Non - Maintenance of Stock Register by Retailor

[BAL KRISHAN GARG]

Dear All Members , I have a query regarding non - maintenance of stock register by a Retailor .

I have qualify the audit report that the assessee does not maintain stock register so it is not possible to give the quantitative details of the same . The assessee is the retailor and dealing in electrical and consumable goods ranging from Rs. 1 to Rs .5,000 /- and running a retail counter and its not possible to maintain the stock register for the assessee also . Assessee does valuation of its closing stock as on the last day of the financial year by taking physical inventory and convert the same into closing stock for the balance sheet purpose and value each item by multipling the quantity with its purchase price after deducting discount and vat .

The officer wants to add the opening stock as income only on the ground that the auditor had made qualifiy the report and silent regarding closing stock . Whether the officer can do so even after giving the list of physical inventory taken alongwith purchase invoices for valuation purpose already submitted with the department ?

I will be highly oblidge for the reply or suggestion .

Thanks

Regards

BAL KRISHAN GARG

[prasenjit roy]

Please Note that as per AS 2 on Inventory valuation, Valuation of closing stock is done on Retail method in case of Retailer. If you read As 2, I think your problem will be sold.

AI Summary

Inventory valuation: retail method governs valuation for retailers and affects assessment where stock registers are absent.
Non-maintenance of a stock register prompted an auditor's qualification and an assessing officer's proposal to add opening stock to income; the assessee provided a year-end physical inventory and purchase invoices and valued closing stock using purchase price net of discount and VAT. The discussion highlights that Inventory Valuation for retailers should follow the retail method under AS 2, which is the operative standard affecting acceptance of the closing stock valuation in assessments.