ITO, KENDRAPADA WARD, PARADEEP vs. JUGAL KISHORE DAS, KENDRAPADA

आयकर अपील�य अ�धकरण, कटक �यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAVAN KUMAR GADALE, JM आयकर अपील सं./ITA No.16/CTK/2016 (�नधा�रण वष� / Assessment Year :2010-2011) Income Tax Officer, Vs. Sri Jugal Kishore Das, Kendrapara Ward, Prop. M/s Parbati Madhuban, Paradeep (Erstwhile Jewellary, Ward-2 Paradeep) At/Po: Tinimuhani, Dist: Kendrapara-754211 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : ABRPD 2065 Q (अपीलाथ� /Appellant) (��यथ� / Respondent) .. राज�व क� ओर से /Revenue by : Shri Subhendu Dutta, CITDR �नधा�रती क� ओर से /Assessee by : Shri Saswat Acharya, AR सुनवाई क� तार�ख / Date of Hearing : 27/07/2017 घोषणा क� तार�ख/Date of Pronouncement 28/07/2017 आदेश / O R D E R Per Shri Pavan Kumar Gadale, JM: The revenue has filed an appeal and against the order of CIT(A), Cuttack passed in I.T.Appeal No.249/2013-14, dated 30.10.2015, u/s.143(3)/250 of the I.T.Act and raised the following grounds of appeal :- “01. In the facts and circumstances of the case, the ld. First Appellate Authority is not justified in deleting the addition of Rs.40,10,298/- made by the AO for difference in closing stock valuation and directed to the AO to adopt weighted average p rice method of valuation of closing stock – when the AO had taken the valuation of closing stock as per the market price of the gold at the time of survey operation as the gold can easily be liquidated to cash at its present market price not at the cost price of the purchases made of such items. 02. In the facts and circumstances of the case, he CIT(A) is not justified to hold that as the AO has accepted the quantitative closing stock of gold, the method of valuation of closing stock is to be adopted as followed by the assessee.” 2. Brief facts of the case are that the assessee is a proprietor and deals in jewellery and derives income from trading in gold ornaments and

2 ITA No.16/CTK/2016 filed the Return of income for the assessment year 2010-2011 on

28.03.2011 with total income of Rs.3,75,533/-. There was a survey

operation u/s.133A on 26.03.2010 and as per the Board’s guidelines the case was selected for scrutiny assessment and AO issued notices

u/s.143(2) & 142(1) of the Act. In compliance to the same, ld. AR appeared from time to time and furnished the documents and the AO

called information u/s.133(6) of the Act from different banks and discussed the case of the assessee and further on perusal of the financial

statements the AO found that the disclosed closing stock of

Rs.19,55,887/- as against the value of stock of Rs.60,02,987/- and

therefore issued show cause notice to the assessee. The assessee filed

submission explaining that the assessee is a regularly assessed to tax

from 1996-97 and the closing stock of Gold is continued from 2004-05 to

the date of survey, and therefore, the assessee has valued the stock

based on the opening balance. The AO was not satisfied with the

explanation on the closing stock and, therefore, considered the difference

in the valuation of closing stock as income and made addition of

Rs.40,10,298/- with other additions and assessed total income of

Rs.51,88,150/- and passed order u/s.143(3) of the Act, dated 08.03.2013.

before the CIT(A). The ld. CIT(A) considered the facts and submissions of

the assessee in the assessment proceedings and the information of the survey proceedings and applied weighted average method for valuation of

stock and relied on the decision of the coordinate bench of the Tribunal in

3 ITA No.16/CTK/2016 case of Khimji Dayabhai Jewellers Vs. ITO, ITA No.501/CTK/2012 for

A.Y.2008-09, order dated 14.12.2012, wherein the ITAT has accepted the

weighted average method for valuation of closing stock and ld. CIT(A)

dealt on the disputed issue at pages 3 & 4 of the order and directed the

AO to adopt the weighted average price method and partly allowed the

appeal of the assessee after observing as under :-

“Considering the case of the appellant and the above judgment of the jurisdictional ITAT; I am of the opinion that weighted average price method of valuation of closing stock is more appropriate for valuation of gold and silver ornaments as their price is ever changing. The AO is therefore directed to adopt the weighted average price method for valuation of the closing stock and find out the difference between the closing stock as determined in this method and the closing stock shown by the appellant. The difference if any should be added to the total income of the appellant as unexplained purchases.”

the Tribunal.

addition made by the AO and adopted the weighted average price

method, whereas the AO was correct in following at the market price and

prayed that the order of CIT(A) be set aside and appeal of the revenue be

allowed.

the decision of the coordinate bench of the Tribunal.

the judicial decisions. The ld. DR’s sole grievance that the CIT(A) has

erred in applying weighted average price method for valuation of closing

stock which is not in accordance with law and the facts. However, the

4 ITA No.16/CTK/2016 assessee has relied on the price of gold for the year 2004-05 as evident from the assessment order whereas ld. AR relied on decision of the coordinate bench of this Tribunal in the case of Shri Ashoka Jewellers, ITA No.488/CTK/2014, order dated 28.4.2017 where the weighted average price method has been applied to the valuation of stock. We found that the ld.CIT(A) has discussed elaborately on the disputed issue with the judicial decisions and relied on the coordinate bench decision of the Tribunal in the case of Khimji Dayabhai Jewellers Vs. ITO, ITA No.501/CTK/2012 for A.Y.2008-09, order dated 14.12.2012. Accordingly, we are not inclined to interfere with the order of CIT(A) and uphold the same. Accordingly, the grounds of appeal of the revenue are dismissed. 8. Thus, appeal of the revenue is dismissed. Order pronounced in the open court on this 28/07/2017. Sd/- Sd/- (N. S. SAINI) (PAVAN KUMAR GADALE) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER कटक Cuttack; �दनांक Dated 28/07/2017 �.कु.�म/PKM, Senior Private Secretary आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant- 1. Income Tax Officer, Kendrapara Ward, Madhuban, Paradeep (Erstwhile Ward-2 Paradeep) ��यथ� / The Respondent- 2. Sri Jugal Kishore Das, Prop. M/s Parbati Jewellary, At/Po: Tinimuhani, Dist: Kendrapara-754211 आयकर आयु�त(अपील) / The CIT(A), 3. आयकर आयु�त / CIT 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कटक / DR, ITAT, Cuttack 5. गाड� फाईल / Guard file. 6. स�या�पत ��त //True Copy// आदेशानुसार/ BY ORDER,

5 ITA No.16/CTK/2016

(Senior Private Secretary) आयकर अपील�य अ�धकरण, कटक / ITAT, Cuttack