K.S.JHAVERI,J. - (1.) By way of this appeal, the appellant has assailed the judgment and order of the tribunal whereby tribunal has dismissed the appeal of the department and confirmed the order of the CIT(A).
(2.) This court while admitting the appeal on 11.11.2009 framed following substantial question of law:- "Whether in the facts and circumstances of the case, the learned ITAT was right in law in deleting the addition in entirety inspite of being made upon logical basis when it has specifically maintained the application of Section 145(3) i.e. rejection of books of accounts for not portraying true and correct accounts?"
(3.) The facts of the case are that the assessee firm continues to derive income from manufacturing and export of garments. During the year under consideration, on the total turnover of 6,68,48,332, the assessee had declared gross profit of Rs. 50,45,638/- giving a G.P. rate of 7.54% and net profit of Rs. 53,03,507/- @ 7.93%, as compared to gross profit of Rs. 21.30 lacs @ 7.59% on the total turnover of Rs. 2.81 crores and NP @ 6.27% in the immediate preceding year. 3. 1 During the course of assessment proceedings, assessee furnished that there is not maintained any quantitative or monthwise tally of purchase and sales. The AR of the assessee also submitted that the closing stock is incomplete and unverifiable. On perusal of the Audit Report, as per Form No. 3CB, the auditor vide clause 28(a) has noted that "the relevant records of quantitative details are not maintained by the assessee." Thus, the major items in the trading account, i.e. closing account, are not amenable to verification. The assessee on 8-12-2005 produced the books of accounts which were re-verified by test check. On examination of the bills of PP Fashions, house No. 659 section-6, R.K. Purram New Delhi 110022, it was found that 484 pieces were given for stitching on various dates.;