Income Tax Appellate Tribunal – Jaipur
Dcit Central Circle-2, Jaipur, … vs M/S. Vikas Jewellers 331-332 … on 1 November, 2021 vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES “A”, JAIPUR
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BEFORE SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 789/JP/2019
Assessment Year: 2016-17
Deputy Commissioner of cuke M/s Vikas Jewellers,
Income Tax, Vs. 331-332, Govindram Building,
Central Circle-2, MI Road, Jaipur.
Jaipur.
PAN No.: AAKFV 6383 P
vihykFkhZ@Appellant izR;FkhZ@Respondent
jktLo dh vksj ls@ Revenue by : Shri B.K. Gupta (PCIT-DR)
fu/kZkfjrh dh vksj ls@ Assessee by: Shri S.R. Sharma, (CA) &
Shri Rajnikant Bhatra (CA)
lquokbZ dh rkjh[k@ Date of Hearing : 16/09/2021
mn?kks”k.kk dh rkjh[k@ Date of Pronouncement : 01/11/2021
vkns’k@ ORDER
PER: SANDEEP GOSAIN, J.M.
This is the appeal filed by the Revenue against the order of the ld.
CIT(A)-4, Jaipur dated 27/03/2019 for the A.Y. 2016-17 wherein following
grounds have been raised by the Revenue.
“1. Whether on the facts and in the circumstances of the case, the Ld.
CIT(A) was right in deleting of Rs. 2,12,54,055/- on account of excess
stock found during the search without appreciating the facts that one
of the partner of the firm categorically admitted the excess stock of
Rs. 5,64,20,450/- in the statements recorded during the search U/s
132(4) of the IT Act.
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DCIT Vs M/s Vikas Jewellers
2. The appellant crave, leave or reserving the right to amend, modify,
alter add or forego any ground(s) of appeal at any time before or
during the hearing of this appeal.”
2. The hearing of the appeals was concluded through video conference
in view of the prevailing situation of Covid-19 Pandemic.
3. The brief facts of the case are that the assessee is a firm carrying on
business of trading & manufacturing of gold/silver jewellery and precious &
semi precious stones. The assessee filed its return of income on 16/10/2016
declaring total income of Rs. 3,01,17,360/-. A search u/s 132 of the Income
Tax Act, 1961 (in short, the Act) was carried out on 28-01-2016 of which
the assessee is one of the Members. During the course of search, cash,
jewellery, valuables, stock in trade, documents, books of account and/or
loose papers were found and seized Finally, the assessment was completed
U/s 143(3) r.w.s. 153A of the Act assessing total income of the assessee at
Rs. 5,15,73,080/- by making various additions.
4. Being aggrieved by the order of the A.O., the assessee carried the
matter before the ld. CIT(A), who after considering the submissions of both
the parties and material placed on record, deleted the addition of Rs.
2,12,54,055/- made by the A.O. on account of excess stock found during
the course of search.
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DCIT Vs M/s Vikas Jewellers
5. Now the Revenue is in appeal against the order passed by the ld.
CIT(A).
6. At the outset, the ld. DR has vehemently supported the order of the
A.O.
7. On the other hand, the ld. AR appearing on behalf of the assessee
has reiterated the same arguments as were raised before the ld. CIT(A) and
also relied on the written submissions filed before the Bench and the same
is reproduced below:
“It is submitted that it is a fact that in search proceedings the authorized
officer found no excess stock in quantity and no excess stock in quantity
was determined. Total value of stock of all the items of gold jewellery and
gold jewellery studded with precious semi-precious stones was determined
by the valuer at the prevailing rate of gold and precious stones as on 28-
01-2016 i.e. as on the date of search at Rs. 22,37,26,899/, It is apparent
from the said valuation report that the entire goods in stock was valued at
market rate/selling rate on the date of search and not at the cost price to
the assessee. The Govt. approved valuer/registered valuer while valuing
jewellery/stock of jewellery always determines its market value and cost
thereof never determined by them as it is unascertainable by them. Thus
the market price taken by approved valuer is liable to be reduced by the
gross profit margin of dealer embedded therein to arrive at cost of stock
found in course of search. The authorized officer to determine value of
stock as per books of accounts adopted G.P. rate method i.e. a trading
account was drawn taking the amounts of opening stock, purchases and
sales till the date of search and on the sales amount preceding year’s G.P.
rate was applied and the G.P. amount worked by said formula was put in
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DCIT Vs M/s Vikas Jewellers
debit side of the trading account and out of aggregate total of debit side
i.e. value of opening stock, purchases and the G.P. calculated as per above
method total sales amount was deducted and the resultant amount was
taken as value of stock in Trade as per books of accounts as on the date of
search. In this computation the authorized officer incorrectly taken last year
G.P. rate at 0.7% in place of 9.1% resulting in stock as per books taken
less by Rs. 68,17,033/-. In assessment order the Ld. A.O. accepted the said
mistake and allowed deduction of Rs. 68,17,033/- treating stock as per
books of accounts more by Rs. 68,17,033/- hence there remains no dispute
in stock as per books of account. However as verifiable from the stock
inventory-cum-valuation report prepared by the I.T. department’s
appointed valuer that for the valuation of gold/silver gems stones rate
applied to calculate the total value of stock as on 28.1.2016 i.e. the
prevailing market rate which is also a selling rate. It is verifiable from the
audited statement of accounts that the method of valuation of closing stock
as being regularly employed by the assessee firm is at estimated cost and
every year the stock is carried forwarded/brought forwarded at such cost
value. Thus the said market price arrived at by valuer also includes the
margin of profit of the dealer. As submitted above that the margin of gross
profit in assessee firm’s case is about 9.13 to 9.7% and accordingly for
determination the cost of the stock found as on the date of search a
deduction of 9.50% being G.P. rate of earlier year(s) should be allowed
from market value determined by valuer. After allowing the said
deductions @ 9.50% the correct value of the stock works out as under: –
Total value of closing stock of M/s Vikas 22,37,26,899/-
Jewellers as per valuation report by the Regd.
Valuer.
2,12,54,055/-
Less: Gross Profit margin / discount etc. @ 9.5%
Total value of stock as on the date of search 20,24,72,844/-28.01.2016
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DCIT Vs M/s Vikas Jewellers
Less: Value of stock as per books of accounts
17,41,23,482-
Excess value of closing stock as on the date of 2,83,49,362/-
search
Thus, the correct excess value of closing stock as on the date of search
works out to Rs. 2,83,49,302/- in place of Rs. 5,64,20,450/- determined
and mentioned in the statement recorded u/s 132 (4) of the I. T. Act,
1961. Thus the statement of assessee recorded u/s 132 (4) is wrong to
the above extent i.e. instead of correct excess stock of Rs. 2,83,49,362/-
the wrongly calculated excess stock of Rs. 5,64,20,450/- by authorized
officer in search was admitted as excess stock as additional income of
the year and surrendered to tax. Thus there is no retraction but what
assessee firm did is simply to correct calculation mistake and accepted
his statement u/s 132 (4) in toto. The assessing officer is wrong in not
allowing gross profit margin @ 9.50% which was claimed as per last year
G.P. rate. The assessee has not specifically asked for allowance of
discount element but as a general trade practice referred to bargaining
discounts being allowed which Ld. A.O. not accepted. As for reduction of
G.P. margin from market value of stock the Id. A.O. has not stated any
thing in assessment order which is allowable in law to assessee and in
fact the authorized officers in search and Ld. A.O. in assessment
themselves in various similar cases (Bhura Mal Raj Mal Surana P. Ltd.,
Bhuramal Raj Mal Surana (Mfg.). Chandra Kumar Surana A.Y. 2015-16
passed by same A.O. — appeals heard by Id. CIT(A)-Iv, Jaipur) has
allowed deduction of margin of G.P. from valuation made by approved
valuer. The Ld. A.O. is therefore wrong and incorrect in law in not
allowing the said deduction of said G.P. margin of 9.50% from valuation
of stock done by valuer at market value on the date of search which may
kindly be allowed. The allowance of said G.P. margin will result in excess
stock as on date of search at Rs. 2,83,49,362/- as given above which
assessee declared as its additional income in return filed and paid tax.
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The Ld. A.O. is wrong in further determining excess value of stock at Rs.
2,12,54,055/-which deserves to be deleted.
Without prejudice to above we are to submit that said alleged difference
in value of Rs. 2,12,54,055/- of stock in trade as per books of accounts
and as per valuation report of registered valuer as on the date of search
i.e. 28-01-2016. The Ld. A.O. has not held that there was any difference
in quantity of stock as per valuation report and as per hooks of accounts.
There can be no addition simply on the basis of valuation unless excess
quantity of stock is found. If such addition is some how made on account
of said valuation of stock and sustained in assessment than credit of same
has to be allowed in year end while computing profit at year end which
has not been allowed and as assessing officer accepted declared closing
stock as on 31-3-2016 in books of accounts the addition of difference in
value as on 28-01-2016 will got set off The assessee carried forward the
closing stock of this year end as declared in books of accounts as on.
stock for next year. The Ld. A.O. neither allowed credit of difference while
accepting closing stock at year end but accepted closing stock declared
by the assessee which has been taken as op. stock in next year. In
next year also no credit allowed for enhanced stock and even it is done
it will be revenue neutral exercise. The Hon’ble ITAT in case of Manoj
Kumar Johari (ITA No. 479/JP/13 & 383/JP/13 order dated 16-10-2015)
has held that “Apropos Ground No. 5 of the assessee, we find merit in
the arguments of the Ld. counsel for the assessee that increase in
valuation of the closing stock is to be allowed in next year as increase
in opening stock in next year i.e. 2010-11. It has not been disputed
that the assessee has not claimed any benefit by increase in valuation
of stock in subsequent year. Hence, the addition becomes revenue
neutral. Consequently, respectfully following the decision of Hon’ble
Supreme Court in the case of CIT Vs. Excel Industries Ltd. (2013) 358
ITR 295, the addition being tax neutral and the assessee having not
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DCIT Vs M/s Vikas Jewellers
derived any benefit, the addition is deleted” and in case of Paras Mal
Jain vs ALIT (ITA No.916/JP/12 dated 17-10-2015 has held that
“Assuming an addition on account of closing stock is somehow made,
the same is to be allowed to the assessee in the next year as opening
stock which will reduce the profits of next year. This exercise is
essentially revenue neutral between two years. The Hon’ble Supreme
Court in the case of CIT vs. Excel India, 358 ITR 295 has held that
addition in such revenue neutral exercise should not be made by the
Department. Thus, on both the counts, there is no justification in
retaining the addition which is deleted.”
It is, therefore, prayed that order of Ld. CIT(A) may kindly be upheld
and addition of Rs.2,12,54,055/- made in the income of appellant
deserves to be deleted.”
8. We have considered the rival contentions and carefully perused the
material placed on record. From perusal of the record, we observed that
the ld. CIT(A) has dealt with the issue in para 5 to 5.5 of his order and the
same is reproduced below:
“5. I have perused the written submissions submitted by the Ld.
A/R and the order of AO. I have also gone through various
judgements cited by the Ld. A/R and those contained in the
order of AO. I have perused the statement recorded in
course of search u/s 132(4) of appellant. I have also
perused the valuation report of approved valuer who valued
the stock found in course of search and also letter filed by
appellant to DDIT (Inv.) after search on 22-02-2016.
5.2 It is found that valuer while valuing the stock has taken
market value of stock found on the date of search as the
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DCIT Vs M/s Vikas Jewellers
valuer could value only market value of stock and cannot
value cost of stock. Thus valuation of closing stock found in
course of search is at market value of stock as on date of
search. As the stock found in course of search was valued at
market value it should have been reduced by G.P. margin of
appellant to arrive at cost of stock so as to compare it with
the stock as per books which admittedly was at cost so as to
arrive at difference of value of stock found in course of
search. The Ld. A/R also pointed out that the said mistake in
calculation of stock as well as mistake in calculation of stock
as per books of accounts were immediately on receipt of
copies of statement recorded u/s 132(4) and copy of
valuation report from DDIT was pointed out to DDIT(Inv.) by
filing detailed letter giving correct calculations but he took
no action thereon. The appellant thereafter while filing
return for the year duly corrected itself both the mistakes i.e.
corrected the cost of stock found on the day of search by
reducing its G.P. margin and also corrected the stock as per
hooks of accounts on the date of search taking its correct
G.P. margin and calculated correct difference of stock found
in course of search at Rs.2,83,49,362/- and included the said
difference as its income in return filed. The A.O. in
assessment proceedings accepted the mistake pointed out by
appellant in calculating the stock as per books of accounts on
the date of search but did not allow deduction of gross profit
(by G.P. rate) from market value of stock so determined by
approved valuer though claimed by appellant in assessment
proceedings also and thereby made impugned addition of Rs.
2,12,54,055/- on account of difference of stock on date of
search which is not included in return.
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DCIT Vs M/s Vikas Jewellers
5.3 The AO in assessment order has not given any reason for not
allowing the deduction of G.P. margin from the market value
of stock on the date of search so as to arrive estimated cost
of stock found in course of search to compare it with cost of
stock on the date of search as per books of accounts of
appellant. I find the contention of Ld. A/R as well founded
and G.P. margin of appellant should have been allowed from
market value of stock on the date of search valued by
approved valuer and thereafter difference in stock found in
course of search and stock as per books of accounts Should
have been arrived as normally being done in search/survey
proceedings. Therefore I allow the deduction of G.P. margin
rightly claimed by appellant at 9.5% based on that margin of
profit in appellant’s case for last 2 — 3 years was 9.13% to
9.7% and on allowing G.P. margin of 9.5% from market value
of stock found on the date of search valued by approved
valuer there remains no difference in stock in excess to
difference of value of stock surrendered and declared by
appellant in its return filed. Therefore, addition made by AO
towards further excess stock of Rs.2, I 2,54,055/- cannot he
sustained on the facts of the case.
5.4 Further the Ld. AIR in his submission stated that even if
addition is somehow made on account of said valuation of
stock and sustained in assessment than credit of same has to
be allowed by year end while computing profit at year end
which has not been allowed. The AO though enhanced value
of stock as on 28-01-2016 but accepted declared stock by
appellant at year end (31-3-2016) which was arrived at by
appellant by including only excess stock admitted by him. The
appellant carried forward the closing stock of this year end as
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declared in books of accounts as opening stock for next year.
In next year also no credit allowed enhanced stock and even
if it is done it will be revenue natural exercise.
The Hon’ble ITAT in case of Manoj Kumar Johari (ITA No.
479/JP/13 & 383/JP/13 order dated 16-10-2015) has held that
“Apropos Ground No. 5 of the assessee, we find merit in the
arguments of the Ld. Counsel for the assessee that increase in
valuation of the closing stock is to be allowed in next year as
increase in opening stock in next year i.e. 2010-11. It has not
been disputed that the assessee has not claimed any benefit by
increase in valuation of stock in subsequent year. Hence, the
addition becomes revenue natural. Consequently, respectfully
following the decision of Hon ‘ble Supreme Court in the case of
CIT vs. Excel Industries Ltd. (2013) 358 ITR 295, the addition
being tax natural and the assessee having not derived any
benefit, the addition is deleted”.
In case of Paras Mal Jain vs. ACTT (ITA No. 916/JP/12 dated
17-10-2015 Hon ‘ble ITAT has held that “Assuming an addition
on account of closing stock is somehow made, the same is to
be allowed to the assessee in the next year as opening stock
which will reduce the profit of next year. This exercise is
essentially revenue natural between two years. The Hon’ble
Supreme Court in the case of CIT vs. Excel India 358 ITR 295 has
held that addition in such revenue natural exercise should not be
made by the Department.
5.5 I find acceptable the above said submissions also made by Ld. A/R
supported with above judgements of Hon’ble ITAT, Jaipur Bench
and Supreme Court Judgement and so there is no justification in
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DCIT Vs M/s Vikas Jewellers
sustaining the said addition of Rs.2,12,54,05/- so made by AO
which is directed to be deleted.”
9. We observed that the valuer while valuing the stock has taken
market value of stock found on the date of search as the valuer
could value only market value of stock and cannot value cost of
stock. Thus valuation of closing stock found in course of search is at
market value of stock as on date of search. As the stock found in
course of search was valued at market value it should have been
reduced by G.P. margin of assessee to arrive at cost of stock so as
to compare it with the stock as per books which admittedly was at
cost so as to arrive at difference of value of stock found in course of
search. The Ld. A/R pointed out that the said mistake in calculation
of stock as well as mistake in calculation of stock as per books of
accounts were immediately on receipt of copies of statement
recorded u/s 132(4) and copy of valuation report from DDIT was
pointed out to DDIT(Inv.) by filing detailed letter giving correct
calculations but he took no action thereon. The assessee thereafter
while filing return for the year duly corrected itself both the
mistakes i.e. corrected the cost of stock found on the day of search
by reducing its G.P. margin and also corrected the stock as per
books of accounts on the date of search taking its correct G.P.
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DCIT Vs M/s Vikas Jewellers
margin and calculated correct difference of stock found in course of
search at Rs.2,83,49,362/- and included the said difference as its
income in return filed. The A.O. in assessment proceedings accepted
the mistake pointed out by assessee in calculating the stock as per
books of accounts on the date of search but did not allow deduction
of gross profit (by G.P. rate) from market value of stock so
determined by approved valuer though claimed by assessee in
assessment proceedings also and thereby made impugned addition
of Rs. 2,12,54,055/- on account of difference of stock on date of
search which is not included in return.
10. We further observed that the AO in assessment order has not
given any reason for not allowing the deduction of G.P. margin from
the market value of stock on the date of search so as to arrive
estimated cost of stock found in course of search to compare it with
cost of stock on the date of search as per books of accounts of
assessee. We find the contention of Ld. A/R as well founded and
G.P. margin of assessee should have been allowed from market
value of stock on the date of search valued by approved valuer and
thereafter difference in stock found in course of search and stock as
per books of accounts Should have been arrived as normally being
done in search/survey proceedings. Therefore we allow the
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DCIT Vs M/s Vikas Jewellers
deduction of G.P. margin rightly claimed by assessee at 9.5% based
on that margin of profit in assessee’s case for last 2 — 3 years was
9.13% to 9.7% and on allowing G.P. margin of 9.5% from market
value of stock found on the date of search valued by approved
valuer there remains no difference in stock in excess to difference of
value of stock surrendered and declared by assessee in its return
filed.
11. The Ld. A/R in his submission stated that even if addition is
somehow made on account of said valuation of stock and sustained
in assessment than credit of same has to be allowed by year end
while computing profit at year end which has not been allowed. The
AO though enhanced value of stock as on 28-01-2016 but accepted
declared stock by assessee at year end (31-3-2016) which was
arrived at by assessee by including only excess stock admitted by
him. The assessee carried forward the closing stock of this year end
as declared in books of accounts as opening stock for next year. In
next year also no credit allowed enhanced stock and even if it is
done it will be revenue natural exercise. The Coordinate Bench of
ITAT, Jaipur in case of Manoj Kumar Johari (ITA No. 479/JP/13
& 383/JP/13 order dated 16-10-2015) has held that “Apropos
Ground No. 5 of the assessee, we find merit in the arguments of the
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Ld. Counsel for the assessee that increase in valuation of the closing
stock is to be allowed in next year as increase in opening stock in next
year i.e. 2010-11. It has not been disputed that the assessee has not
claimed any benefit by increase in valuation of stock in subsequent
year. Hence, the addition becomes revenue natural. Consequently,
respectfully following the decision of Hon’ble Supreme Court in the
case of CIT vs. Excel Industries Ltd. (2013) 358 ITR 295, the
addition being tax natural and the assessee having not derived any
benefit, the addition is deleted”. In case of Paras Mal Jain vs. ACTT
(ITA No. 916/JP/12 dated 17-10-2015 the Coordinate Bench has
held that “Assuming an addition on account of closing stock is
somehow made, the same is to be allowed to the assessee in the next
year as opening stock which will reduce the profit of next year. This
exercise is essentially revenue natural between two years. The Hon’ble
Supreme Court in the case of CIT vs. Excel India 358 ITR 295 has held
that addition in such revenue natural exercise should not be made by the
Department.
12. From perusal of the record, we found that in search proceedings the
authorized officer found no excess stock in quantity and no excess stock in
quantity was determined. Total value of stock of all the items of gold
jewellery and gold jewellery studded with precious semi-precious stones was
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determined by the valuer at the prevailing rate of gold and precious stones as
on 28-01-2016 i.e. as on the date of search at Rs. 22,37,26,899/-. It was
apparent from the said valuation report that the entire goods in stock was
valued at market rate/selling rate on the date of search and not at the cost
price to the assessee. The Govt. approved valuer/registered valuer while
valuing jewellery/stock of jewellery always determines its market value and
cost thereof never determined by them as it is unascertainable by them. Thus
the market price taken by approved valuer is liable to be reduced by the
gross profit margin of dealer embedded therein to arrive at cost of stock
found in course of search. The authorized officer to determine value of stock
as per books of accounts adopted G.P. rate method i.e. a trading account
was drawn taking the amounts of opening stock, purchases and sales till the
date of search and on the sales amount preceding year’s G.P. rate was
applied and the G.P. amount worked by said formula was put in debit side of
the trading account and out of aggregate total of debit side i.e. value of
opening stock, purchases and the G.P. calculated as per above method total
sales amount was deducted and the resultant amount was taken as value of
stock in Trade as per books of accounts as on the date of search. In the
computation, the authorized officer incorrectly taken last year G.P. rate at
0.7% in place of 9.1% resulting in stock as per books taken less by Rs.
68,17,033/-. In assessment order the A.O. accepted the said mistake and
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DCIT Vs M/s Vikas Jewellers
allowed deduction of Rs. 68,17,033/- treating stock as per books of accounts
more by Rs. 68,17,033/- hence there remains no dispute in stock as per
books of account. However as verifiable from the stock inventory-cum-
valuation report prepared by the I.T. department’s appointed valuer that for
the valuation of gold/silver gems stones rate applied to calculate the total
value of stock as on 28.1.2016 i.e. the prevailing market rate which is also a
selling rate. It is verifiable from the audited statement of accounts that the
method of valuation of closing stock as being regularly employed by the
assessee firm is at estimated cost and every year the stock is carried
forwarded/brought forwarded at such cost value. Thus the said market price
arrived at by valuer also includes the margin of profit of the dealer. As
submitted above that the margin of gross profit in assessee firm’s case is
about 9.13 to 9.7% and accordingly for determination the cost of the stock
found as on the date of search a deduction of 9.50% being G.P. rate of
earlier year(s) should be allowed from market value determined by valuer.
After allowing the said deductions @ 9.50% the correct value of the stock
works out as under: –
Total value of closing stock of M/s Vikas 22,37,26,899/-
Jewellers as per valuation report by the
Regd. Valuer.
Less: Gross Profit margin / discount etc. @ 2,12,54,055/- 9.5%
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DCIT Vs M/s Vikas Jewellers
Total value of stock as on the date of search 20,24,72,844/-
28.01.2016
Less: Value of stock as per books of accounts
17,41,23,482-
Excess value of closing stock as on the date of 2,83,49,362/-
search
Thus, the correct excess value of closing stock as on the date of search
works out to Rs. 2,83,49,302/- in place of Rs. 5,64,20,450/- determined
and mentioned in the statement recorded u/s 132 (4) of the Act. Thus the
statement of assessee recorded u/s 132 (4) is wrong to the above extent
i.e. instead of correct excess stock of Rs. 2,83,49,362/- the wrongly
calculated excess stock of Rs. 5,64,20,450/- by authorized officer in search
was admitted as excess stock as additional income of the year and
surrendered to tax. Thus there is no retraction but what assessee firm did
is simply to correct calculation mistake and accepted his statement u/s 132
(4) in toto. The assessing officer is wrong in not allowing gross profit
margin @ 9.50% which was claimed as per last year G.P. rate. The
assessee has not specifically asked for allowance of discount element but
as a general trade practice referred to bargaining discounts being allowed
which Ld. A.O. not accepted. As for reduction of G.P. margin from market
value of stock the. A.O. has not stated any thing in assessment order which
is allowable in law to assessee and in fact the authorized officers in search
and A.O. in assessment themselves in various similar cases (Bhura Mal Raj
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DCIT Vs M/s Vikas Jewellers
Mal Surana P. Ltd., Bhuramal Raj Mal Surana (Mfg.). Chandra Kumar
Surana A.Y. 2015-16 passed by same A.O. — appeals heard by ld. CIT(A)-
iv, Jaipur has allowed deduction of margin of G.P. from valuation made by
approved valuer. The A.O. is therefore wrong and incorrect in law in not
allowing the said deduction of said G.P. margin of 9.50% from valuation of
stock done by valuer at market value on the date of search. The allowance
of said G.P. margin will result in excess stock as on date of search at Rs.
2,83,49,362/- as given above which assessee declared as its additional
income in return filed and paid tax.
13. Apart from our above discussion, we are of the view that said alleged
difference in value of Rs. 2,12,54,055/- of stock in trade as per books of
accounts and as per valuation report of registered valuer as on the date of
search i.e. 28-01-2016. The A.O. has not held that there was any difference
in quantity of stock as per valuation report and as per hooks of accounts.
There can be no addition simply on the basis of valuation unless excess
quantity of stock is found. If such addition is somehow made on account of
said valuation of stock and sustained in assessment than credit of same has
to be allowed in year end while computing profit at year end which has not
been allowed and as assessing officer accepted declared closing stock as on
31-3-2016 in books of accounts the addition of difference in value as on 28-
01-2016 will got set off the assessee carried forward the closing stock of
19 ITA 789/JP/2019_
DCIT Vs M/s Vikas Jewellers
this year end as declared in books of accounts as on stock for next year.
The A.O. neither allowed credit of difference while accepting closing stock
at year end but accepted closing stock declared by the assessee which
has been taken as op. stock in next year. In next year also no credit
allowed for enhanced stock and even if it is done it will be revenue
neutral exercise. Considering the totality of facts and circumstances, we
are of the view that the ld. CIT(A) has passed a well-reasoned order and
no new facts or circumstances have been brought before us by the ld DR
in order to controvert or rebut the factual findings so recorded by the ld.
CIT(A), therefore, we see no reason to interfere into or deviate from the
findings so recorded by the ld. CIT(A) qua this issue and we uphold the
same.
14. In the result, this appeal of the revenue stands dismissed.
Order pronounced in the open court on 01st November, 2021.
Sd/- Sd/-
¼foØe flag ;kno½ ¼lanhi x®lkÃa½
(VIKRAM SINGH YADAV) (SANDEEP GOSAIN)
ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member
Tk;iqj@Jaipur
fnukad@Dated:- /10/2021
*Ranjan
vkns’k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- The DCIT, Central Circle-2, Jaipur.
2. izR;FkhZ@ The Respondent- M/s Vikas Jewellers, Jaipur.3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
20 ITA 789/JP/2019_
DCIT Vs M/s Vikas Jewellers
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 789/JP/2019)
vkns’kkuqlkj@ By order,
lgk;d iathdkj@Asst. Registrar
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