TMI Blog1970 (3) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... which deals in cotton and cotton seeds. Two periods are involved in these references. The first period is from Diwali of 1950 to Diwali of 1951 and the second period is from Diwali of 1951 to Diwali of 1952. Since some questions of fact and law are common between the two periods, both these cases were dealt with by the Board of Revenue together and referred by a common order making a common reference. The questions that have been referred to this court are as follows: (1) (a) Whether on the facts and the circumstances of the case, it was legal to treat Rs. 10,000 an item of cash credit standing in the name of the wife of one of the partners of the assessee-firm, as the profit or income out of concealed sales? (b) If the answer to (a) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t question, which is in two parts, relates to a sum of Rs. 10,000 which was found credited to the account of the wife of one of the partners Kanji Devsi in the first period mentioned above. The case of the assessee with regard to this amount was that Shri Kanji Devsi had paid a sum of Rs. 10,000 to his wife in the year 1941 in order to induce her to agree to her marriage with him, and this amount remained in her possession and was deposited by her in the business during the first period now in question. This explanation was not accepted by any of the taxing authorities mainly on the ground that there was no proof of such payment except the bare statement of the partner. This partner had a personal account in the books of account and even in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,000 arose out of sales which were to the extent of Rs. 1,00,000, and, consequently, that inference drawn by the department that sales to the extent of Rs. 1,00,000 were not reflected in the account books was correct. The result, therefore, is that the second part of the question must also be answered against the assessee. 4.. The second question relates to sales of raw cotton to Yelmele Cotton Company. Admittedly, this company is doing the business of purchasing raw cotton, ginning and pressing it, and, after packing it into, bales, of selling it to different mills. When raw cotton was sold to this company by the assessee, a certificate was originally filed which did not indicate whether the purchase was for consumption or for resale. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for manufacture, the assessee would not be liable. That is a question of fact. Upon the evidence of the representative of the assessee, the taxing authorities have come to the conclusion that the assessee knew it and had sold the cotton for the purposes of manufacture; and it is not correct that Yelmele Cotton Company had purchased the cotton after making the assessee understand that it was being purchased for resale but had subsequently utilised it for manufacture. Upon the evidence before the taxing authorities, the inference drawn by them was not unreasonable. Our answer to the second question, therefore, is that the declarations of resale given by Yelmele Cotton Company were not valid. 6.. With regard to the third question all that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the taxing authorities. Our answer to the third question, therefore, is in the affirmative, in favour of the assessee. 7.. The last question relates to transactions in both the periods. The question, as has been framed, takes it for granted that the cotton was sold by the assessee to different mills outside the State of Madhya Pradesh, and that these sales were effected through local adhatias. The Board of Revenue has mentioned that it has held in the matter of M/s. Basantilal Banarsilal of Khandwa, one of the adhatias through which the transactions were routed was a purchasing agent of the mills and was not liable to sales tax. The Board has also found that cotton in these transactions was booked by the assessee direct in the name of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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