Suppressed turnover from inspection slips justified best judgment addition and penalty where the assessee gave no credible explanation.

Recovered inspection slips showing purchase entries not reflected in the regular books were treated as unaccounted transactions because the assessee gave no satisfactory explanation at inspection or in the immediate statement, and a later affidavit-based version was rejected as an afterthought. On that basis, the best judgment addition for suppressed turnover was sustained. Once concealment was established from contemporaneous records and the lack of a credible explanation, the consequential penalty on the suppressed turnover was also upheld. The assessment and penalty were therefore affirmed.

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Issues: (i) Whether the turnover estimated on the basis of slips recovered during inspection was liable to be sustained as suppressed turnover; (ii) Whether penalty imposed on the suppressed turnover was justified.

Issue (i): Whether the turnover estimated on the basis of slips recovered during inspection was liable to be sustained as suppressed turnover.

Analysis: The slips recovered in the surprise inspection contained purchase entries which were not reflected in the regular accounts. No satisfactory explanation was offered at the time of inspection or in the subsequent statement recorded shortly thereafter. The explanation introduced later through affidavits, filed much after the inspection, was found to be inconsistent with the immediate conduct and the recorded statement of the assessee. The later version was treated as an afterthought and the entries in the slips were held to represent unaccounted transactions justifying best judgment assessment.

Conclusion: The addition towards suppressed turnover was rightly sustained against the assessee.

Issue (ii): Whether penalty imposed on the suppressed turnover was justified.

Analysis: Once suppression of turnover was established on the basis of the recovered slips and the absence of a credible explanation, there was no basis for deleting the penalty levied on the suppressed turnover. The finding of concealment supported the consequential penal action under the Act.

Conclusion: The penalty was rightly upheld against the assessee.

Final Conclusion: The assessment made on the basis of the suppressed transactions and the consequential penalty were affirmed, and the appeal failed.

Ratio Decidendi: When contemporaneous records disclose unaccounted turnover and the assessee fails to offer a credible explanation at the time of detection, a later explanation supported only by belated affidavits may be rejected and both best judgment addition and penalty may be sustained.

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