Turnover addition needs material, not suspicion, where inspection records do not prove clandestine sales or suppression.

An enhancement of gross turnover cannot rest on suspicion or a loose paper alone when the inspection report does not provide material to prove clandestine sales or suppression. Here, the purza merely showed goods were weighed and intended for truck transport, while the assessee's explanation that the sale was not finalised and the cash memo had not yet been issued remained unshaken. Non-issuance of a cash memo at the time of inspection did not by itself establish undisclosed turnover. The turnover addition was therefore held arbitrary and perverse, and the assessee succeeded.

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Issues: Whether the enhancement of the gross turnover by Rs. 1,50,000 was arbitrary, perverse and without material.

Analysis: The inspection report only showed that a purza had been written after weighment of goods and that the goods were to be taken by truck; it did not discredit the assessee's explanation that the sale had not been finalised and that the cash memo had not yet been issued. Non-issuance of a cash memo at the time of inspection, by itself, did not establish clandestine sales or any suppression of turnover. Since the inspecting officer did not doubt the correctness of the assessee's stand, the purza could not, on its own, constitute material for enhancement.

Conclusion: The enhancement of the gross turnover by Rs. 1,50,000 was without material and was therefore arbitrary and perverse. The answer was in favour of the assessee and against the department.

Ratio Decidendi: An addition to turnover cannot be sustained merely on suspicion or on the basis of a loose paper when the contemporaneous facts and the inspecting officer's own report do not furnish material to prove clandestine sales or suppression.

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