1979 (12) TMI 89

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....s in purchase and sale of ornaments. Return was filed showing an income of Rs. 21,709 which came to be accepted under s. 143(1) with little modification inasmuch as the computed income amounted to Rs. 22,620. 3. Subsequently, the assessment was reopened under s. 143(2)(B) on the ground that the income had been under-assessed as the closing stock had not been valued at the market rate. According to the ITO, the method of valuation of the closing stock adopted by the assessee was at market rate whereas the assessee contended that it was following on ad-hoc method for valuing its closing stock and it was neither the precise cost price nor the market price. The assessee's case, however, was that it was following a consistent method for the l....

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.... year, it had sold 1007 gms of jewellery and there was excess sale of 553 gms as compared to the purchases which therefore, was necessarily out of opening stock. The assessee pointed out that if the sale of 553 gms of jewellery from the old stock was deducted out of the total sales of 1298 gms in the year 745 gms was sold out of the purchases of 841 (847) gms made in the year under appeal. 6. To understand the assessee's contention and the case, a close look at the trading account as also sale and purchases of the first nine months of the year would be necessary. A copy of the trading account and details of purchases and sales of the first 9 months has been given to us at pages 4 and 5and is reproduc4ed bellow which clearly supports the ....

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....ging Rs. 263 is in conformity with the earlier pattern as follows:- Asst. year. Average cost Sale rate Rate of C. Stock . Rs. Rs. Rs. 1971-72 16 20 18.5 1972-73 18.3 20.4 20 1973-74 21 28 23 1974-75 25.5 39 26.3 7. We have reproduced page 5 of the assessee's paper book to show that the entire closing stock has not been valued @ Rs. 26.3 per gm. but 3017gms.of old jewellery was valued at Rs. 23 per gm. which was the same value as adopted as on 31st Day of March, 1973. 8. A close study of the above figures would show that the assessee has never valued the closing stock at the market rate and it was valued slightly above the cost price which was in conformity with th....