( 1. ) THIS judgment shall also govern the disposal of Miscellaneous Civil Case. No. 14 of 1968 (Girdharilal Nannelal, Burhanpur v. The Commissioner of Sales Tax, Madhya Pradesh ). These are two references under Section 44 of the Madhya Pradesh General Sales Tax Act, 1958. Some questions have been referred to us by the Board of Revenue in both these cases. The assessee in both these cases is a firm "m/s. Girdharilal Nannelal" of Burhanpur, 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) above is in the affirmative, was the enhancement of the gross turnover by Rs. 1,00,000 on the basis that the said Rs. 10,000 represented ten per cent. of the profit excessive or arbitrary?

(2)Whether on the facts and circumstances of the case, the assessee was entitled to the deduction claimed in respect of Rs. 11,72,020-14-3 being the value of sale of raw cotton to Yelmele Cotton Co. on the basis that ginning and pressing of raw cotton is not a manufacturing process and, therefore, the declarations of resale given by the Yelmele Co. were valid?

(3) Whether or not the assessee was entitled to be allowed its claim of exemption on account of export sales in a sum of Rs. 2,54,742-14-6 representing the value of cotton sold to Prakash Cotton Mills, Bombay, without being required to produce a certificate from the purchaser certifying "that the delivery was for the purpose of consumption in the State of delivery "?

(4) Whether the transaction of Rs. 1,48,564-4-6 in the first period representing the value of cotton sold to the Swadeshi Cotton Mills, Kanpur, and Rs. 1,20,748 representing the value of cotton sold to the Swadeshi Cotton Mills and Rs. 1,00,475-13-0 representing the value of cotton sold to Keshavram Cotton Mills, Calcutta, in the second period, through adhatias, are intra-State sales giving rise to a taxable event in the hands of the assessee? We shall now deal with these questions one by one briefly stating the relevant facts, and shall answer them.

( 2. ) THE first 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 that account no withdrawal of such a sum was shown in the year 1941 when it was alleged to have been given to his wife. Having rejected the explanation given by the assessee, the taxing authorities assumed that this amount represented profit arising out of some concealed sales relating to this business. This inference was challenged by the learned counsel appearing for the assessee and his contention was that merely on account of some amount having been shown as credited in the account books, it was not reasonable to infer that it reflected profit ari