TaxTMI 
TaxTMI 
2014 (11) TMI 647
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....s directed against the order of the Commissioner of Income Tax (Appeals) confirming the addition on account of valuation of closing stock of Rs. 4,61,305/-. 4. The brief facts of the case are that the Assessing Officer observed that the assessee does not have any basis for valuing the closing stock, the assessee does not maintain day to day stock register as evident from the audit report, the quantity-wise details are also not maintained, there is fall in the gross profit ratio from 0.76% in the earlier year to 0.45% in this year. The Assessing Officer further observed that the only basis of valuation of closing stock of finished goods is the market value and therefore, revaluing the closing stock as per the available sale bills, he made a....
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....f the Assessing Officer by observing as under: "2.1. I have considered the submissions of the A. R. of the appellant and the observations of the assessing officer in the assessment order. A.O's observations on the issue in brief are as follow. As per clause 12(a) of the audit report, valuation of closing stock is done at 'market price'. It is also seen from the audit report that day-to-day stock register was not maintained, G. P. has declined from 0.76% in the earlier year to 0.45% in the current year. With these observations, A.O. went on to value the closing stock of cotton, cotton seeds and oil adopting the sale price in the last bill of the previous year as 'market price'. The difference in the valuation of Rs. 4,61....
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....e bills as the rate for valuation of closing stock of cotton, cotton seeds and oil and thereby made addition of the difference amount of Rs. 4,61,305/- to the income of the assessee. 9. On appeal, the Commissioner of Income Tax (Appeals) confirmed the action of the Assessing Officer. 10. The Authorized Representative of the assessee submitted before us that the assessee has valued the closing stock at the average market rate of the last month of the year which was the method consistently and regularly followed by the assessee and therefore the Assessing Officer was not justified in substituting the valuation of closing stock with the bills issued during the fag-end of the year and making addition to the income of the assessee, and the Com....
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....ck of the assessee on the basis of the sale bills at the fag-end of the year in place of the method adopted by the assessee of valuing its closing stock on the basis of average market price of the last month of the year. Thus, we set aside the orders of the lower authorities and delete the addition of Rs. 4,61,305/- and allow this ground of appeal of the assessee. 12. The only other grievance of the assessee as stated in ground no. 2.1(2) is directed against the order of the Commissioner of Income Tax (Appeals) confirming the addition being 20% of gunny bags purchase Rs. 2,00,249/-. 13. The brief facts of the case are that the Assessing Officer observed that the assessee has paid Rs. 24,13,728/- towards ginning and pressing charges to Vis....
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....nd modify the assessment order accordingly. Thus subject to verification, this ground of appeal is treated as allowed." 15. We have heard the rival submissions and perused the orders of lower authorities and material available on record. In the instant case, the Assessing Officer observed that the assessee has paid Rs. 24,13,728/- for ginning and pressing charges to Vishal Industries. He also noted that the assessee receives readymade cotton bales for direct sales. He also observed that if the cotton was bagged by the assessee in gunny bags, the weight of gunny bags was not separately shown in the bills issued and therefore, that much quantity of cotton was not accounted for in the sale quantity. He further observed that the assessee could....