MALIK, CJ. :- The question referred to this Court for its decision in compliance with an order under Section 66(2) of the Indian Income-tax Act is -

"Whether on the facts and in the circumstances of this case, the assessee was entitled to value his closing stock at market rate ?"

2. The assessee is a firm mainly carrying on wholesale cloth business. The accounts produced showed a total turn-over of Rs. 12,81,375/-. The receipts showed a balance of Rs. 9,263/- in favour of the assessee. After deducting certain expenses the assessee, however, worked out a net loss of Rs. 13,915/-. In preparing the Profit and Loss Account the assessee had valued his closing stock at the market rate at Rs. 1,64,191/-. The cost price of the said stock was, however, Rs. 2,27,913/-. The Income-tax Officer was of the opinion that the assessee should have valued his closing stock At the cost price as he had been doing in previous years and he added back the difference between Rs. 2,27,913/- and Rs. 1, 64,191/-, i.e., Rs. 63,722/-. The Appellate Assistant Commissioner and the Tribunal agreed with the decision of the Income-tax Officer.

3. The assessee had pleaded that his usual method of accounting was that at

Click Here to Read the rest of this document