Rajasthan H.C : Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the ITO did not have any basis for estimating the value of closing stock ?

High Court Of Rajasthan : Jaipur Bench

CIT vs. Bindal Jewellers

Sections 256(2)

Asst. Year 1987-88

N.K. Jain & J.C. Verma, JJ.

D.B. IT Ref. Appl. No. 7 of 1993

2nd December, 1997

Counsel Appeared

A. Kasiwal, for the Applicant : N.M. Ranka & J.K. Ranka, for the Respondent

JUDGMENT

BY THE COURT :

This IT Ref. Appl. under s. 256(2) of the IT Act, 1961, for the asst, yr, 1987-88 has been filed by the petitioner CIT Jaipur, against the order dt. July 17, 1990, passed in IT Appeal No. 1525/JPR of 1989 by the Tribunal, Jaipur Bench, Jaipur, and the order dt. April 25,1991, passed by the Tribunal in Reference Application No. 200/JP of 1990, upholding the order dt. July 17, 1990, and dismissing the application.

The following questions of law were requested to be referred for the opinion of this Court :

“1. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the ITO did not have any basis for estimating the value of closing stock ?

2. Whether, on the facts and in the circumstances of the case and in law, the order of the Tribunal is perverse as the Tribunal failed to appreciate the fact that the ITO had valued the closing stock taking the minimum of the average rate of opening stock, the purchase price, the sale price and the price of processed goods?”

Learned counsel for the petitioner has contended that the learned Tribunal has committed an error of law in not referring the abovesaid questions of law on the basis of lowest value and has not considered the sufficient material on record. The Tribunal has failed to take on record the estimated value of costs of its own without following any guidelines. Reliance has been placed on CIT vs. S. P. Jain (1973) 87 ITR 370 (SC).

On the other hand, learned counsel for the respondent has contended that the learned Tribunal, on the basis of the material on record and the fact that goods of better quality carrying higher value were sold during the course of the accounting year and goods of inferior quality were left, came to the conclusion after scrutinising the evidence. It is submitted that proper accounts were kept and that even the ITO has not pointed out any defect in the percentage in recovery of the finished goods and, as such, no question of law can be referred on the finding of fact arrived at by the Tribunal. Reliance has been placed on CWT vs. Sara Varghese (Mrs.) (1991) 187 ITR 450 (Ker).

We have heard learned counsel for the parties and perused the material on record. The value may differ from asset to asset and place to place with different person and the value of the closing stock cannot be mathematically calculated. The money value attributed to the stock should be decided and estimated by the concerned authority in a reasonable and judicial manner on the basis of the facts and circumstances of the case available before him. In the instant case, the finding recorded by the learned Tribunal cannot be said to be perverse. No question of law for reference is made out. Consequently, the reference application under s. 256(2) of the IT Act, 1961 is dismissed.

[Citation : 257 ITR 777]

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