DCIT Vs Zari Silk (India) Pvt. Ltd. (ITAT Jaipur)
ITAT Jaipur held that valuation of finished goods at lower of cost or net realizable value after following stock ageing effect is justifiable as the same is already allowed by AO in earlier years. Accordingly, addition towards difference in valuation of stock due to ageing effect not sustainable.
Facts- The assessee is engaged in the business of Manufacturing & Trading of Sarees, Salwar Suites and Dress Materials. A survey u/s 133A of the Act was carried out on the business premises of the assessee on 26.11.2014. Notably, the value of inventory available with the assessee was determined by the survey team at Rs. 31,38,42,649/- as on 26.11.2014, whereas inventory reported on accounting software (Tally) was at Rs. 27,95,30,977/-. The assessee also maintained inventory in the separate software (named MISSBS) where in the figure of stock was reported at Rs. 31,24,00,586/-. Considering the differences in the stock while in the assessment proceeding the assessee was asked to show cause vide notice dated 30.11.2017 as to why the difference of Rs. 3,43,11,672/- not considered as income.
AO did not consider the explanation furnished by the assessee in stock for an amount of Rs. 1,98,88,536/- and Rs. 1,29,81,073/-. For the balance amount of Rs. 14,42,063/- assessee failed to furnish any justification. Based on said observations, ld. AO added the difference in inventory of Rs. 3,43,11,672/- as income in the hands of the assessee as undisclosed investment.
