COMMISSIONER OF INCOME TAX 1 vs. SHARAD MOHANLAL SHAH

Revenue has challenged the order of the Income Tax   Appellate   Tribunal,   Ahmedabad,   dated   30.5.2017 raising the following question for our consideration. “Whether   on   the   facts   and   circumstances   of the case and in law, the Hon’ble Appellate Tribunal   is   justified   in   upholding   the decision of the Ld. CIT(A) of approving the method   of   the   assessee   valuing   the   closing stock as per LIFO method even though the same method does not portray true picture of its business profit?”

The issue arises out of the assessment made for the Assessment Year 2010­2011. Assessee is in the business   of   manufacturing   and   selling   of   gold C/TAXAP/489/2018 ORDER ornaments.  In the scrutiny assessment the Assessing Officer mainly question the valuation of the closing stock.   According   to   the   Assessing   Officer,   the assessee undervalued the stock which was below the average   cost   price   of   gold.   The   assessee   pointed out that it follow the last in first out (for short “LIFO”)  method  of  valuation.   The  Assessing  Officer did not disturb the quantum of the gold at the time of   closing   but   substituted   the   valuation,   allowed to   the   assesseee   average   cost   price   and   thereby disturbed the closing stock valuation.

The   assessee   carried   the   matter   in  appeal  and the   CIT(Appeal)   noted   the   following   such   methods since several years. That even otherwise such method is recognised in law and the Assessing Officer ought not to have disturbed the same.

The   Revenue  filed  an   appeal   before   the   Income Tax   Appellate   Tribunal,   Ahmedabad,   challenging   the order   of   CIT(Appeal).   The   Tribunal   dismissed   the revenue   appeal,   upon   which   this   appeal   has   been filed.

This Court had issued notice for considering the remand of the matter as was done by the Tribunal in case of the assessee for the Assessment Year 2007­ 2008. In   response   to   such   notice,   Shri   Tushar Hemani, learned counsel appeared for the respondent­ assessee.   He   pointed   out   that   the   Tribunal   orders for   the   Assessment   Year   2007­2008   concerning   two C/TAXAP/489/2018 ORDER issues;   one  was   the  deployment   of  LIFO   method   for valuation   of   closing   stock   and   the   other   was   the portion   declared   by   the   assessee   at   the   time   of survey which remain unsold and which had come to the part of the closing stock adopted certain rate per gram of the gold.   He pointed out that, insofar as applying LIFO method is concerned, the Tribunal had confirmed the view of the CIT(Appeal) and the remand was merely for the purpose of later issue.

We have perused the order of the Tribunal for the   Assessment   Year   2007­2008   and   confirmed   this position.   It   is   therefore   not   necessary   to   remand the matter for proceedings.

The sole question arises in the present appeal is   therefore   confined   to   LIFO   method. The CIT(Appeal)  concurrently   held  that  such  method  was already   recognised   in   law   and   in   any   case consistently   followed   by   CIT(Appeal)   in   several orders. The Tax Appeal is dismissed. (AKIL KURESHI, J) (UMESH TRIVEDI, J) syed/