JUDGMENT
1. We have heard learned Counsel for the appellant and Sri R. K. Upadhyaya, appearing for the Income-tax department. The question sought to be raised for the purpose of this appeal are as follows:
(1) Whether the non-mention of Section 145 in the order of the assessing officer vitiates the action by the assessing officer ?
(2) Whether the question of undervaluation of the closing stock can be examined by the assessing officer under the Income Tax Act ?
(3) Whether the valuation of closing stock and consequent return under the U. P. Trade Tax Act which has been accepted by the tax authorities is binding on the Income-tax department thereby debarring the income-tax authorities from scrutinising question of valuation of closing stock ?
2. We have considered the impugned orders along with the above questions and we do not find any force to the appeal.
3. The assessing officer has passed the detailed order which has been accepted by the appellate authorities and mere non-mention of Section 145 does not vitiate the proceedings because the criteria set out in that section has already been met in the impugned orders.
4. For the purpose of the second question raised above, learned Counsel for the appellant relies upon a decision of the Gujarat High Court in the case of Sadhuram Gordhandas v. CIT . The Gujarat High Court in turn relies upon certain decisions of the Supreme Court, namely : (1) Chainrup Sampatram v. CIT and (2) Sakthi Trading Co. v. CIT .
5. We are unable to read any of the aforesaid two decisions of the Supreme Court or the decisions of the Gujarat High Court to mean that valuation of closing stock can be done at the arbitrary whim of the assessee at any amount which the assessee likes.
6. On the contrary the Supreme Court has laid down the principle in the case of Sakthi Trading Co. that proper practice is to value the closing stock on cost with only exception where market value is lower than cost.
7. In the present case, the assessing officer has rejected the valuation of the assessee and has applied the lowest value applicable on the day of acquisition as the cost and has thereby valued the closing stock. The case of the assessee was that stocks should have been valued at a lower value, as the market value was lower than that. The assessing officer did not accept this contention as no proof was furnished by the appellant of the fact that market value on the relevant date was lower. This is basically a finding of fact recorded on the appreciation of evidence. We do not find any defect in approach of the authority especially because of not tendering any evidence from the appellant's side to show that the market value was lower.
8. For the third proposition learned Counsel for the appellant has relied upon a decision of the Madras High Court in CIT v. Anandha Metal Corporation .
9. The Madras High Court has said something of the nature, which the appellant is proposing as third question above, in paragraph 7 of the judgment. However, after reading the whole judgment of the Madras High Court, we are unable to find out any cogent reason for the opinion that the valuation accepted under the Tamil Nadu General Sales Tax Act is binding on the income-tax authorities.
10. The U. P. Trade Tax Act and the Income Tax Act are two different Acts. The authorities are different under the two Acts, functioning under different Governments. Thus, we see no reason how it can be held that an order or decision regarding stock valuation under the Trade Tax Act will virtually operate as res judicata in proceedings under the Income Tax Act. Moreover, while computing the question of turnover under the U. P. Trade Tax Act, the valuation of closing stock is not very relevant and therefore, the trade tax authorities may not be seriously concerned with the question.
11. Because of the above reasons, we are unable to find any question of law on which this appeal can be admitted. It is accordingly dismissed.