The Income Tax Appellate Tribunal (ITAT) Chennai Bench has upheld the order of CIT(A) which deletes the addition, as there was no cognitive evidence which proves the change in the stock valuation method.
The revenue challenged the order of Commissioner of Income Tax (Appeals)-10, Chennai [CIT(A)] dated 10-03-2020 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) on 2702-2015.
The assessee, Smt. Shobhakaver Surana engaged in the trading of jewellery who was subjected to Tax Audit and the assessee has valued its stock at an average cost price. The valuation of the stock has been given in Schedule-D to the Tax Audit Report as placed on record.
It was evident that each category of stock has been valued by the assessee based on the average cost price including the quantity and value of the opening stock. As per financial statements, the assessee has an opening stock of Rs.115.03 Lacs and having closing stock of Rs.167.79 Lacs. There is no evidence on record that the aforesaid method of valuation has been changed by the assessee during the year.
It was admitted by AO that the valuation was made excluding the opening stock and further entire purchases were not considered while valuing old gold. After due consideration of the assessee’s submissions as well as the contents of the remand report, CIT(A) deleted the addition
The Tribunal viewed that the assessee is a trading concern that has maintained category-wise stock details which have been valued at average cost. The assessee is subjected to a Tax Audit which contains quantitative details and well valuation of stock under each category.
A Coram comprising Shri Manoj Kumar Aggarwal, AM and Shri Sonjoy Sarma, Judicial member observed that no evidence on record proves the change in method of valuation.
The Tribunal held that the addition was rightly been deleted in the impugned order and the appeal, as well as cross-objection stand, dismissed.
The assessee was represented by Shri J. Prabhakar, CA and the revenue was represented by Shri ARV. Sreenivasan.
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