Income Tax Appellate Tribunal - Jaipur
Radhey Shyam Laddha, Kota vs Acit, Kota on 21 May, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM
vk;dj vihy la-@ITA No. 97/JP/2017
fu/kZkj.k o"kZ@Assessment Year : 2011-12
Radhey Shyam Laddha, cuke A.C.I.T.,
Raja India Company, near Vs. Circle-2,
Mandi yard Gate, D-263, Kota.
Bhamashah Mandi, Kota.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAHPL 3516 F
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Shri B.L. Bhojwani (CA)
jktLo dh vksj ls@ Revenue by : Shri Raj Mehra (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 16/05/2018
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 21/05/2018
vkns'k@ ORDER
PER: BHAGCHAND, A.M. The appeal filed by the assessee emanates from the order of the ld. CIT(A), Kota dated 30/11/2016 for the A.Y. 2011-12, wherein the assessee has raised following grounds of appeal:
"1. That the ld Assessing Officer has erred on the facts and in the circumstances of the case and in law in valuing the closing stock at average purchase price even though the assessee was consistently valuing the stock at market price and the ld CIT(A) too has similarly erred in confirming the action of the Assessing Officer.
2. Without prejudice to Ground No.1
2 ITA 97/JP/2017_ Radhey Shyam Laddha Vs. ACIT That the ld CIT(A) has erred on the facts and in the circumstances of the case in sustaining the addition to the extent of Rs. 3,96,252/- out of the addition of Rs. 22,57,977/- made by the ld Assessing Officer on account of enhancement in the valuation of various items of closing stock."
2. The brief facts of the case are that the return of income was filed by the assessee on 30/09/2011 declaring total income of Rs. 56,72,730/-. The assessment was completed U/s 143(3) of the Act at an income of Rs. 82,69,600/-. The Assessing Officer made various additions.
3. The ld. CIT(A) has given part relief to the assessee by holding as under:
"I have gone through assessee's submission and AO's findings.
As regards Ground of appeal No. 1, the same issue of valuation of closing stock had also come into consideration in the assessee's case for A.Y 2009-10 and my predecessor CIT (A) vide appeal order no 551/11-12 dated 26.02.2013 had taken the value of closing stock on estimation basis in respect of most of the items/commodities mentioned in this Ground.
Following the same line of decision, I am of the opinion that since the pricing of these items are very volatile and fluctuate year to year, the only method of valuation can be estimation in the absence of proper and minute detailing adopted by the assessee as well as the A.O, who adopted the average pricing method. Further, since the assessee has been following the same method year after year, the legal precedents on the method are in his favour.
3 ITA 97/JP/2017_ Radhey Shyam Laddha Vs. ACIT Looking to the totality of the facts involved, since the assessee has also not been able to justify his arguments regarding most of the Bardana being used and old, the valuation is enhanced from 11/- per bag adopted by him to Rs. 16/- per bag but reduced from the figure of Rs. 26.27/- taken by the A.O being veiy high and based on average of total purchases when average sale rate is 27/-.
The addition would be 20,210 bags *5/- which would be equal to Rs. 101, 050/-. The balance addition of Rs. 1,87,347/- is to be deleted.
As regards the addition on closing stock in the Gunwar account, it is seen that in the earlier year order referred above, the CIT (A) had confirmed a lump sum amount towards this commodity. In the current appeal also, the valuation taken by the A.O appears to be on the higher side considering the submission made by the assessee and the facts examined. The addition in the valuation of closing stock is restricted to Rs. 1,00,000/-. The balance addition of Rs. 8, 01,064/- is directed to be deleted.
As regards the addition on account of oil seeds also the A.O cannot take the average purchase price as the basis in the absence of qualitative and commodity wise analysis. The addition is accordingly restricted to Rs. 50,000/- . The balance addition of Rs. 1,23,346/- is directed to be deleted.
As regards the addition made in respect of Kirana items, the quantum being very low, the action of the A.O is not held to be unjustified and the addition of Rs. 9,164/-is accordingly confirmed.
As regards the addition made in respect of Dalhan account, my predecessor had held in the above referred appeal order that since the assessee did not maintain a stock register, an estimated addition was required to be sustained. Following the same line of decision, I am of the view that in the present 4 ITA 97/JP/2017_ Radhey Shyam Laddha Vs. ACIT appeal, it will be fair to restrict the addition to Rs. 1, 00,000/-. The balance addition of Rs. 5, 98,854/- is directed to be deleted.
As regards the addition made on maize/Jowar account, the quantum being very low, the action of the A.O is not held to be unjustified and the addition of Rs. 11,038/- is accordingly confirmed.
As regards the addition made in respect of wheat account also the A.O cannot take the average purchase price as the basis in the absence of qualitative and commodity wise analysis. The addition is accordingly restricted to Rs. 25,000/- . The balance addition of Rs. 1,30,904/- is directed to be deleted.
Thus, the total addition confirmed on this Ground comes to Rs.3,96,252/- and the balance addition of Rs. 18,61,725/- is directed to be deleted."
4. After hearing both the sides at length and considering the various factual aspects of the matter, we are of the view that the ld. CIT(A) has sustained small additions. The facts regarding the Bardana used and old the value adopted by the assessee's A.O. and average price has been specifically dealt by the ld. CIT(A). Since this item was used/old hence the cost or market value cannot be the basis of valuation for stock. The ld. CIT(A) has adopted the reasonable basis to value it and the addition of Rs. 1,01,050/- has been rightly sustained. However, additions in the case of valuation of closing stock of other items, has been sustained on ad hoc basis. In view of these facts, the addition in respect of closing stock for the Gunwar, oil seeds, kirana, dalhan, maize/jowar and wheat 5 ITA 97/JP/2017_ Radhey Shyam Laddha Vs. ACIT are sustained on ad hoc basis which is not justified. Accordingly, we direct to delete the addition so sustained by the ld. CIT(A).
5. In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on 21/05/2018.
Sd/- Sd/-
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(VIJAY PAL RAO) (BHAGCHAND)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 21st May, 2018
*Ranjan
vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Shri Radhey Shyam Laddha, Kota.
2. izR;FkhZ@ The Respondent- The ACIT, Circle-2, Kota.
3. vk;dj vk;qDr@ The CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 97/JP/2017) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar