Ravi Kumar Gupta, Jammu vs Assessee

I.T.A. No.749/Asr/2014 Assessment year 2007-08

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IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH BENCH, AMRITSAR

[Coram:Pramod Kumar AM and A.D. Jain JM]

I.T.A. No.749/Asr/2014 Assessment year:2007-08

Ravi Kumar Gupta, ..........................Appellant Prop. M/s. Ravi Jewellers, Lakhdatta Bazar, Jammu (J&K)

[PAN:ADVPG 8292 L ]

Vs.

Dy. Commissioner of Income-tax, ............................Respondent Circle-2, Jammu.

Appearances by:

None for the appellant Tarsem Lal for the respondent

Date of concluding the hearing: June 03, 2015 Date of pronouncing the order : June 04, 2015

Per Pramod Kumar:

1. By way of this appeal, the assessee appellant has called into question correctness of learned CIT(A)'s order dated 26 th September, 2014, confirming penalty of Rs.90,244/- imposed on the assessee under section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 2007-08.

2. To adjudicate on this appeal, only a few material facts need to be taken note of. The assessee is engaged in business as jeweller. During the course of scrutiny assessment proceedings, the Assessing Officer noted that I.T.A. No.749/Asr/2014 Assessment year 2007-08

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while valuing the closing stock, the assessee was only taking into account value of the gold and did not factor for the making charges of the jewellery. On these facts, the Assessing Officer added the making charges of jewellery, computed on estimated basis @ Rs 25 per gram, to the value of closing stock. The matter did not rest there. The Assessing Officer also imposed penalty of Rs.90,244 in respect of this addition. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. The assessee is not satisfied and is in further appeal before us.

3. None appeared for the assessee but we have heard the learned Departmental Representative, perused the material on record and duly considered facts of the case in the light of the applicable legal position.

4. We find that it is an undisputed position that the valuation of closing stock is to be done at cost or at market price, whichever is less, and that market price as is the settled legal position, net realisable value of the closing stock. In the light of this undisputed position and having regard to the fact that it is a possible view of the matter that net realisable value in respect of gold jewellery is only intrinsic value of gold, the course of action adopted by the assessee in valuing gold jewellery on the basis of cost price or market price of gold-

whichever is less, is one of the possible view of the matter. The mere fact that the assessee has accepted the addition made by the Assessing Officer, though by specifically observing that such a valuation is tax neutral because corresponding higher stock value is taken into account in the next year, it does not necessarily imply that there was a lapse on the part of the assessee I.T.A. No.749/Asr/2014 Assessment year 2007-08

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The valuation of closing stock, in the present case, may thus be incorrect but not necessarily malafide or even lacking bonafides. The explanation in support of such a valuation method cannot be rejected as unacceptable. As a matter of fact, as the assessee rightly contended before the Assessing Officer, such a valuation is overall tax neutral as well, and it is only on account of difference of opinion on the approach to stock valuation. Keeping in view these discussions, as also entirety of the case, we deem it fit and proper to delete the impugned penalty of Rs.90,244. The assessee gets the relief accordingly.

5. In the result, the appeal is allowed. Pronounced in the open court today on 4 th day of June, 2015.

Sd/- Sd/- A D Jain Pramod Kumar Judicial Member) (Accountant Member)

Dated: the 4 th day of June, 2015 *aks/-

Copies to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File

By order

Assistant Registrar Income Tax Appellate Tribunal Amritsar Bench, Amritsar