OF THE TRIBUNAL IN FAVOU R OF THE ASSESSEE AND DID NOT PURSUE THE MATTER ANY FURTHER BUT IN RESPECT OF SOME A.Y.S, THE MATTER WAS TAKEN IN APPEAL BEFORE THE HIGH COURT BUT WITHO UT ANY SUCCESS, THE REVENUE CANNOT BE ALLOWED TO FLIP-FLOP ON THE ISSUE AND IT OUGHT LET THE MATTER REST RATHER THAN SPEND THE TAXPAYERS MONEY IN PURS UING LITIGATION FOR THE SAKE OF IT. IT FURTHER HELD THAT WHEN THE RATE OF TAX RE MAINED THE SAME IN PRESENT A.Y. AS WELL AS IN SUBSEQUENT A.Y., THE DISPUTE RAI SED BY THE REVENUE IS ENTIRELY ACADEMIC OR AT BEST MAY HAVE A MINOR TAX EFFECT. TH ERE WAS, THEREFORE, NO NEED FOR THE REVENUE TO CONTINUE WITH THE LITIGATIO N WHEN IT WAS QUITE CLEAR THAT NOT ONLY WAS IT FRUITLESS (ON MERITS) BUT ALSO THAT IT MAY NOT HAVE ADDED ANYTHING MUCH TO THE PUBLIC COFFERS. IT MAY BE NOTE D THAT THE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT VS. SATISH ESTATE PVT. LTD. (2014) 226 TAXMAN 11 WHERE ADDITION OF RS.75 LAKHS WAS MADE ON ACCOUN T OF UNDERVALUATION OF ITA NO. 807/JP/15 & 747/JP/15 ACIT, CIRCLE-2,ALWAR VS. M/S GINNI INTERNATIONAL LT D. ALWAR 8 CLOSING STOCK OF THE LAND BUT THE CLOSING STOCK OF LAND SHOWN BY THE ASSESSEE IS ACCEPTED BY AO AS OPENING STOCK FOR THE SUBSEQUENT YEAR IN THE ASSESSMENT MADE U/S 143(3) FOR THE SUBSEQUENT YEAR DELETED THE ADDITION MADE BY THE AO AS NO LOSS TO THE REVENUE HAS BEEN CAUSED. IN THE P RESENT CASE ALSO FOR SUBSEQUENT A.Y. 12-13, AO HAS ACCEPTED THE CLOSING STOCK DECLARED BY THE ASSESSEE AS OPENING STOCK AND ALSO ACCEPTED THE CLO SING STOCK DECLARED IN THAT YEAR. HENCE, THE ADDITION MADE BY AO AND CONFIRMED BY CIT(A) IS OTHERWISE NOT JUSTIFIED. 3.4 THE LD DR IS HEARD WHO HAS RELIED UPON THE ORDE R OF THE LOWER AUTHORITIES. 3.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE VALUES ITS STOCK AT LOWER OF COST OR NET REALIZABLE VALUE. ADMITTEDLY, THERE HAS BEEN NO CHANGE IN IT S VALUATION POLICY WHICH HAS BEEN FOLLOWED CONSISTENTLY OVER THE YEARS. THE LIM ITED DISPUTE RELATES TO WHETHER THE COMPARISON OF COST OR NET REALIZABLE VA LUE SHOULD BE DONE ON AN INDIVIDUAL STOCK ITEM BASIS OR ON AN AGGREGATE BASI S TAKING ALL ITEMS OF STOCK TOGETHER. AS PER AS-2 ISSUED BY THE ICAI, STOCK IS REQUIRED TO BE VALUED AT LOWER OF COST OR NET REALIZABLE VALUE BY COMPARING THE INDIVIDUAL ITEM AND NOT BY AGGREGATING ALL THE ITEMS. THIS METHOD OF VALUAT ION OF STOCK HAS BEEN CONSISTENTLY FOLLOWED BY THE ASSESSEE IN THE PAST Y EARS AND HAS BEEN DULY ACCEPTED BY THE REVENUE. AS WE HAVE HELD EARLIER, THE PRINCIPLE OF CONSISTENCY SHOULD APPLY UNLESS THERE ARE VALID REASONS TO DEVI ATE FROM THE PAST ACCEPTED POSITION. WE ACCORDINGLY DELETE THE DISALLOWANCE O F RS 24,78,016 ON ACCOUNT OF UNDERVALUATION OF STOCK. THE GROUND OF APPEAL O F THE ASSESSEE IS THUS ALLOWED. ITA NO. 807/JP/15 & 747/JP/15 ACIT, CIRCLE-2,ALWAR VS. M/S GINNI INTERNATIONAL LT D. ALWAR 9 IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DI SMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/11 /2016. SD/- SD/- ( KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 02/11/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CIRCLE-2, ALWAR. 2. IZR;FKHZ@ THE RESPONDENT- M/S GINNI INTERNATIONAL LTD., ALWAR 3. VK;DJ VK;QDR@ CIT ALWAR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-, ALWAR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.807 /JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.