INCOME TAX ACT, 1961

Section 145

Accounting method - Valuation of closing stock - Remand of matter -

Assessee was in the business of retail sale of silk saris. Case was selected for scrutiny and notice under section 143(2) was issued and subsequently, notice under section 142(1) was issued along with questionnaire. Assessee produced the details called for pursuant to such notice. Business of assessee's firm was taken over by a private limited company together with all its assets and liabilities. AO while completing the assessment made an addition towards valuation of closing stock among others on the ground that valuation of closing stock did not give the true and correct status of business and profit and the matter relating to allowability of this method of stock valuation was not accepted by Department in the earlier years and additions were made to extent of closing stock. Accordingly, AO held that closing stamp was under valued. Held: The issue with regard to whether valuation of closing stock would arise when business of assessee along with the stock was taken over by company needed to be decided. This was a mixed question of fact and law, which had to be considered because revenue did not dispute the fact that business of the assessee along with the stock was taken over by company on 8-1-2012, therefore, it would be appropriate to remand the matter to AO for fresh consideration on this aspect after due opportunity to assessee and accordingly, matter was remanded back to AO to consider afresh.

Relied:Asstt. CIT v. R.M. K.V. Silks & Vice-Versa [ITA Nos. 2706/Mds/2016, 2705/Mds/2016, 2469/Mds/2016, 2704/Mds/2016, ITA Nos. 2471/Mds/2016, dt. 26-7-2017].

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2012-13

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