Burden of proof in escaped turnover cases requires revenue verification before drawing adverse inference from seized records.

In proceedings under section 21 of the U.P. Act, 1948, the Revenue had to first produce material showing that the assessee's alleged purchases were from outside the State and that escaped turnover existed. The assessee asserted that the purchases were local and supplied names and addresses of some sellers, but the assessing authority made no enquiry from those persons before drawing an adverse inference from a seized diary. The Tribunal held that the Revenue had not discharged the initial burden and that the assessee's explanation could not be rejected without verification. The finding that the purchases were not proved to be from outside the State was upheld in favour of the assessee.

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Issues: Whether, in proceedings under section 21 of the U.P. Act, 1948, the Revenue had established that the assessee had purchased utensils from outside the State so as to justify taxing the alleged escaped turnover.

Analysis: The assessee stated that the purchases were local and furnished the names and addresses of some sellers and the names of others. No enquiry was made by the assessing authority from those persons before drawing an adverse inference from the diary seized during survey. In such proceedings, the initial burden lay on the assessing authority to bring material showing that the transactions represented purchases from outside the State and that turnover had escaped assessment. On the record, the Tribunal found that the Revenue had not discharged that burden and that the assessee's explanation could not be rejected without enquiry.

Conclusion: The finding that the purchases were not proved to be from outside the State was upheld, and the issue was decided in favour of the assessee.

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