2012 (11) TMI 662

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....learned CIT(A)- III, Surat dated 03-11-2008 for assessment year 2005-06 on the following grounds: 1. On the facts and in the circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the assessing officer in making addition of Rs.10,44,525/- on account of alleged sundry creditors u/s. 41(1) of the Act. 2. On the facts and in the circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the assessing officer in making addition of Rs.4,937/-- on account of cash creditors. 4. The AO observed that the assessee Company was required to file complete details of sundry credito....

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....) for his consideration. Accordingly, we set aside the order of the learned CIT(A) and restore both the grounds of appeal to his file with direction to re-decide the same in accordance with law by giving reasonable sufficient opportunity of being heard to the assessee. 7. In the result, the appeal of the assessee is allowed for statistical purposes. ITA No.262/Ahd/2009: AY 2005-06 ITA No.298/Ahd/2009:AY 2005-06 M/s. Suryanarayan Silk Mills Pvt. Ltd. 8. Both the appeals are directed against the order of the learned CIT(A)-III, Surat dated 03-11-2008 for assessment year 2005-06. 9. Grounds No.1 and 2 of the appeal of the assessee read as under: "1. On the facts and in the circumstances of the case as well as law on the subject, the lea....

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....sessee is engaged in dyeing and printing of clothes on job work basis and has shown turnover of Rs.4.77 Crores in the assessment year under appeal showing gross profit of 6.70% and in the preceding assessment year 2004-05 the turnover was Rs.3.06 Crores on which gross profit rate of 7.43% has been shown. The AO has gone in detail and found that certain discrepancies in the accounts of the assessee and on comparison of the gross profits with other traders of similar line found that the assessee did not maintain day to day stock register as well as consumption records. The AO also found certain other reasons to justify rejection of book results in the matter. The AO accordingly applied provisions of section 145(3) of the IT Act and estimated....