Disclosed stock cannot be taxed as turnover unless the Revenue proves it represented sales in the relevant year.

Disclosed stock value could not be added to taxable turnover in the absence of evidence that it represented sales during the relevant assessment year. In sales tax matters, the Revenue must prove that the amount is turnover arising from a taxable first sale, and a mere disclosure of stock or income does not establish suppressed sales. Because no material linked the disclosure to actual sales in the assessment year, the department failed to discharge its burden. The Andhra Pradesh High Court therefore held the addition unjustified and set it aside.

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Issues: Whether the value of stock voluntarily disclosed under the Voluntary Disclosure of Income and Wealth Act, 1976 could be added to the assessee's taxable turnover in the absence of evidence that the stock had been sold during the relevant assessment year.

Analysis: The addition to turnover was sought on the basis that the assessee had disclosed stock value during the assessment year and that the amount represented suppressed sales. The record, however, showed no material linking the disclosure to actual sales during the assessment year. In sales tax matters, liability at the point of first sale must be established by the Revenue, and a mere disclosure of stock or income does not by itself prove taxable sales. The burden to establish that the amount represented turnover from sales during the relevant year lay on the department, and that burden was not discharged.

Conclusion: The addition of the disclosed stock value to the assessee's turnover was unjustified and was set aside.

Ratio Decidendi: A disclosed stock amount cannot be treated as taxable turnover unless the Revenue proves that it represented sales liable to tax during the relevant assessment year.

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