The ITAT held that the valuation of inventory must comply with...

The ITAT held that the valuation of inventory must comply with section 145A and ICDS-II, which disallows the LIFO method previously adopted by the assessee. Both opening and closing stock must be valued consistently under ICDS-II to accurately determine profits, preventing distortion of gross profit in the current year. The Tribunal set aside the CIT(A) order and directed the AO to recompute profits for the impugned year strictly as per ICDS-II, adding only the relevant increase for that year. The AO must also assess the impact of ICDS-II adjustments for prior years separately under section 148, recognizing the cumulative effect from the year ICDS-II became applicable. The assessee is permitted to submit detailed calculations of year-wise impacts, and the AO is required to apply the uniform valuation method across all relevant years. The appeal is partly allowed for statistical purposes.