A.D. Jain, J.M. - (1.) THIS appeal by the assessee pertains to the asst. yr. 1986-87. It is directed against the order, dt. 22nd Jan., 1993, passed by the CIT(A).
(2.) It would be apposite to relate here, briefly, the factual material leading to the filing of the present appeal. The assessee is a resident unregistered firm. The major part of its business is related to doing labour job work, weaving blankets for its sister concern, viz., M/s Seth Industries, Prop. M/s Simplex Woollen Mills. Return of income declaring a net loss of Rs. 3,60,269 was filed on 9th Feb., 1987. P&L a/c, balance sheet and other relevant statements of accounts were also filed with the return. Notices under Section 143(2)/142(1) were issued. Appearance was put in before the AO, on behalf of the assessee. The books of accounts produced were verified on a test check basis.
(3.) THE assessee had taken loans amounting to Rs. 3,76,000 from 30 parties. THE AO treated this loan amount of Rs. 3,76,000 and interest thereon, amounting to Rs. 43,632, totalling to Rs. 4,19,632, as unexplained cash credits appearing in the books under s. 68 of the IT Act. Penalty proceedings under Section 271(1)(c) were initiated separately.;