INCOME TAX ACT, 1961

Section 145

Accounting method - Unaccounted stock difference and non-revaluation of value of stock - LIFO v/s FIFO method -

Assessee was a trader of gold and diamond ornaments. During the course of survey proceedings, there was a difference between physical stock and as shown in books of account. On verification of audited books of account, it was found that assessee had not accounted the stock difference and not revalued value of stock. Assessee had not followed Accounting Standard-2, as prescribed by statutory authorities. The assessee should have valued the stock at FIFO method or net realizable value in place of LIFO method. AO made addition on account of difference in valuation of stock. Held: Assessee was following the norm to compute value of closing stock at cost and net reliable value whichever was lower by applying LIFO method. Valuation of stock made by assessee was well-established and was consistently being followed by assessee in earlier years. Once adopted method of valuing closing stock should be followed consistently unless there was cogent reason to change it. If Revenue had accepted a particular's view or proposition in past, it was not open for Revenue to take entirely contrary or different stand in a later year on same issue by relying upon the case of Supreme Court in Radha Soami Satsang v. CIT [(1992) 193 ITR 321 (SC) : 1992 TaxPub(DT) 0858 (SC)].

Followed:Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC) : 1992 TaxPub(DT) 0858 (SC) CIT v. J.P. Patel (Bombay) (P.) Ltd. (2003) 263 ITR 421 (MP) : 2003 TaxPub(DT) 1217 (MP-HC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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