TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 1249
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....ry should be valued on FIFO or Weighted Average Method." 3. The brief facts qua the issue are that theassessee filed its return of income for the Assessment Year 2011-12 on 28.09.2011, declaring total income to the tune of Rs. 3,98,33,213/-. The return of income of the assessee was processed on 13.01.2012 u/s 143(1) of the Act. Later, the assessee's case was selected for scrutiny u/s 143(2) of the Act and the Assessing Officer has completed assessment u/s 143(3) by making addition to the tune of Rs. 14,43,06,905/- on account difference in valuation of stock. During the course of scrutiny proceeding, it was found that a survey action under section 133A was conducted by ITO and who made specific enquiries and concluded his findings in his final report dated 05.05.2011. The crux of the report as submitted by ITO is as follows: "The assessee is a trader of gold and diamond ornaments. During the courseof survey proceedings value of stock was physically determined at Rs. 25,36,11,394/-. But as perassessee's books closing stock was shown as Rs. 10,93,04,489/-. The stock difference comes toRs.11,43,06,905/-.The matter was confronted with the assessee during the time of survey andthe....
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...., they valued closing stock as at the end of the year consistently the weight ofgold ornaments held since earlier years also. The assessee also submitted that in all the past years, the assessee has been following consistently the same method and stock is being valued at cost price or market price whichever is lower. The assessee also submitted that on the date of survey and subsequent happenings relating to alleged admission and for making payment of Rs. 3 crores, it would be appropriate to refer to declaration dated 30th March, 2011 made by Smt. Anita Basak, a director. The assessee's declaration put stress on the fact that during the survey proceeding she was not in good health and statement given by her was under pressure. 6. However, the Assessing Officer did not accept the contention of the assessee because of the following reasons: (i) Assessee has not followed Accounting Standard - 2, as prescribed by the statutory authorities.The assessee should value the stock at FIFO method or net realizable value in place of LIFO method. (ii) The assessee did not explain the difference in the quantity of gold and diamond found physically in the course of survey. (iii) The assesse....
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.... No.25 of Accounting Standard -2 which reads as under: "25 The cost of inventories, other than those dealt with in paragraph23, shall be assigned by using the first-in, first out (FIFO) or weighted average cost formula. An entity shall use the same cost formula for all inventories having a similar nature and use to the entity. For inventories with a different nature or use, different cost formulas may be justified." The ld. DR for the Revenue submitted that the valuation of stock done by the assessee is not as per the Companies (Accounting Standard) Rules, 2006 and hence, addition made by the Assessing Officer is to be accepted. 10. On the other hand, the ld. Counsel for the assessee has submitted before us that ld. CIT(A) provided relief to the assessee based on the decision of the Hon'ble ITAT Kolkata in assessee'sown case for Assessment Year 2009-10in ITA No.51/Kol/2013. Apart from this, the ld. Counsel for the assessee submitted before us that the Department has been accepting the method for valuation of closing stock which is regularly followed by the assessee for valuation of closing stock in earlier years. Since, the department has been accepting the method regularly fol....
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....r 2009-10 in ITA No.51/Kol/2013. We also note that the judgment of the Coordinate bench in ITA No.442/Kol/2015 in the case of M/s RoopshreeJewellers (P) Ltd. dated 17.04.2018 is identical and similar to the facts of the assessee`s case under consideration, wherein it was held as follows: "4.2. The ld AO observed that the value of the Gold jewellery at the commencement of the year was much less than its value at the end of the year. The assessee stated that the details of stock had been maintained in terms of weight only and not in terms of pieces and items of jewellery. The ld AO observed that the assessee could not able to locate as to which items of jewellery were there in the opening stock, purchase and closing stock. Hence the assessee pleaded that it was not possible to say as to whether the items sold during the year were items of opening stock or were the items that had been purchased during the year. In other words, in the absence of the details, the assessee could not tell as to whether the items left in the closing stock or were out of the ones which has been purchased / manufactured during the year, it is just a assumption that the jewellery, which was purchased last, ....