JMJ Essential Oil Company, Una V. ITO, Una

ITA 397/CHANDI/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6130 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 09-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR AMA RVEER SINGH
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources; Accommodation entries; Onus to prove
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.397/CHD/2012 ASSESSMENT YEAR : 2008-09 J.M.J. ESSENTIAL OIL COMPANY, VS THE INCOME TAX O FFICER, PLOT NO. 39, UNA ( H.P.) INDUSTRIAL AREA, TEHSIL - TAHLIWAL, UNA ( H.P.) PAN : AAFFJ0540B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : DR. AMARVEER SINGH DATE OF HEARING : 12.03.2014 DATE OF PRONOUNCEMENT : 28.04.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) SHIMLA DATED 2 7.02.2012 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF TH E INCOME-TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : A] ADDITION U/S. 68 OF THE CASH SALES:- 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER (AO) HAS ERRED IN TREATING CASH SALES AS CA SH CREDITS AND ADDING THE SAME AS INCOME OF THE APPELLANT U/S. 68. 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, HE HAS ERRED IN NOT ACCEPTING THE REASONS, CIRCUMSTANCES AND MOD E OF CASH SALES IN WHICH DETAILS GIVEN BY THE CUSTOMER IS NOT AUTHENTI CATED BY THE SELLER. UNDER NO LAW OF LAND, THERE IS ONUS ON APPELLANT TO PROCURE AND VERIFY DETAILS GIVEN BY EACH AND EVERY CASH CUSTOMER. REA SONS ASSIGNED BY HIM ARE WRONG, INSUFFICIENT AND BAD IN LAW. 2 3. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, HE HAS ERRED IN IGNORING BOOKS OF ACCOUNT INCLUDING THE INVENTOR Y RECORDS VIZ. RAW MATERIAL REGISTER, ISSUE AND PRODUCTION SL IPS, FINISHED GOODS REGISTER, AND SALES TAX PAID CHALLANS AND RETURN OF SALES TAX FILED WITH THE COMMERCIAL TAX DEPARTMENT OF UNA DOCUMENTING TH E MANUFACTURING AND SALE OF GOODS WORTH RS. 1,94,37,600 (INCLUSIVE OF VAT RS.7,47,600). REASONS ASSIGNED BY HIM IS WRONG, INSUFFICIENT AND BAD IN LAW. BL DEDUCTION U/S. 80IC ON INTEREST INCOME OF RS. 18 ,44,923:- 4. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED AO HAS ERRED IN DENYING THE DEDUCTION U/S. 80IC IN RESPECT OF INTEREST INCOME OF THE INDUSTRIAL UNDERTAKING. 5. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED AO HAS ERRED IN NOT FOLLOWING THE BINDING DECISION OF THE TRIBUNAL IN THE CASE OF PARTNER OF THE APPELLANT UPHELD BY THE HON'BLE M UMBAI HIGH COURT ON THE SAME POINT WHICH HAS SPECIFICALLY DISTINGUISHED THE JUDGMENT OF S.C. IN PANDIAN'S CASE. REASONS ASSIGNED BY HIM FOR DISA LLOWANCE ARE WRONG AND INSUFFICIENT. 3. THE ASSESSEE IN THE PRESENT APPEAL HAS RAISED TW O ISSUES, ONE AGAINST THE ADDITION UNDER SECTION 68 OF THE INCOME TAX ACT ON THE CASH SALES AND THE SECOND AGAINST THE DENIAL OF DED UCTION UNDER SECTION 80IC OF THE ACT ON INTEREST INCOME. 4. THE LD. DR FOR THE REVENUE, AT THE OUTSET POINTE D OUT THAT THE ISSUE AGAINST THE ADDITION UNDER SECTION 68 OF THE ACT ON CASH SALES IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR THE PRECEDING YEAR. 5. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE RE WERE CERTAIN FACTORS WHICH WERE NOT THERE IN THE PRECEDING YEAR AND THE SAME HAVE TO BE CONSIDERED WHILE DECIDING THE ISSUE. IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT CASH SALES WERE MADE BY THE ASSESSEE TOTALING RS.1.94 CR DURING THE PERIOD FROM DECEMBER,2007 TO PART OF JANUARY, 2008. IT WAS FURTHER POINTED OU T BY THE LD. AR FOR THE ASSESSEE THAT THE CASH GENERATED ON CASH SA LES FOR THE PRECEDING YEAR WAS DEPOSITED IN THE BANK ACCOUNT AN D TRANSFERRED 3 THEREAFTER FROM THE BANK ACCOUNT. FURTHER, THE ASSE SSEE DURING THE YEAR UNDER CONSIDERATION HAD MADE CREDIT SALE OF RS . 53.10 LACS OF PAN SHAMAMA AS PER BILL DATED 23.2.2008, COPY OF WH ICH IS PLACED AT PAGE 52 OF THE PAPER BOOK. IN RESPECT OF THE SECON D ADDITION OF DENIAL OF DEDUCTION UNDER SECTION 80IC OF THE ACT O N INTEREST INCOME, IT WAS POINTED OUT BY THE LD. AR FOR THE AS SESSEE THAT SIMILAR DEDUCTION HAS BEEN ALLOWED BY THE HON'BLE B OMBAY HIGH COURT IN CIT VS JAGDISHPRASAD M.JOSHI 318 ITR 420 ( BOM). 6. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON TH E RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS PRODUCI N PVT. LTD. 322 ITR 270 (S.C) WHEREIN IT HAS BEEN HELD THAT INT EREST EARNED ON FDRS WAS NOT BUSINESS INCOME AND HENCE, THERE IS NO MERIT IN THE DEDUCTION CLAIMED UNDER SECTION 80IC OF THE ACT. 7. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FIRM WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF ESSENTI AL OIL, COMMERCIALLY KNOWN AS MUSK/UTTAR HEENA SPECIAL. TH E INDUSTRIAL UNIT OF THE ASSESSEE FIRM IS SITUATED AT TEHSIL TEH LIWAL, DISTT. UNA (H.P.). THE ASSESSEE HAD CLAIMED DEDUCTION UNDER S ECTION 80IC OF THE ACT WHICH WAS ALLOWED TO THE ASSESSEE BY THE AS SESSING OFFICER AS THE ASSESSEE HAD FULFILLED THE NECESSARY CONDITI ONS FOR CLAIMING THE SAID DEDUCTION. HOWEVER, THE ASSESSING OFFICER NOTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AD SHOWN CASH SALES OF RS.1,94,37,600/- INCLUDING VAT OF RS. 7,47 ,600/- WHICH IN- TURN WAS REMITTED TO THE SALES TAX AUTHORITIES. TH E ASSESSEE FIRM SUBMITTED THE LIST OF PERSONS TO WHOM CASH SALES WE RE CLAIMED TO HAVE BEEN MADE. THE ASSESSING OFFICER NOTED THAT T HE ADDRESSES PROVIDED BY THE ASSESSEE FIRM OF SUCH PERSONS TO WH OM CASH SALES WERE MADE, WERE INCOMPLETE. THE ASSESSING OFFICER DEPUTED THE 4 INSPECTOR OF HIS OFFICE TO VERIFY THE CASH SALES MA DE TO THE PARTIES AT NALAGARH AND BADDI AREAS. IN HIS REPORT, THE INSPE CTOR STATED THAT ON VERIFICATION, THE ADDRESS SUBMITTED BY THE ASSES SEE WERE FOUND TO BE BOGUS AND EVEN THE ADDRESSEE GIVEN BY THE ASSESS EE WERE NOT THERE IN BADDI AREA. AS NONE OF THE PARTIES TO WHOM CASH SALES WERE CLAIMED TO HAVE BEEN MADE WERE TRACED, THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE SAID AMOUNT SHOULD NOT BE TREATED AS INCOME FROM UNDISCLOSED SOURCES. THE ASSESSEE HAD G IVEN LIST OF 35 CASES TO WHOM CASH SALES IN ROUND FIGURES OF RS. 3 LACS AND RS. 6 LACS HAD BEEN CLAIMED TO HAVE BEEN MADE. IN REPLY, THE ASSESSEE SUBMITTED THAT MERELY BECAUSE THE ADDRESSES GIVEN B Y THE BUYERS WERE FOUND TO BE INCORRECT, THE GENUINENESS OF THE SALES ON CASH BASIS COULD NOT BE TREATED AS INCOME FROM UNDISCLOS ED SOURCES. THE ASSESSING OFFICER, AFTER CONSIDERING REPLY OF THE A SSESSEE AND THE ONUS HAVING NOT BEEN DISCHARGED BY THE ASSESSEE TO GIVE COMPLETE INFORMATION ABOUT THE BUYERS WHERE CASH SALES WERE OF HUGE AMOUNT, TREATED THE SAME AS INCOME FROM UNDISCLOSED SOURCES AND ASSESSED THE SAME UNDER SECTION 68 OF THE INCOME TAX ACT. 8. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), THE PLEA OF THE ASSESSEE WAS THAT THE SALES WHETHER IN CASH OR CREDIT, WERE REGULARLY ENTERED IN THE BOOKS OF ACCOUNT AND WHERE THE SALES WERE MADE IN CASH, THE BUYERS HAD NOT GIVEN COMPLETE ADD RESS AND THERE WAS NO MEANS OF INSISTENCE UPON THE BUYERS TO GIVE COMPLETE ADDRESS. IT WAS FURTHER CONTENDED BY THE ASSESSEE THAT MERELY BECAUSE THE ADDRESS OF ALL THE CUSTOMERS WERE NOT F OUND TO BE COMPLETE OR WERE FOUND TO BE INCORRECT, DOES NOT JU STIFY TREATING THE SAID CASH SALES AS UNEXPLAINED CASH CREDITS. 5 9. DURING THE APPELLATE PROCEEDINGS, THE COMMISSION ER OF INCOME TAX (APPEALS) ASKED THE ASSESSEE TO PRODUCE ITS BOO KS OF ACCOUNT, SALE BILLS, PURCHASE BILLS ETC. IN ORIGINAL WHICH W ERE PRODUCED BY THE ASSESSEE. THE PERUSAL OF THE SALES REGISTER PRODUC ED BY THE ASSESSEE REFLECTED CASH SALES HAD BEEN EFFECTED W.E.F. 01.12 .2007, WHICH HAS BEEN TABULATED AT PAGE 4 OF THE APPELLATE ORDER. TH E COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT HUGE CASH SALES HAD BEEN CLAIMED OVER SPAN OF JUST ABOUT A MONTH AND SALES W ORTH RS. 12 CR HAD BEEN MADE ON 12 DIFFERENT DAYS/DATES IN THE WHO LE YEAR; CASH SALES UPTO RS. 48 LACS HAD BEEN SHOWN ON A SINGLE D AY I.E. 01.12.2007. THE SAID SALES WERE EFFECTED THROUGH 8 SALE INVOICES WHICH WERE CONSECUTIVELY SERIAL NUMBERED AS 007 TO 014 AND OUT OF 8 SALE INVOICES, 7 INVOICES WERE FOR RS. 6,24,000/- EACH. THE ITEM SOLD BY THE ASSESSEE WAS IN RESPECT OF ONE COMMODIT Y I.E. PAN SHAMAMA AND THE SALES WERE FOR ODD WEIGHTS OF PAN S HAMAMA SUCH AS SALE VIDE INVOICE NO. 018 FOR 12.50 KG WEIGHT, I NVOICE NO. 24 FOR 25.50 KG AND VIDE INVOICE NO. 27 FOR 50.50 KG. THE ASSESSEE HAD SHOWN PRODUCTION OF 2000 KG OF PAN SHAMAMA DURING T HE YEAR UNDER CONSIDERATION AND THE ENTIRE PRODUCTION WAS SHOWN I N THE MONTH OF NOVEMBER,2007 ONLY, OUT OF WHICH 1557.50 KG OF PAN SHAMAMA WAS SOLD IN THE MONTH OF DECEMBER AND JANUARY THROUGH C ASH SALES. THE SALE VALUE OF THE SAID PAN SHAMAMA WAS RS.12000/- P ER KG AND THE SAID EXPENSIVE ITEM WAS SOLD THROUGH CASH SALE OVER A PERIOD OF FEW DAYS. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ENLISTED THE DETAILS OF SALE INVOICES AT PAGES 5 & 6 OF THE APPE LLATE PROCEEDINGS WHEREIN INCOMPLETE ADDRESS OF THE BUYERS HAVE BEEN GIVEN. THE SAID LIST IS NOT BEING REPRODUCED FOR THE SAKE OF BREVIT Y. THE COMMISSIONER OF INCOME TAX (APPEALS) THUS, HELD THA T THE DETAILS GIVEN IN THE CASH BILLS WERE PRIMA-FACIE BOGUS. IN VIEW OF THE ENTIRE 6 CIRCUMSTANTIAL EVIDENCES AND THE ASSESSEE HAVING FA ILED TO FURNISH COMPLETE INFORMATION IN RESPECT OF THE SO CALLED BU YERS, THE COMMISSIONER OF INCOME TAX (APPEALS) PERUSED THE CA SH BOOK OF THE ASSESSEE WITH REFERENCE TO THE RELEVANT ENTRIES OF CASH SALES. THE COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THE ENTIRE CASH GENERATED WAS DEPOSITED BY THE ASSESSEE IN PUN JAB NATIONAL BANK, UNA AND STATE BANK OF INDIA, UNA AND THE AMOU NTS WERE TRANSFERRED ON THEIR DEPOSIT TO THE SISTER CONCERNS OF THE ASSESSEE ONE AFTER THE OTHER. THE COMMISSIONER OF INCOME TA X (APPEALS) VIDE PARA 4.5 HAS REFERRED TO THE VARIOUS BANK ENTR IES AND HAS NOTED THAT PRIOR TO 6.12.2007 AND AFTER 11.1.2008, THERE WERE NO SUCH MAJOR TRANSFER ENTRIES TO THE ASSESSEE'S SISTER CO NCERNS/ALLIED BANK ACCOUNTS. 10. ANOTHER ASPECT NOTED BY THE COMMISSIONER OF INC OME TAX (APPEALS) WAS THAT THE BOGUS CASH SALE HAD RESULTED IN YIELDING AN ABNORMAL NET PROFIT RATE OF 90.7% TO THE ASSESSEE A ND IT WAS ONLY ON ACCOUNT OF TAX EXEMPTION UNDER SECTION 80IC OF THE ACT, THE ASSESSEE HAD RETURNED THE NET PROFIT RATE OF 90.7% AND HAD BOOKED SUCH HEAVY CASH SALES AMOUNTING TO RS. 2 CR. IN VIE W THEREOF, THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE ORD ER OF ASSESSING OFFICER IN ADDING THE SUM OF RS.1.94 CR A S INCOME UNDER SECTION 68 OF THE INCOME TAX ACT AND DIRECTED THE A SSESSING OFFICER TO DEDUCT THE SAID SALES FROM THE TOTAL SALES AND A CCORDINGLY REDUCE THE NET PROFIT ELIGIBLE FOR THE PURPOSE OF DEDUCTIO N UNDER SECTION 80IC OF THE ACT. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS ENGAGED IN THE 7 BUSINESS OF MANUFACTURING OF ESSENTIAL OIL KNOWN AS MUSK/UTTAR HEENA SPECIAL AND THE INDUSTRIAL UNIT WAS SITUATED IN THE REMOTE AREAS OF UNA. THE ASSESSEE HAD STARTED PRODUCTION ON 30.05.2005 AND THE FIRST YEAR OF CLAIM OF DEDUCTION UNDER SECT ION 80IC OF THE ACT WAS ASSESSMENT YEAR 2006-07. DURING THE ASSESS MENT YEAR 2007-08, THE CLAIM OF THE ASSESSEE IN RESPECT OF DE DUCTION UNDER SECTION 80IC OF THE ACT WAS VERIFIED BY THE ASSESSI NG OFFICER AND THE ASSESSEE WAS FOUND TO BE ELIGIBLE FOR THE AFORE SAID DEDUCTION UNDER SECTION 80IC OF THE ACT. HOWEVER, THE ASSESS EE HAD OFFERED TO REDUCE THE ALLOWABLE PROFITS BY 8% ON TOTAL SALES I N ASSESSMENT YEAR 2006-07 WHICH WAS FOLLOWED IN ASSESSMENT YEAR 2007- 08 AND THE ALLOWABLE PROFITS WERE REDUCED BY 5% ON TOTAL SALES . IN THE ASSESSMENT PROCEEDINGS RELATING TO ASSESSMENT YEAR 2007-08, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD SHOWN CASH SALES OF RS.3.12 CR INCLUDING VAT OF RS. 12 LACS WHICH WERE MADE DURING THE MONTH OF SEPTEMBER,2006 TO DIFFERENT PARTIES WH OSE ADDRESSES WERE FOUND TO BE INCOMPLETE AND THE SAID PARTIES CO ULD NOT BE TRACED. THE PLEA OF THE ASSESSEE THAT THE GOODS MAN UFACTURED BY IT HAD TREMENDOUS REPUTATION FOR PURITY AND QUALITY AN D HAD ENJOYED MONOPOLISTIC STATUS IN THE TRADE CIRCLE OF ESSENTIA L OILS AND PERFUMERY COMPOUNDS AND DUE TO HUGE DEMAND HAD MADE THE DELIVERY ACROSS COUNTER ON CASH BASIS, WAS REJECTED BY THE ASSESSING OFFICER AND ADDITION OF RS. 3 CR WAS MADE IN THE HA NDS OF THE ASSESSEE. 12. THE TRIBUNAL IN ITA NO. 204/CHD/2011 IN M/S J.M .J. ESSENTIAL OIL COMPANY, UNA VS ITO, UNA VIDE ORDER DATED 19.10 .2011 HAD UPHELD THE ADDITION OF RS. 3 CR OBSERVING AS UNDER : 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE MANUFACTURIN G OF 8 ESSENTIAL OIL WHICH IN TURN IS UTILIZED FOR PERFUME S, ETC. THE ASSESSEE FIRM HAS ITS OFFICE AT JMJ HOUSE, 5 TH FLOOR, ORCHARD AVENUE, HIRANANDANI, POWAI, MUMBAI. THE MANUFACTURI NG UNIT IS SITUATED AT UNA, H.P. THE ASSESSEE HAD STAR TED THE MANUFACTURING AT UNA UNIT ON 30.5.2005 AND HAD CLAI MED DEDUCTION U/S 80IC OF THE ACT FOR THE FIRST TIME IN ASSESSMENT YEAR 2006-07. THE PROFITS ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT WERE REDUCED BY 8% OF THE TOTAL SALES BY THE ASSESSING OFFICER. IN THE YEAR UNDER APPEAL I.E . ASSESSMENT YEAR 2007-08 SIMILAR EXERCISE WAS CARRIE D OUT BY THE ASSESSING OFFICER AND THE ELIGIBLE PROFITS FOR DEDUCTION U/S 80IC OF THE ACT WERE REDUCED TO 14.5% OF THE TO TAL SALES, ON WHICH NO DEDUCTION U/S 80IC OF THE ACT WAS ALLOW ED. THE ABOVE SAID ADDITION HAS BEEN ACCEPTED BY THE AS SESSEE. 12. DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE HAD DECLARED TOTAL SALES OF RS.95.28 CRORES ON WHIC H NET PROFIT OF RS.85.29 CRORES HAD BEEN DECLARED BY THE ASSESSEE DECLARING GP RATE OF 91% AND NP RATE OF 89 %. THE ASSESSING OFFICER NOTED THE ASSESSEE TO HAVE MA DE CASH SALES OF RS.3.12 CRORES, INCLUDING VAT OF RS.1 2 LACS. THE AFORESAID CASH SALES WERE MADE ONLY DURING THE MONTH OF SEPTEMBER, 2006 IN CONNECTION WITH A PRODU CT KNOWN AS PAN SHAMAMA. THE ASSESSEE CLAIMS TO HAVE MANUFACTURED SYNTHETIC ESSENCE FOR RETAIL COUNTER S ALE ON TEST MARKET BASIS AND HAD SOLD 2.5 TONS OF THE PROD UCTS AT SALE PRICE OF RS.12,0007- PER KG. EXCLUSIVE OF VAT. THE AFORESAID COUNTER SALE WAS MADE TO THE VARIOUS PERSONS/BUYERS WHO COLLETED THE GOODS FROM THE MANUFACTURING FACILITIES AT UNA AND TRANSPORTED THE SAME AT THEIR OWN COST. THE GOODS WERE CLAIMED TO BE SUP PLIED IN M.S.DRUMS OF 25 KGS. SINCE THE SALE WERE COLLECT ED IN CASH, THE PLEA OF THE ASSESSEE WAS THAT IT DID NOT CARRY OUT ANY VERIFICATION OF THE NAMES AND ADDRESSES OF THE BUYERS. ADMITTEDLY, NO SALES IN CASH WERE MADE EITH ER BEFORE OR AFTER SEPTEMBER, 2006. THE ASSESSEE ADMITS THAT IT STOPPED THE COUNTER SALES FOR ADMINISTRATIVE REASON S OF COLLECTING, COUNTING, SAFE KEEPING OF CASH AND FOR SECURITY REASONS CONSIDERING THE FACT THAT THE FACTORY IS LO CATED IN A ISOLATED AREA, THE ASSESSEE DID NOT WISH TO COMPOUN D ADMINISTRATIVE INCONVENIENCES BY SELLING FINISHED G OODS ACROSS THE COUNTER. HENCE THE ASSESSEE DISCONTINUED THE COUNTER SALE ON CASH BASIS. 13. THE ASSESSEE HAS ANNEXED THE DETAILS OF RAW MA TERIAL USED IN THE MANUFACTURING OF PAN SHAMAMA AT PAGE 60 OF T HE PAPER BOOK UNDER WHICH IT HAS TABULATED ITEM-WISE D ETAILS OF THE RAW MATERIAL PURCHASED I.E. THE QUANTITY AND DA TE OF PURCHASE. OUT OF THE SAID QUANTITY PURCHASED, THE ASSESSEE CLAIMS TO HAVE ISSUED THE SMALLER QUANTITY THAN PURCHASED OF THE RAW MATERIAL FOR THE PURPOSE OF CONSUMPTION IN THE MANUFACTURING PROCESS. HOWEVER, NO QUANTITATIVE DETAILS IN RESPECT OF THE RAW MATERIAL CONSUMED AND PRODUCTION THEREOF HAVE BEEN PRODUCED BEFORE US. THE ASSESSEE HAS MAINTAINED STOCK REGIST ER OF THE RAW MATERIAL PURCHASED AND COPY OF THE SAME ARE PLACED ALONGWITH PHOTOCOPIES OF THE PURCHASE BILLS OF THE 9 DIFFERENT ITEMS AT PAGES 61 TO 81 OF THE PAPER BOOK . THE FIRST SUCH ACCOUNT OF RAW MATERIAL COMP J.M./B.2 IN WHICH THE TOTAL PURCHASES WERE OF THE QUANTITY OF 6 00 AND ON 22.7.2006 THERE WAS ISSUE OF 525 AND ON 30.8.2006 THERE IS ISSUE OF 75. THE SECOND ITEM IS COMP J.M.E/5 AND THE COPY OF THE STOCK REGISTER IS PLACE D AT PAGE 63 OF THE PAPER BOOK IN WHICH QUANTITY OF 600 HAS BEEN PURCHASED AGAINST WHICH ITEMS ISSUED IN JULY, 2006 WERE 512 AND IN AUGUST, 2006 WERE 88. SIMILARLY, IN RESPECT OF OTHER RAW MATERIALS THE IT EMS HAVE BEEN PURCHASED AND ISSUED BY THE ASSESSEE IN E ITHER JULY OR AUGUST, 2006 IN TOTALITY AND THE STOCK IS N IL AS ON 30.8.2006. HOWEVER, IF WE PERUSE THE DETAILS OF RAW MATERIAL USED IN THE MANUFACTURING OF PAN SHAMAMA TABULATED AT PAGE 68 OF THE PAPER BOOK, WE FIND THA T THE ASSESSEE HAD TABULATED QUANTITY OF 200 PURCHASED ON 10.7.2006 OF COMP J.M./B.2, AND AGAINST WHICH QUANT ITY OF 50 HAS BEEN ISSUED FOR THE MANUFACTURING PROCESS OF PAN SHAMAMA. SIMILARLY, IN RESPECT OF COMP J.M.E/5 OUT OF QUANTITY OF 400 PURCHASED ON 10.7.2006, QUANTITY OF 50 HAD BEEN ISSUED. THE ASSESSEE HAS NOT MAINTAINED TH E DETAILS OF CONSUMPTION OF THE RAW MATERIAL BUT HAS ONLY MAINTAINED THE RECORD OF ISSUE OF RAW MATERIAL, WHI CH DOES NOT ESTABLISH CLAIM OF THE ASSESSEE THAT IT WAS MAI NTAINING PRODUCTION RECORD. IN THE ABSENCE OF THE DETAILS BE ING AVAILABLE AS TO HOW OUT OF THE TOTAL QUANTITY PURCH ASED, WHERE PART OF THE SAME WAS UTILIZED FOR THE MANUFAC TURE OF PAN SHAMAMA, WHICH APPARENTLY WAS SOLD IN CASH BY T HE ASSESSEE IN THE MONTH OF SEPTEMBER, 2006. 14. THE ASSESSEE HAS FURTHER TABULATED DETAILS OF C ASH SALES AT PAGES 86 AND 87 OF THE PAPER BOOK IN WHICH IN MA JORITY QUANTITY OF 50 KGS. FOR SUM OF RS.6 LACS AND VAT OF RS.24,0007- HAS BEEN SOLD BY THE ASSESSEE. THE TABU LATED DETAILS REVEAL THAT THE INVOICES IN SERIATIM ORDER HAVE BEEN ISSUED BY THE ASSESSEE STARTING FROM INVOICE NO.19 ISSUED ON 2.9.2006 FOR 50 KGS. AMOUNTING TO RS.6,24,0007- TO BUYERS, NAMELY RAJESH TRADING COMPANY WITH ADDRESS OF MAWAL I ROAD, KULLU. THE SALE INVOICES ARE ISSUED FROM SR.NOS.19 TO 74 TOTALING 55 INVOICES AND ARE OF THE MONTH OF SEPTEM BER, 2006. THE COPIES OF THE SALE BILLS ISSUED BY THE ASSESSEE ARE ENCLOSED AT PAGES 88 TO 142 OF THE PAPER BOOK. PERU SAL OF THE SAME REVEALS THAT THE NAME OF THE BUYERS IS MEN TIONED IN THE SAID BILLS. HOWEVER, THE ADDRESSES OF THE PE RSONS WERE NOT FOUND IN MAJORITY OF THE BILLS. THE GOODS WERE PURCHASED BY THE PARTIES RESIDING IN VARIOUS PARTS OF HIMACHAL PRADESH INCLUDING MANALI, KULLU, BADDI, SH IMLA, NALAGARH, ETC.. THE SAID SALES ARE MADE BY THE ASSE SSEE ON VARIOUS DATES AS ENUMERATED PAGE 86 AND 87 OF THE P APER BOOK AND FROM THE PERUSAL OF THE SALE BILLS MAINTAINED B Y THE ASSESSEE, WE FIND MAJORITY OF THE SALE BILLS ARE FO R RS.6,24,0007- AND SOME OF THE SALES ARE FOR RS.3,12 ,0007-. THE ASSESSEE HAS FILED TO EXTRACT OF THE CASH BOOK FOR THE MONTH OF SEPTEMBER, 2006 AT PAGES 153 TO 163 OF THE PAPER BOOK. THE PERUSAL OF THE SAID CASH BOOK REVEALS THA T THE CASH COLLECTED BY THE ASSESSEE FIRM WAS DISTRIBUTED IN CASH TO 10 ITS PARTNERS, S/SHRI J.M.JOSHI AND SACHIN JOSHI. TH E COPY OF THE CAPITAL ACCOUNTS OF BOTH THE PARTNERS REFLECT T HAT EXCEPT FOR WITHDRAWING THE CASH IN THE MONTH OF SEPTEMBER. 2006 THE TOTAL WITHDRAWALS BY THE RESPEC TIVE PERSONS HAVE BEEN MADE BY WAY OF CHEQUES. 15. THE ASSESSEE BEFORE US CLAIMS TO HAVE MANUFACTU RED SYNTHETIC PRODUCT KNOWN AS PAN SHAMAMA. THE TOTAL QUANTITY OF 2.5 TONS OF ITEMS FOR PACKING OF 50 KG. WERE SOLD BY WAY OF SALE OVER THE COUNTER TO BUYERS AGAINST C ASH. THE UNIT OF THE ASSESSEE IS ESTABLISHED IN ISOLATED AREA OF HIMACHAL PRADESH I.E. IN UNA. THE ASSESSEE HIMSELF HAD ADMITTED IN ITS REPLY THAT AS A POLICY OVER THE COU NTER SALES WERE NOT ENCOURAGED OR ENTERTAINED BY THE ASSESSEE DUE TO DIFFICULTY INVOLVED IN HANDLING OF THE CASH. HOWEVER, IN THE MONTH OF SEPTEMBER, 2006, THE ASSES SEE MADE CASH SALES TOTALING RS.3.12 CRORES. THE CASH S ALES AS PER THE ASSESSEE WERE SUPPORTED BY SALES INVOICES W HICH WERE FOUND TO BE WANTING BY THE ASSESSING OFFICER A S NEITHER NAMES NOR COMPLETE ADDRESSES OF THE PERSONS WERE AVAILABLE ON THE SAID SALE INVOICES. THE ITEMS MANUFACTURED BY THE ASSESSEE WERE NOT FOR GENERAL CONSUMPTION. THE SAID ITEMS HAVE SELECTED MARKET AN D EVEN THE END USERS WERE SELECTED. THE ASSESSING OFF ICER HAD SHOW CAUSED THE ASSESSEE TO PROVE THE CASH SALE S OF RS.3.12 CRORES. THE EXPLANATION OF THE ASSESSEE THA T THE COUNTER SALES WERE MADE TO VARIOUS PERSONS/BUYERS W HO IN TURN COLLECTED THE GOODS FROM THE MANUFACTURING UNIT OF THE ASSESSEE AT UNA AND TRANSPORTED THE SAME ON THEIR OWN, WAS FOUND TO BE WANTING BY THE ASSESSING OFFICER. THE PACKAGING OF THE ITEMS SOLD BY THE ASS ESSEE IN CASH WAS OF 25 KG. AND MOSTLY SALES OF 50 KG. WERE MADE BY THE ASSESSEE AS MOST OF THE BILLS WERE FOR RS.6,12, 000/- THE ONUS WAS UPON THE ASSESSEE TO ESTABLISH THE CREDIT IN ITS BOOKS OF ACCOUNT, WHICH IN THE PRESENT CASE WAS CLAIMED TO BE ON ACCOUNT OF SALES OF ITEMS PRODUCED . AS POINTED OUT IN PARAS ABOVE THE ASSESSEE HAS FAILED TO MAINTAIN THE PRODUCTION DETAILS. THE ASSESSEE HAD O NLY MAINTAINED THE RECORD OF PURCHASES OF RAW MATERIAL AND ITS ISSUE AND THEN THE RECORD OF ITS SALES. THE TOTAL Q UANTITY CLAIMED TO BE SOLD BY THE ASSESSEE OF THE SAID ITEM S WAS 2.5 TONS AT SALE PRICE OF RS. 12,000/- PER KG. THE ASSE SSEE FURTHER CLAIMED THAT IT HAD DISCONTINUED THE COUNTE R SALE AS THE FACTORY WAS LOCATED AN ISOLATED AREA AND ADMINI STRATIVE INCONTINENCES WERE CAUSED VIS--VIS SAFE KEEPING OF CASH AND FOR SECURITY REASON. IN THE ENTIRETY OF THE FAC TS AND CIRCUMSTANCES WE FIND THAT THE ASSESSEE HAS FAILED TO ESTABLISH ITS CLAIM AND IN THE ABSENCE OF DISCHARGI NG THE ONUS CAST UPON THE ASSESSEE WE ARE IN AGREEMENT WIT H THE FINDINGS OF THE CIT (APPEALS) THAT THE ENTIRE EXERC ISE WAS A CASE OF INTRODUCTION OF CASH BY THE ASSESSEE IN THE FORM OF CASH SALES AND CREDIT TO ITS BOOKS OF ACCOUNT. THE ACCEPTANCE OF SUCH CASH SALES BY VAT AUTHORITIES DO ES NOT ESTABLISH THE GENUINENESS OF THE TRANSACTION. FURTH ER CIRCUMSTANTIAL EVIDENCE STRENGTHENS THE CASE OF THE AUTHORITIES BELOW I.E. THE TOTAL CASH COLLECTED FROM THE ABOVE SAID SALES WAS WITHDRAWN BY THE PARTNERS IN C ASH. 11 NO PART OF THE CASH SALES WERE DEPOSITED IN THE BAN K ACCOUNT AND THE TOTAL AMOUNT OF RS.3.12 CRORES IN C ASH WAS WITHDRAWN BY THE PARTNERS IN THE MONTH OF SEPTEMBER , 2006 ITSELF. THOUGH THE PERUSAL OF THE CAPITAL ACCO UNT OF THE PARTNERS REVEALS THAT REST OF THE ENTRIES IN TH EIR RESPECTIVE CAPITAL ACCOUNTS BOTH ON ACCOUNT OF CRED IT OR DEBITS EVEN TO THE EXTENT OF THE AMOUNT OF RS.10,00 0/- OR MORE WERE BY WAY OF CHEQUE. THE ASSESSEE HAVING FAI LED TO DISCHARGE ITS ONUS TO PROVE THE GENUINENESS OF THE CASH SALES OF RS.3.12 CRORES, WE UPHOLD THE ORDER OF THE CIT (APPEALS). THE ASSESSEE IS NOT ENTITLED TO THE DEDU CTION U/S 80IC OF THE ACT ON THE AFORESAID ADDITION OF RS .3.12 CRORES. GROUND NOS.L AND 2 RAISED BY THE ASSESSEE A RE DISMISSED. 13. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATIO N HAS FOLLOWED THE SIMILAR PATTERN OF SHOWING CASH SALES WITHIN A PERIOD OF 30 TO 40 DAYS, TOTALING RS.1.94 CR ON DIFFERENT DATES AS UND ER : DATE TOTAL AMOUNT OF CASH SALES 01.12.2007 4804800 07.12.2007 2028000 08.12.2007 1803360 12.12.2007 817440 13.12.2007 1903200 14.12.2007 948480 24.12.2007 1747200 26.12.2007 960960 03.01.2008 2496000 04.01.2008 187200 09.01.2008 1248000 10.01.2008 492960 TOTAL 19437600 12 14. THE ASSESSEE HAD MADE THE CASH SALES TOTALING R S. 48,04,800/- ON A SINGLE DAY ON 01.12.2007 AND THEREAFTER CASH S ALES HAVE BEEN REPEATEDLY MADE BY THE ASSESSEE. THE COMMISSIONER O F INCOME TAX (APPEALS) HAS EXAMINED THE BOOKS OF ACCOUNT ALONGWI TH THE PURCHASE AND SALE BILLS AND NOTED THAT MOST OF THE CASH SALE S WERE ON ACCOUNT OF SALE OF 50 KG PACKING OF PAN SHAMAMA FOR RS. 6,2 4,000/-. THE ASSESSEE HAD CLAIMED PRODUCTION OF 2000 KG OF PAN S HAMAMA ENTIRELY IN THE MONTH OF NVOEMBER,2007 ONLY AND OUT OF SAID PRODUCTION, 1557.50 KG OF PAN SHAMAMA WAS SOLD IN THE MONTH OF DECEMBER AND JANUARY THROUGH CASH SALES. THE SALE PRICE OF THE S AID PRODUCT WAS @ RS. 12000/- PER KILOGRAM AND THE SAID EXPENSIVE ITE M WAS SOLD IN CASH OVER THE COUNTER WITHIN A PERIOD OF FEW DAYS. THE SALE BILLS WERE PRODUCED BEFORE THE ASSESSING OFFICER AND VERI FICATION EXERCISE WAS CARRIED OUT BY THE INSPECTOR AND THE A DDRESSES OF THE PARTIES WERE FOUND TO BE INCOMPLETE AND WERE FOUND TO BE NON- EXISTENT EVEN IN THE AREA WHICH WERE GIVEN BY THE A SSESSEE. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS TABULATED THE LIST OF SALE INVOICES ISSUED BY THE ASSESSEE TO DIFFERENT PARTIE S AND THE PERUSAL OF THE SAME AT PAGES 5 & 6 OF THE APPELLATE ORDER R EFLECT THAT THE ADDRESSES WERE INCOMPLETE AND WERE THUS, A FACADE C REATED BY THE ASSESSEE TO REFLECT ITS ALLEGED CASH SALES. 15. THE SECOND ASPECT TO BE CONSIDERED IN THE PRESE NT CASE IS THE MODUS-OPERANDI ADOPTED BY THE ASSESSEE VIS--VIS C ASH GENERATION. THE SAID ASPECT HAS ALSO BEEN ELABORATELY CONSIDERE D BY THE COMMISSIONER OF INCOME TAX (APPEALS) UNDER PARA 4.5 , WHICH READS AS UNDER : 4.5 WITH A VIEW TO EXAMINE AS TO WHAT THE APPELLANT DID WITH THE HUGE CASH GENERATED IN THE BOOKS OF ACCOUNT IN THE GARB OF CASH SALES, THE CASH BOOK OF THE APPELLANT WAS PERUSED W.E.F T HE RELEVANT BANK ACCOUNTS. IT WAS NOTED THAT THE ENTIRE CASH GENER ATED WAS DEPOSITED 13 BY THE APPELLANT IN PUNJAB NATIONAL BANK, UNA AND S BI, UNA. THUS ON 01.12.2007 CASH OF RS.48 LACS WAS DEPOSITED IN P NB, UNA. IT IS FURTHER SEEN THAT AN AMOUNT OF RS.45 LACS WAS TRANS FERRED BY THE APPELLANT FROM THE SAID ACCOUNT ON 06.12.2007 TO SA CHIN PERFUMERY AND COSMETICS. ON ENQUIRIES IT WAS LEARNT THAT SACH IN PERFUMERY AND COSMETICS HAPPENS TO BE THE APPELLANT'S SISTER CONC ERN. SIMILARLY FURTHER CASH AMOUNTS DEPOSITED IN PNB, UNA ON ACCOU NT OF CASH SALES WERE TRANSFERRED ON 22.12.2007 TO THE EXTENT OF RS. 50 LACS TO JMJ HOTELS AND INFRASTRUCTURE LTD., ANOTHER SISTER CONC ERN OF THE APPELLANT. AN AMOUNT OF RS. 40 LACS WAS TRANSFERRED ON 11.01.2 008 TO STATE. BANK OF INDIA, POWAI TO THE CENTRAL BANK ACCOUNT OF THE GROUP CONCERNS OF THE APPELLANT. SIMILARLY CASH DEPOSITED WITH SBI , UNA ON 07.12.2077, 08.12.2007 AND 13.12.2007 WAS TRANSF ERRED ON 22.12.2007 TO JMJ HOTELS & INFRASTRUCTURE PVT. L TD. AGAIN, THE CASH DEPOSITED ON 24.12.2007 AND 03.01.2008 WAS TRANSFER RED ON 08.02.2008 TO STATE BANK OF INDIA, POWAI. PRIOR TO 06.12.2007 AND AFTER 11.01.2008, THERE ARE NO SUCH MAJOR TRANSFE R ENTRIES TO THE APPELLANT'S SISTER CONCERNS/ALLIED BANK ACCOUNTS. AFTER THE TRANSFER OF THE GIVEN FUNDS IN THE AFORESAID NER BY THE APPE LLANT, ITS NEED FOR BOGUS CASH GENERATION APPEARS TO HAVE COME TO END. THUS IT IS OBVIOUS THAT THE CASH SALES WERE RECORDED IN THE BO OKS OF ACCOUNT BY APPELLANT ONLY IN ORDER TO CREATE A FACADE OF LIQUI DITY IN ORDER TO PROVIDE ACCOMMODATION ENTRIES TO ITS SISTER CONCERN S. THE ENTIRE ARRANGEMENT, ON VERY FACE OF IT, /S SHAM AND A COLO RABLE DEVICE TO INTRODUCE ITS OWN UNACCOUNTED INCOME THROUGH BACK DOOR IN THE GUISE OF CASH SALES. THIS ARRANGEMENT CAME HANDY TO THE A PPELLANT ON ACCOUNT OF THE FACT THAT IT IS ENJOYING TOTAL TAX E XEMPTION U/S 80IC OF THE I. T.ACT. THUS MERELY BY PAYING A MEAGRE SUM OF RS.7,47,600/- AS VAT ON CASH SALES WITHIN THE STATE, THE APPELLANT H AS CLEVERLY SUCCEEDED IN BOGUS CAPITAL FORMATION TO THE TUNE OF RS. 1,86,90,0007-. THE BOGUS CASH SALES HAVE ALSO RESULTED IN YIELDING AN ABNORMAL NET PROFIT RATE OF 90.7% TO THE APPELLANT. IT IS ONLY O N ACCOUNT OF TAX EXEMPTION U/S 80IC THAT THE ASSESSEE COULD SO BRAZE NLY RETURN A NET PROFIT RATE OF 90.7% AND COULD BOOK SUCH HEAVY CASH SALES AMOUNTING TO RS.2 CRORES APPROX. 16. AS REFERRED BY US IN THE PARAS HEREIN ABOVE AND ALSO IN THE ORDER OF THE TRIBUNAL RELATING TO ASSESSMENT YEAR 2 007-08 IN ASSESSEE'S OWN CASE, THE INDUSTRIAL UNIT OF THE AS SESSEE IS SITUATED IN REMOTE AREA OF DISTRICT UNA AND IS NOT A PLACE F ROM WHERE THE CUSTOMERS CAN EASILY COME AND PICK THE GOODS. THE ENTIRE EXERCISE OF THE CASH SALES MADE BY THE ASSESSEE AND EVEN THE DEPOSIT OF THE MONEY IN THE BANK ACCOUNT AND THEREAFTER ITS TRANSF ER TO THE SISTER CONCERNS OR THE ALLIED DOES NOT ESTABLISH THE CASE OF THE ASSESSEE OF HAVING MADE THE CASH SALES TOTALING RS. 1.94 CR. 14 17. IN THE ENTIRETY OF THE ABOVESAID FACTS AND CIRC UMSTANCES, WHERE THE ASSESSEE HAS FAILED TO ESTABLISH ITS CLAIM VIS- -VIS THE CASH SALES, WE ARE INCONFORMITY WITH THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THAT THE ASSESSEE HAS FAILED T O ESTABLISH THE GENUINENESS OF THE HUGE CASH SALES OF RS.1.94 CR CR EDITED IN THE BOOKS OF ACCOUNT PURELY IN THE FORM OF LIQUID CASH. FURTHER THE SAID BOGUS CASH SALES HAVE RESULTED IN YIELDING AN ABNOR MAL PROFIT RATE OF 90.7% TO THE ASSESSEE AGAINST WHICH THE ASSESSEE HA D CLAIMED TAX EXEMPTION UNDER SECTION 80IC OF THE ACT. IN VIEW T HEREOF, WE UPHOLD THE ORDER OF COMMISSIONER OF INCOME TAX (APP EALS) IN CONFIRMING THE ADDITION OF RS.1.94 CR UNDER SECTION 68 OF THE INCOME TAX ACT. WE FURTHER UPHOLD THE ORDER OF COMM ISSIONER OF INCOME TAX (APPEALS) IN DIRECTING THE ASSESSING OFF ICER TO DEDUCT THE SAID CASH SALES OUT OF THE TOTAL SALES AND TO A CCORDINGLY REDUCE THE NET PROFIT OF THE ASSESSEE ELIGIBLE FOR THE PUR POSE OF DEDUCTION UNDER SECTION 80IC OF THE ACT. UPHOLDING THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND IN VIEW OF THE ABOVESAID FACTS AND CIRCUMSTANCES AND THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE RELATING TO ASSESSMENT YEAR 20 07-08, WE DISMISS GROUND NOS. 1 TO 3 RAISED BY THE ASSESSEE. 18. THE SECOND ISSUE RAISED BY THE ASSESSEE IS AGAI NST DENIAL OF DEDUCTION UNDER SECTION 80IC OF THE ACT ON INTEREST INCOME OF RS. 18,44,923/-. ADMITTEDLY, THE ASSESSEE HAD RECEIVED THE SAID INTEREST ON DEPOSITS MADE WITH THE BANK. THE CLAIM OF THE A SSESSEE WAS THAT THE SAID DEPOSITS WERE MADE OUT OF THE MONEY RECEIV ED FROM THE BUSINESS OF THE INDUSTRIAL UNIT AND BEING BUSINESS INCOME WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE AC T. THE SAID DEDUCTION UNDER SECTION 80IC OF THE ACT WAS REJECTE D BY BOTH 15 ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TA X (APPEALS) AS THE INTEREST INCOME WAS NOT IN RESPECT OF THE PROF ITS AND GAINS DERIVED BY THE UNDERTAKING. WE FIND NO MERIT IN TH E PLEA OF THE ASSESSEE IN THIS REGARD. THE ASSESSEE HAS PLACED R ELIANCE ON CIT VS JAGDISH PRASAD M.JOSHI (SUPRA) WHEREIN IT HAS BEEN HELD THAT INTEREST INCOME EARNED BY THE ASSESSEE WAS IN THE NATURE OF BUSINESS INCOME. HOWEVER, IN THE PRESENT CASE THE FINDING OF THE ASS ESSING OFFICER WAS THAT BANK INTEREST HAS NOTHING TO DO WITH THE M ANUFACTURING ACTIVITIES OF THE UNDERTAKING. THE ASSESSEE HAS FA ILED TO PLACE ON RECORD ANY EVIDENCE TO PROVE CONTRARY AND HENCE, TH E CLAIM OF ASSESSEE IS NOT MAINTAINABLE. REJECTING THE SAME, WE UPHOLD THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). THE GROUND OF APPEAL NOS. 4 & 5 RAISED BY THE ASSESSEE ARE DISMIS SED. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MARCH,2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: .28 TH APRIL, 2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITA T,CHD.