M/S. Sanjeev Woolen Mills vs Commissioner Of Income-Tax, Mumbai

The Supreme Court addressed the valuation of closing stock under Section 80 HHC of the Income-tax Act, 1961, emphasizing that the method of valuing stock must adhere to established accounting principles. The Court held that the Assessing Officer's conclusion that the assessee inflated profits through market value assessment was justified, as it distorted the financial picture and contravened basic accounting principles. Consequently, the Court upheld the decision of the Assessing Officer, affirming the rejection of the assessee's method of stock valuation.