Additional evidence in tax appeals must be lawfully admitted before it can displace an assessment.

The Kerala HC noted that an appellate tribunal cannot disturb a best judgment assessment on the basis of original slips or photostat copies unless such material is lawfully admitted as additional evidence under the governing procedure. Here, the assessment rested on inspection materials, including shortage, unaccounted purchases, stock records, and admissions in compounding proceedings, but the Tribunal relied on slips that had not been properly admitted and on which the Revenue had no fair opportunity to be heard. The procedure was therefore unfair and unreasonable, and the Tribunal failed to give due effect to the existing admissions and non-production of primary records.

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Issues: Whether the Appellate Tribunal was justified in setting aside the best judgment assessment by relying upon the original slips and other material not properly admitted as additional evidence and without giving the Revenue an opportunity to meet that material.

Analysis: The assessment had been founded on inspection materials, including shortage, unaccounted purchases, sale bills, stock register entries, and the assessee's admission in compounding proceedings. The Tribunal, however, examined the original slips and photostat copies and drew conclusions on their contents, although there was no application or admission of those slips as additional evidence under Regulation 48 of the Kerala Sales Tax Appellate Tribunal Regulations, 1966. In the absence of lawful admission of such material, the Tribunal could not rely on it to disturb the assessment. The procedure adopted was held to be unfair and unreasonable, and the Tribunal failed to give due effect to the relevant admissions and non-production of primary records.

Conclusion: The Tribunal was not justified in relying on material not properly before it, and its order was vitiated by procedural unfairness.

Ratio Decidendi: Additional evidence cannot be relied upon in appellate proceedings unless it is lawfully admitted in accordance with the governing procedure, and an assessment cannot be disturbed on the basis of material that the opposite party had no fair opportunity to meet.

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