TaxTMI 
TaxTMI 
2016 (1) TMI 408
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.... not willing to press Ground Nos. 1 to 7. The same is taken as Statement from the Bar and accordingly, the ground numbers 1 to 7 raised by the assessee are dismissed as not pressed. 4. The next issue to be decided in this appeal is as to whether an addition could be made in the sum of Rs. 2,27,246/- towards difference in valuation of closing stock in the facts and circumstances of the case. 4.1. The brief facts of this issue is that the assessee is a partnership firm engaged in the trading of motor cycles, servicing and repairing, mobile services and authorized agent of P C Chandra Jewellery Apex P Ltd . The assessee has been valuing the closing stock by considering the cost price of the goods alone regularly over the years. The Learned AO during the course of assessment proceedings held that direct expenses incurred are also to be included in the valuation of closing stock and accordingly made an addition of Rs. 2,27,246/-. On first appeal, the Learned CITA held that all direct expenses are to be included for determining the final cost price for the purpose of valuation of closing stock. The Learned CITA also held that the assessee had agreed for the said disallowance in the....
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.... condition. We are in complete agreement with the arguments of the Learned AR that if the consistent method followed by the assessee is disturbed by the Learned AO for valuation of closing stock of goods, then the same method should be equally adopted for valuation of opening stock in the assessment year under appeal also in order to determine the true profits for the assessment year. Reliance is placed on the decision of Hon'ble Bombay High Court in the case of CIT vs Mahalaxmi Glass Works (P) Ltd reported in 318 ITR 116 (Bom) in support of this proposition, wherein it was held that :- " The substantial question of law as raised in this appeal is as under : "Whether, on the facts and circumstances of the case and in law, the hon'ble Tribunal was justified in confirming the order of the Commissioner of Income-tax (Appeals) whereby he directed the Assessing Officer to make adjustment of unutilized Modvat credit to the opening stock and thus ignoring the ratio laid down in Melmould Corporation v. CIT [1993] 202 ITR 789 (Bom) wherein it was held that changing the value of opening stock will lead to chain reaction and hence the same should not be done ?" 2. Thi....
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....rom this, we find from the judgment of the Income-tax Appellate Tribunal that when counsel for the assessee contended that the closing stock of the previous year be taken as opening stock of the next year and that the Assessing Officer be directed to establish the valuation for closing stock as opening stock of the next year, the Departmental representative stated that he has no objection for the same. This concession has been recorded in the order. Respectfully following the decision of Bombay High Court as stated supra, we hold that the method of valuation of closing stock adopted by the Learned AO in this assessment year should be adopted for valuation of opening stock for the assessment year under appeal. Hence we deem it fit and appropriate to set aside this issue to the file of the Learned AO to follow the aforesaid direction in respect of valuation of opening and closing stock of goods. Accordingly, the ground no. 8 raised by the assessee is allowed for statistical purposes. 5. The next issue to be decided in this appeal is as to whether an addition could be made in the sum of Rs. 7,82,442/- towards cash found during the course of survey. 5.1. The brief facts of thi....
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...., we find that the Learned AO had wrongly invoked section 68 of the Act in order to make this addition which is not applicable for cash found . On specific query from the Bench with regard to the fact that merely by mentioning a wrong section in the assessment order would not automatically lead to a situation that the cash found during survey stands explained. We find that the Learned AO had not rejected the books of accounts produced by the assessee. The cash was found and the business was allowed to be continued by the survey team. Hence there could be a situation that certain business receipts and payments could not have been properly entered on the day of survey itself. However, the cash book has been prepared and final balance sheet is prepared later on and presented before the Learned AO which are not rejected by the Learned AO. Hence in these facts and circumstances , we deem it fit and appropriate, in the interest of justice and fair play, to set aside this issue to the file of the Learned AO to decide this issue afresh in accordance with law. The assessee is at liberty to file additional evidences and documents to explain the cash found during the course of survey with ref....