Registered dealer declarations are only prima facie proof of sale, and deductions fail only when genuineness is disproved by evidence.

A declaration by a registered dealer is only prima facie evidence of a genuine sale and does not preclude departmental enquiry into whether the transaction was real. The revenue may therefore examine the surrounding material, but an adverse finding cannot rest on suspicion, personal impression, or non-probative material. On the record discussed, there was no reliable evidence to support the presumption that the goods never passed to the registered dealers, so the alleged bogus nature of the sales was not established and the deduction could not be denied on that basis.

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Issues: Whether the mere production of declarations by registered dealers was conclusive proof of genuine sales so as to preclude enquiry into the genuineness of the transactions, and whether there was any evidence on record to justify the presumption that the goods sold never passed to the registered dealers.

Analysis: The declaration obtained from a registered dealer was treated as prima facie evidence supporting the assessee's claim, but not as conclusive proof. The departmental authorities were therefore entitled to examine whether the sales were in fact genuine. At the same time, a finding adverse to the assessee could not rest on mere suspicion, on the assessing authority's personal impression, or on material that did not amount to probative evidence establishing that the transactions were fictitious. The record disclosed no reliable evidence sufficient to justify the presumption that the goods never passed to the registered dealers.

Conclusion: The question was answered in favour of the assessee. The declarations were not conclusive, but the revenue failed to produce evidence adequate to sustain disallowance of the deductions on the footing that the sales were bogus.

Ratio Decidendi: A declaration by a registered dealer is only prima facie evidence of a sale to a registered purchaser, and a deduction cannot be denied unless the department establishes with evidence that the transactions were not genuine.

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