Shree Jalaram Industries,, ... vs Assessee

PAN: AATFS0453Q I . T. A . N o s . 2 14 4 & 21 72/ A h d/ 07 f o r A. Y. 0 2- 03 (I TO v s . M / s . M /s . Sh re e J a la ra m I nd us t r ie s ) Page 2

राजःव क ओर से / By Revenue :Shri Roopchand, Sr. D.R. आवेदक क ओर से / By Assessee : Shri Aseem L. Thakkar, A.R. सुनवाई क तार ख/Date of Hearing :29.01.2015 घोषणा क तार ख/Date of Pronouncement :27.03.2015

ORDER

PER SHAILENDRA KUMAR YADAV, J.M:

These cross appeals are arising out form the order of CIT(A)-XVI, Ahmedabad, dated 31.01.2007 for the assessment year 2002-03. So, they are being disposed of by way of this common order for the sake of convenience.

2. In ITA No. 2144/Ahd/2007, Revenue has filed the appeal on the following grounds:

"1. The Ld. Commissioner of Income tax (A) - XVI, Ahmedabad has erred in law and on facts in deleting the addition made of Rs. 5,93,853/- on account of sales of cattle feed.

2. The Ld. Commissioner of Income tax (A) - XVI, Ahmedabad has erred in law and on facts in deleting the addition made of Rs. 1,23,987/-on account of unaccounted purchase of Kapas Shankar (Cotton 'Shankar').

3. The Ld. Commissioner of Income tax (A) - XVI, Ahmedabad has erred in law and on facts in deleting the addition made of Rs.71,89,691/-on account of unaccounted purchase of Shankar Kapasiya (cotton seeds).

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4. The Ld. Commissioner of Income tax (A)-XVI, Ahmedabad has erred in law and on facts in deleting the addition made-of Rs. 1,65,231/- on account of unaccounted purchase of Kalyan Kapas.

5. The Ld. Commissioner of Income tax (A)-XVI, Ahmedabad has erred in law and on facts in directing the Assessing Officer to compute the profit on sale of cotton bales and make the addition of the profit thereon and not the entire sale itself i.e. Rs. 27,71,015/-.

6. The Ld. Commissioner of Income tax (A) - XVI, Ahmedabad has erred in law and on facts in deleting the addition made of Rs. 8,10,665/- on account of unaccounted sale of Kala by clubbing the income of Raghuvir Cotton Company.

7. The Ld. Commissioner of Income tax (A) - XVI, Ahmedabad has erred in law and on facts in deleting the addition made of Rs. 11,16,568/-on account of unexplained stock difference of cotton and cotton seeds.

8. The Ld. Commissioner of Income tax (A) - XVI, Ahmedabad has erred in law and on facts in deleting the addition made of Rs. 3,47,181/- on account of disallowance of unpaid sales tax under section 43B of the Income tax Act, 1961.

9. On the facts and in the circumstances of the case, the Ld. Commissioner of Income tax (A) -XVI, Ahmedabad ought to have upheld the order of the Assessing Officer.

10. It is therefore prayed that the order of the Ld. Commissioner of Income tax (A) - XVI, Ahmedabad may be set aside and that of the Assessing Officer be restored."

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2.1 In ITA No. 2172/Ahd/2007, assessee has filed the appeal on the following grounds:

1. The learned Commissioner of Income Tax (A) has erred in confirming the rejection of book results u/s.145(3) of the I.T. Act, 1961.

2. The learned Commissioner of Income Tax (A) has erred in confirming an addition of Rs. 19,63,297/-

made by Assessing Officer for the alleged low G.P.

3. The learned Commissioner of Income Tax (A) has erred in giving direction to compute the profit on the sale of Cotton bales and make addition of the profit on sale of the cotton bales and not the entire sale itself. He thereby erred in retaining the addition in part out of Rs.27,71,015/- made by the A.0.

4. The learned Commissioner of Income Tax (A) has erred in confirming an addition of Rs.4,61,445/- made by the A.O. for alleged unexplained cash Credits as Under:-

1. Jayantibhai Dalsukh Rs.1,11,587/-

2. Gajibhai Bhagwanbhai Rs. 99,858/-

3.. Dhirubhai Ambaram Rs.1,00,000/-

4. Laghrabhai Ratubhai Rs.1,00,000/-

5. l.alubhai. Gajubhai Rs. 50,000/-

Rs.4,61,445/-

3. Assessee is engaged in the business of kapas. Facts in this issue are that return declaring NIL was filed on 30.10.2002. A survey u/s. 133A was carried out in this case on 30.01.2002. During survey books of account and documents were impounded. Statement of Shri Thakarshibhai Thakkar main partner of assessee firm was recorded. The main partner has admitted that no record is maintained for I . T. A . N o s . 2 14 4 & 21 72/ A h d/ 07 f o r A. Y. 0 2- 03 (I TO v s . M / s . M /s . Sh re e J a la ra m I nd us t r ie s ) Page 5

sending raw material ie. Kapas for ginning, no production record is maintained and no physical stock has been taken at the end of year. Assessing Officer further stated that books of account were found to be incomplete during survey. In the impounded books entries have not been made for months. In the cash book no opening and closing balances were mentioned. During survey assessee was asked by Assessing Officer to furnish information with regard to purchases, sales and closing stock which was the primary data. Assessee submitted these details which differ from details submitted during assessment proceedings for the same period. Assessing Officer found that there was difference in purchases, sales and closing stock. He concluded that primary data and other documents have been prepared artificially. He rejected book results of assessee on the grounds that sales and purchases were not reflected correctly in primary books of account, production register and stock register were not prepared which is basic requirement in manufacturing unit and books of account prepared after survey do not reflect correct and complete financial affairs of assessee.

3.1 Assessing Officer after rejecting books of account estimated gross profit rate of various items based on yield as stated by main partner of assessee during survey and by taking average purchase rates of different items and sale rates of different items. In his statement Shri Thakkar the main partner stated that 100 kgs of Kala yields 70 kg of Kapas and I . T. A . N o s . 2 14 4 & 21 72/ A h d/ 07 f o r A. Y. 0 2- 03 (I TO v s . M / s . M /s . Sh re e J a la ra m I nd us t r ie s ) Page 6

70 kgs of Kapas yields 28 kgs of cotton and 42 kgs of cotton seeds. On the basis of these calculations Assessing Officer has worked out gross profit rate of Kala Kapas at 7.36%, Kalyan Kapas 24.6%, Oil & cattle feed at 62.71%. On purchase, sale and closing stock figures of various items furnished by assessee during assessment proceedings Assessing officer computed gross profit at Rs. 37,24,780/-. Assessee has shown gross profit of Rs. 17,61,483/-. Assessing Officer therefore made addition of Rs. 19,63,297/- on account of low gross profit being difference in gross profit computed by Assessing Officer and gross profit declared by assessee.

3.2 Matter was carried before the First Appellate Authority on this point who having considered the argument of assessee observed that Assessing Officer has rejected books result on the ground that no stock/ production register was maintained. Books of account were not completed and physical stock was not taken at the end or year. Transactions were not entered in books of accounts for months. Cash book did not reflect opening and closing balances. There was discrepancy with regard to sales/purchases and closing stock between figures given by assessee during course of survey proceedings and details submitted during assessment proceedings. In this regard, the main stand of assessee has been that Assessing Officer has not pointed out any specific defects in books of accounts and has not pointed out any instance of suppression or inflation of expenses. As regards discrepancies in purchase I . T. A . N o s . 2 14 4 & 21 72/ A h d/ 07 f o r A. Y. 0 2- 03 (I TO v s . M / s . M /s . Sh re e J a la ra m I nd us t r ie s ) Page 7

and sale, assessee has stated that it has high sales in books of account for the period up to the date of survey than what was furnished at the time of survey. The books of account could not be completed as it was the middle of business season. Considering these aspects, the Assessing Officer was right in rejecting books u/s. 145(3) since assessee has not maintained any stock register/production register and books of accounts were incomplete. There was discrepancy in figure of sale/purchases furnished by assessee at the time of survey and furnished during course of assessment proceeding. Assessing Officer has pointed out the defects in maintenance of books of accounts. The argument of assessee that books of accounts could not be completed since it was middle of the season has no force. Assessee has maintained inward/outward register, souda books and bill books. There was no difficulty in maintaining the books of accounts. Assessee not having completed the books on regular basis has resulted in difference in data furnished during survey and subsequently during assessment proceedings. Assessee is expected to complete books of account on regular basis, which has not been done in this case. In view of discrepancy pointed out by Assessing Officer, books of account of assessee were not reliable. He has rightly rejected the books of account u/s. 145(3). This reasoned finding of CIT(A) needs no interference from our side. We uphold the same.

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3.3 Regarding addition of Rs.19,63,297/- made by Assessing Officer on account of low gross profit rate, we find that Assessing Officer has computed gross profit rate of various items dealt with by assessee on the basis of records of assessee, norms of industry and statement of main partner of assessee firm. Assessing Officer then applied gross profit rate so computed on sale of various items to compute gross profit rate of assessee. The sale figures given by assessee during assessment proceedings were adopted by Assessing Officer. Gross profit computed by Assessing Officer is Rs.37,24,780/-. After reducing gross profit declared by assessee amounting to Rs.17,61,483/-. Assessing Officer made addition of Rs.19,63,297/- on account of low gross profit rate. Under facts and circumstances, CIT(A) was justified in upholding the rejection of books of accounts as discussed above and having done so, CIT(A) was justified in sustaining addition of Rs.19,63,297/- made on account of low gross profit rate. This reasoned finding of CIT(A) needs no interference from our side. We uphold the same.

4. Various other additions made by Assessing Officer are being dealt as under:

4.1 First issue as raised in Revenue's appeal is with regards to addition of Rs.5,93,832/- on account of unaccounted sale of cattle feed. Assessing Officer has made addition of Rs.21,150/- on account of bogus sale of 50 bags of cattle feed, addition of Rs.1,23,021/- on account of sale recorded in bill I . T. A . N o s . 2 14 4 & 21 72/ A h d/ 07 f o r A. Y. 0 2- 03 (I TO v s . M / s . M /s . Sh re e J a la ra m I nd us t r ie s ) Page 9

book but not entered in regular books of account and addition of Rs.4,49,682/- on account of sale of cattle feed which was entered in sale note books but for which bills have not been prepared and entered in the books of account. As regards the addition of Rs.21,150/- and Rs.1,23,021/-, CIT(A) observed that these sales have been recorded in books of account produced during assessment proceedings and Assessing Officer has already taken into account sales disclosed by assessee during assessment proceeding for making gross profit addition.

Therefore, addition on account of these sale should not be made. As regards addition of Rs.4,49,682/-, CIT(A) observed that these sales pertained to M/s. Raghuvir Cotton Co. and have been included in turnover of said concern. Since said concern has filed separate return of income Assessing Officer was not justified in making addition assessee's hands. Accordingly, addition of Rs.5,93,853/- was rightly deleted by CIT(A). This reasoned factual finding of CIT(A) needs no interference from our side.

4.2 Next issue as raised in Revenue's appeal is with regards to addition of Rs.1,23,987/- on account of unaccounted purchase of Kapas Shanker. Assessing Officer mentioned that as per Avak-Javak Register X-13, purchase of Kapas Shanker was more than what was shown in purchase account of ledger item no.6. Assessing Officer computed cotton produced from kapas and estimated unaccounted sale of cotton of Rs.1,23,987/-. Stand of assessee has been that copy of purchase account was I . T. A . N o s . 2 14 4 & 21 72/ A h d/ 07 f o r A. Y. 0 2- 03 (I TO v s . M / s . M /s . Sh re e J a la ra m I nd us t r ie s ) Page 10

furnished during course of survey as per which total quantity purchased was 53833 kg and there was a difference of only 4 kg which was negligible. Assessing Officer has chosen not to accept purchase account in which quantity record have been made. It was also stated on behalf of assessee that all purchases so recorded were duly supported by purchase bills and were in agreement with the data contained in impounded books and there was no reason that same be treated as unaccounted. In this background, CIT(A) rightly observed that these purchases are accounted for. Assessing Officer has not mentioned anything in remand report against arguments of counsel. Accordingly, CIT(A) rightly accepted the contentions of assessee and where rightly deleted addition of Rs.1,23,987/- on account of purchase of Kapas Shanker. This factual finding of CIT(A) needs no interference from our side. We uphold the same.

4.3 Next issue as raised in Revenue's appeal is with regards to addition of Rs. 71,89,691/- under the head Shanker Kapasiya i.e. cotton seeds. Assessing Officer has mentioned that as per pages 1 to 5 of X-13, assessee purchased 518120 kgs of shanker kapasiya during period 5.12.2001 to 28.01.2001. Out of these only 142534 kgs was accounted for in the books. Assessing Officer did not accept contention of assessee that other concern M/s Raghuvir Cotton Co. was also operating from the same premises and purchases of that concern may have been included. Assessing Officer has further mentioned I . T. A . N o s . 2 14 4 & 21 72/ A h d/ 07 f o r A. Y. 0 2- 03 (I TO v s . M / s . M /s . Sh re e J a la ra m I nd us t r ie s ) Page 11

that as per pages 2 to 5 of the Annexure X-26, assessee purchased shanker cotton seeds weighing 470260 kgs from 5.12.2001 to 25.01.2001. These purchases were also unaccounted. Assessing Officer did not accept the contention of assessee that these purchases are same as recorded in X-13. Stand of assessee has been that purchases recorded in X-13 belong to two firms and these purchases were duly recorded in their books of accounts. Assessee firm purchased 4,30,297 Kg. and M/s Raghuvir Cotton Co. have purchased 87,815 Kgs of cotton seeds. It was further stated that all these explanations were furnished during course of assessment proceeding. Assessing Officer has not accepted the purchases made by M/s. Raghuvir Cotton Co. whereas payments in respect of purchases made by that concern have been made by normal banking channel and payments have been made prior to the date of survey. Hence these purchases pertained to Associate concern and not to the assessee. As regards the purchases mentioned in Annexure X-26, stand of assessee has been that during the course of assessment proceedings statement giving details of purchase made during the said period was furnished. Transactions contained in X-26 and X-13 were identical. Assessing Officer has considered transaction recorded in both registers as different and distinct and made separate addition which is not justified. Further stand of assessee has been that dates, vehicles nos. and quantity of goods purchased mentioned in both items were in agreement. All these documents were in custody of Assessing Officer and I . T. A . N o s . 2 14 4 & 21 72/ A h d/ 07 f o r A. Y. 0 2- 03 (I TO v s . M / s . M /s . Sh re e J a la ra m I nd us t r ie s ) Page 12

could be verified. Considering the arguments of assessee, observation of Assessing Officer and remand report of Assessing Officer, CIT(A) observed that purchases recorded in X-13 pertain to assessee firm and associate concern M/s Raghuvir Cotton Co. The associate concern has filed return of income independently showing these transactions. Return of same has been accepted. Assessing Officer has not mentioned anything in the remand report against the plea of assessee. In this background, CIT(A) rightly observed that purchases recorded in X-13 and X-26 are identical. Assessing Officer has not given any adverse opinion on the point in remand report. Moreover Assessing Officer made addition of the entire purchases which was not correct. At best addition of the peak amount can be made. In view of this, CIT(A) deleted addition of Rs.71,89,691/-. This factual finding of CIT(A) needs no interference from our side. We uphold the same.

4.4 Next issue as raised in Revenue's appeal is with regards to addition of Rs. 1,65,231/- as unaccounted purchase of Kalyan Kapas. Under the head Kalyan Kapas, Assessing Officer has made addition of Rs. 1,65,231/- on account of unaccounted purchase of 4950 kgs Kalyan Kapas. Assessing Officer has mentioned that as per X-13 page no. 50 to 60 purchase of Kalyan Kapas is 382680 kgs whereas figures submitted by assessee during survey the purchase was of 377730 kgs. The difference of 4950 kgs has been treated as unaccounted I . T. A . N o s . 2 14 4 & 21 72/ A h d/ 07 f o r A. Y. 0 2- 03 (I TO v s . M / s . M /s . Sh re e J a la ra m I nd us t r ie s ) Page 13

purchase by Assessing Officer and addition of Rs. 1,65,231/- being sale price, has been made.

4.4.1 Matter was carried before the First Appellate Authority, wherein it was submitted on behalf of assessee that Assessing Officer has compared the figures of purchase given at the time of survey and impounded books. Whatever quantity is mentioned in Annexure X-13 is duly recorded in the books of account. These are also entered in impounded records. Assessing Officer has chosen to ignore the impounded records. Accordingly, requested to delete the addition. CIT(A) having considered arguments of assessee and observations of Assessing Officer and remand report of Assessing Officer observed that Assessing Officer has made this addition on the basis of figures given by assessee during survey while he has made gross profit addition on the basis of sale figures given by assessee at the time of assessment proceedings. In this background, Assessing Officer was not justified in making this addition and same was rightly deleted by CIT(A). This reasoned factual finding of CIT(A) needs no interference from our side. We uphold the same.

4.5 Next issue as raised in Revenue's appeal is with regards to addition of Rs.27,71,015/- as unaccounted sale of cotton. bales. Assessing Officer has mentioned that opening stock of cotton and cotton bales is 51460 kgs and 55300 kgs respectively. Total production was 170975 kgs. The sale of cotton was 152825 kgs and therefore closing stock should be I . T. A . N o s . 2 14 4 & 21 72/ A h d/ 07 f o r A. Y. 0 2- 03 (I TO v s . M / s . M /s . Sh re e J a la ra m I nd us t r ie s ) Page 14

124910 kgs. The physical stock available was 43000 kgs. Assessing Officer treated the difference of 81910 kgs as unaccounted sales and made addition of RS. 27,71,015/- which was total sale consideration.

4.5.1 In appeal, counsel for assessee submitted that Assessing Officer has made addition on the ground that assessee firm has made sales which are not recorded in the books of account of 81910 kgs. Stand of assessee has been that Assessing Officer has accepted that said sales have been made out of accounted stock in books of account. It was not the case of revenue that there was excess stock found during course of survey which can be treated as unaccounted. Actually there was a stock deficit which has been treated by Assessing Officer as unaccounted income. The stand of assessee has been that Assessing Officer can add the profit element on sale of such goods since sales were accounted. The amount of sale difference cannot represent the income of assessee, who has disclosed the sale. CIT(A) having considered the argument of assessee and observation of Assessing Officer found that sale of cotton bales is out of accounted stock and at best profit can be added and not entire sale. Accordingly, Assessing Officer is directed to compute profit on sale of cotton bales and make addition of profit on sale of cotton bales and not entire sale. This reasoned factual finding of CIT(A) needs no interference from our side. We uphold the same. I . T. A . N o s . 2 14 4 & 21 72/ A h d/ 07 f o r A. Y. 0 2- 03 (I TO v s . M / s . M /s . Sh re e J a la ra m I nd us t r ie s ) Page 15

4.6 Next issue as raised in Revenue's appeal is with regards to addition of Rs.8,10,665/- for unaccounted sale of kala. Assessing Officer has mentioned in Annexure X-13 which belongs to assessee firm it has purchased 3,13,315 Kgs of kala as per page nos. 10-18. Since X-13 belongs to assessee and not to Raghuvir Cotton, the purchase of kala has been made by assessee firm and not by Raghuvir Cotton as stated by assessee. Assessing Officer therefore held that income of Raghuvir Cotton is to be considered for clubbing with income of assessee. As against purchase of 3,13,315 kgs of kala purchase of 75,520 kgs was entered in ledger. Assessing Officer has further mentioned that opening stock of kala was 2,59,400 kgs and hence 5,72,715 kgs of kala was available for production of kapas. As per norms given by assessee Assessing Officer has mentioned that assessee has produced 1,60,360 Kgs of cotton and 2,40,540 kgs of cotton seed. There was no closing stock available at the business premises at the time of survey. As per books of accounts of Sh. Raghubir Cotton sale of 76,677 kgs of cotton and 96,943 kgs of cotton seeds has been made. Assessing Officer computed the value of balance at Rs 28,30,996/- of cotton seeds and Rs. 15,47,976 of cotton. Assessing Officer did not accept the stand of assessee that purchases pertained to M/s Raghubir Cotton Company. Assessing Officer worked out the profit on sale of cotton and cotton seed at Rs. 8,10,665 and made addition of the same. I . T. A . N o s . 2 14 4 & 21 72/ A h d/ 07 f o r A. Y. 0 2- 03 (I TO v s . M / s . M /s . Sh re e J a la ra m I nd us t r ie s ) Page 16

4.6.1 Matter was carried before First Appellate Authority, wherein stand of assessee has been that Assessing Officer has relied on X-13 which has been impounded from premises of assessee and contains transactions carried out by assessee firm. It was stated on behalf of assessee that it was explained to Assessing Officer that applicant firm is not dealing in kala. This was clearly and categorically stated in the statement recorded during survey proceedings. During course of assessment proceedings, it was pointed out that purchase of kala was made by M/s. Raghuvir Cotton Co. and evidence in support of same was furnished. However, Assessing Officer ignored the various arguments given at the time of survey as well as assessment proceedings. The stand of assessee has been that since said purchases were duly accounted for in the books of account of M/s. Raghuvir Cotton Co. they did not pertain to assessee firm and question of making addition could not arise. CIT(A) having considered arguments observed that Assessing Officer has not accepted the contention of assessee on the ground that impounded book X-13 belongs to assessee and transactions recorded pertained to assessee alone. Assessee on other hand has mentioned during survey itself that it is not dealing in Kala and the associate concern M/s. Raghuvir Cotton was dealing with the same. Moreover, the sale of kala has been reflected in the transactions of associate concern for which return has been filed. Assessing Officer has not pointed out anything adverse in the remand report filed by Assessing Officer. In this background, CIT(A) rightly observed I . T. A . N o s . 2 14 4 & 21 72/ A h d/ 07 f o r A. Y. 0 2- 03 (I TO v s . M / s . M /s . Sh re e J a la ra m I nd us t r ie s ) Page 17

that addition made by Assessing Officer by clubbing the income of M/s. Raghuvir Cotton Co. was not justified and same was rightly directed to be deleted. We uphold the same.

4.7 Next issue as raised in Revenue's appeal is with regards to addition of Rs.11,16,568/- on account of unexplained stock difference. Assessing Officer has mentioned that there was difference in stock of cotton of 1,27,971 kgs and of cotton seeds of 79,703 kgs. Assessing Officer treated the difference of stock as unexplained investment of the assesses and made addition of Rs. 11,16,568/- by working of the profit on sales of these items. In appeal, stand of assessee has been that addition has been made by relying on question No.2 &3 of statement recorded on 12.2.2002. It was further argued that Assessing Officer has separately added gross profit of various items dealt in by assessee and determined unaccounted sales of cotton seeds.

4.7.1 In appeal, CIT(A) having considered the observations of Assessing Officer and arguments of assessee found that assessee was right in arguing that Assessing Officer has already made addition of gross profit of various items. Same addition can not be made again. Accordingly, same was deleted by CIT(A). This reasoned factual finding of CIT(A) needs no interference from our side. We uphold the same.

4.8 Next issue as raised in Revenue's appeal is with regards to addition of Rs. 3,47,181 /- on account of disallowance of I . T. A . N o s . 2 14 4 & 21 72/ A h d/ 07 f o r A. Y. 0 2- 03 (I TO v s . M / s . M /s . Sh re e J a la ra m I nd us t r ie s ) Page 18

unpaid sales tax u/s. 43B of the Income Tax Act. Assessing Officer has mentioned that sales tax amounting to Rs. 3, 47,181/- has remained unpaid. Before Assessing Officer, assessee stated that it was exempt from sales tax and filed a copy of sale tax exemption certificate and hence assessee claimed that unpaid amount should not be added u/s 43B of the Act. Assessing Officer did not accept the contention of assessee on the ground that asscssee had not followed procedure prescribed in Gujarat Sales Tax Act. Assessing Officer further mentioned that sales tax recovered by assessee from customers constitutes trading receipt of assessee. Assessing Officer held that sales tax collected by the assessee is business receipt and Assessing Officer has also quoted CBDT circular No.674 dated 29.12.1993 as per which the amount of sales tax liability converted into loan is to be allowed as a deduction in which conversion has been permitted by said Governemnt. Since assessee failed to furnish any evidence in this regard Assessing Officer treated the unpaid sales lax as income of assessee.

4.8.1 In appeal, CIT(A) granted relief to assessee. Same has been opposed on behalf of Revenue. Before us, learned Departmental Representative supported the order of Assessing officer and requested to set aside the order of CIT(A). On other hand, learned Authorized Representative supported the order of CIT(A).

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4.8.2 After going through rival submissions and material on record, we find that stand of assessee in this regard has been that Assessing Officer has made addition on the ground that entire procedure has not been followed and only certificate issued by the District Industry Centre was filed and certificate issued by sales tax authority was not furnished. Stand of assessee has been that this certificate was never called for by Assessing Officer and has enclosed the certificate issued by sales tax authority during appellate proceedings. CIT(A) having considered the same observed that Assessing Officer has made addition of this amount on the ground that assessee did not produce required certificate in Form D issued by sales tax Authority. The certificate has been produced by assessee during appellate proceedings since it was not called for during assessment proceedings. In remand report, Assessing Officer has not commented on certificate which shows that he as nothing to say on the point. Since assessee fulfilled the conditions as prescribed in this regard. Assessing Officer was not justified in making addition of unpaid sales tax liability. Same was rightly deleted by CIT(A). We uphold the same.

4.9 Next issue as raised in assessee's appeal is with regards to direction to compute profit of sale of cotton bales and making addition on profit of sale of cotton bales and not entire sale itself. We have dealt this issue in para 4.5 which take care of this issue.

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4.10. Next issue as raised in assessee's appeal is with regards to addition of Rs. 4,61,445/- made on account of unexplained cash credits as under:

1. Jayantibhai Dalsukh Rs.1,11,587/-

2. Gajibhai Bhagwanbhai Rs. 99,858/-

3. Dhirubhai Ambaram Rs.1,00,000/-

4. Laghrabhai Ratubhai Rs.1,00,000/-

5. Lalubhai Gajubhai Rs. 50,000/-

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Rs.4,61,445/-

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Assessing Officer made addition of Rs.4,61,445/- on account of unexplained cash credit. Assessing Officer has mentioned that assessee has raised cash credit amounting to Rs. 4,61,445/- from 5 persons. Assessee submitted only copies of accounts of these five persons as appealing in its books of accounts. However, assessee failed lo file any confirmation from these 5 poisons and also failed to produce these persons for verification and thus failed to prove the genuineness of credits appearing in the books. Assessing Officer therefore held that assessee has failed to prove the identity and credit worthiness of these 5 persons and made addition of Rs. 4,61,445/- as unexplained cash credits u/s 68 of the Income Tax Act.

4.10.1 In appeal, various contentions were raised on behalf of assessee, having considered the same CIT(A) observed that assessee has failed to file confirmations and also failed to produce the creditors to establish the genuineness of cash credits. Accordingly, addition made by Assessing Officer of Rs. I . T. A . N o s . 2 14 4 & 21 72/ A h d/ 07 f o r A. Y. 0 2- 03 (I TO v s . M / s . M /s . Sh re e J a la ra m I nd us t r ie s ) Page 21

4, 61,445/- as unexplained cash credit was rightly confirmed by CIT(A), which needs no interference from our side. We uphold the same.

5. As a result, Revenue's appeal as well as assessee's appeal is dismissed.

Pronounced in the open Court on this the 27th day of March, 2015.

Sd/- Sd/- (N. S. SAINI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 27/03/2015 True Copy S.K.SINHA

आदे श क ूितिल&प अमे&षत / Copy of Order Forwarded to:-

1. राजःव / Revenue

2. आवेदक / Assessee

3. संबिं धत आयकर आयु- / Concerned CIT

4. आयकर आयु-- अपील / CIT (A)

5. &वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड6 फाइल / Guard file.

By order/आदे श से,

उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।