CI.T RTK vs. M/S SANT RAM

ITR/181/1989HC Punjab & HaryanaPHHC01022552198924 October 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages

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What did the High Court hold?

The High Court, while deciding the reference, noted that the ITAT had followed its own decision for the assessment year 1981-82. The counsel for the Revenue fairly stated that the reference for the previous year, ITR No. 182 of 1989, was decided by this Court on 3.1.2005 against the Revenue. Following the earlier view taken by the Court in the case of the assessee for the previous year, the present reference was answered against the Revenue and in favour of the assessee. The specific reasoning for the ITAT's decision on the adhoc method of account and the deletion of the addition was not elaborated in this High Court judgment, as it relied on its prior decision. The operative direction was to answer the reference against the Revenue.

What were the facts?

The Commissioner of Income Tax, Haryana, Rohtak (Revenue) filed an Income Tax Reference (ITR) No. 181 of 1989 before the High Court of Punjab and Haryana at Chandigarh. The reference arose from an order dated 8.3.1989 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh, in WTA No. 909 of 1985. The assessment years in question were 1982-83. The dispute concerned the valuation of closing stock of gold and silver, where an addition of Rs. 1,08,716/- was made by the Inspecting Assistant Commissioner (Investment), Karnal, and subsequently deleted by the Commissioner of Income Tax (Appeals). The ITAT confirmed this deletion. The Revenue challenged the ITAT's findings on two questions of law.

What were the issues?

The Tribunal had to decide the following questions of law: 1. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that an adhoc method of account is one of the recognised methods of valuing stocks under the principles of accountancy? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in confirming the order of the CIT(A) deleting the addition of Rs. 1,08,716/- made by the IAC (Inv), Karnal on account of under-valuation of closing stock of gold and silver? Contentions: Assessee: Not recorded in the judgment. Revenue: The Revenue contended that the ITAT erred in law by holding that an adhoc method of accounting is a recognized method for stock valuation and in confirming the deletion of the addition made by the IAC (Inv) on account of under-valuation of closing stock.

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Cause title — parties, addresses and appearances

I.T.R No. 181 of 1989 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.R No. 181 of 1989 Date of decision:24.10.2006 The Commissioner of Income Tax, Haryana, Rohtak ...Appellant Versus M/S Sant Ram Mangat Ram, Ambala City ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE RAJESH BINDAL Present: Mr.Yogesh Putney, Advocate ****

JUDGMENT Following questions of law have been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh arising out of its order dated 8.3.1989 passed in W.T.A.No.909 of 1985, in respect of the assessment years 1982-83. “1.Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that adhoc method of account is one of the recognised methods of valuing stocks under the principles of accountancy? 2.Whether on the facts and in the circumstances of the case, the Tribunal was right in law in confirming the order of the CIT(A) deleting the addition of Rs.1,08,716/- made by the IAC (Inv), Karnal on account of under-valuation of closing stock of gold and silver?”

I.T.R No. 181 of 1989 -2- On a perusal of the statem

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