2010 (7) TMI 1069

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....,23,753/- on account of valuation of closing stock of by ignoring the fact that the LIFO method adopted by the assessee for valuation of closing stock of jewellery was not specified by the accounting standard issued by Accounting Standard Board of Institute of Chartered Accountants of India for valuation of inventory and that the weighted average cost method was being employed by prominent jewelers as revealed from general enquiry. Further, no stock register item wise or detailed item-wise stock inventory or any evidence regarding the old conventional jewellery having remained with the assessee throughout the year was produced by the assessee. 3. The brief facts of the case are that the assessee is a jeweler. During the course of assessmen....

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....failed to produce any evidence that the old jewellery remained with the assessee throughout the year ; b) no stock register or item wise stock inventory was maintained or produced by the assessee; c) even if it was old jewellery, the same could be converted into latest designs. Further, the Assessing Officer made general enquiries from prominent jewelers of the city, which revealed that they had been employing weighted average cost methods for valuating the inventory and from the photocopies of purchase bills relating to March 2007, the average cost of gold was around Rs. 900 per gram, silver Rs. 105 per gram and diamond Rs. 7000 per Carat in December 2006. The Assessing Officer revalued the closing stock by adopting weighted average cost m....

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....llery would not increase the cost of acquisition of jewellery. Reliance was placed on the ratio laid by the Hon'ble Supreme Court in Chainrup Sampat Ram (24 ITR 481) for the ratio that the closing stock is to be valued either at cost or market value, whichever is lower and the value of stock cannot be appreciated higher than the cost because the closing stock is not the source of profit. Further, in case the value of closing stock is to be increased, the value of opening stock has to be increased to reflect the true profits. The assessee pointed out that survey u/s 133A of the Act was carried out at the business premises of the assessee on 23.6.2009 and the difference mainly on account of weight of jewellery and not on account of rate o....

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....valuation of stock pursuant to the survey conducted on 24.6.2009 and additional income of Rs. 1.35 crores was offered and taxes paid as per the computation filed at page 69 of the paper book. The learned AR further submitted that similar method of valuation of closing stock has been accepted in Assessment Years 2005-06 and 2006-07 vide order passed u/s 143 (3) of the Act. It was pointed out that similar method of valuation of closing stock was being adopted in the earlier years. 6. We have heard the rival contentions and perused the records. The issue arising in the present appeal is with regard to the valuation of closing stock. The assessee is a jeweler and had declared closing stock of Rs. 3,79,84,232/- as on 31.3.2007. The contention o....