Excess stock and suppression estimate: only the turnover actually found on inspection could be taxed, not later speculation.

Excess stock found on inspection justified taxing the suppressed turnover actually detected, but an estimate based only on probable later suppressions could not stand where subsequent inspections during the assessment year showed no irregularities. The first inspection on 1 May 1979 disclosed suppression of Rs. 54,930, and that addition was upheld because it reflected the excess stock actually found. The further addition of Rs. 1,09,860 was deleted because there was no factual basis to extend the suppression estimate beyond the amount directly established by inspection. Revisional interference restoring the full assessment was therefore not justified to that extent.

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Issues: Whether the addition of the entire suppressed turnover and probable suppressions was justified when the first inspection disclosed only the actual excess stock found and later inspections during the assessment year revealed no irregularities.

Analysis: The assessment year was 1979-80 and the inspection on 1 May 1979 disclosed excess stock corresponding to a suppressed turnover of Rs. 54,930. That amount represented the suppression actually discovered on inspection and could validly be brought to tax. However, the further addition of Rs. 1,09,860 was made only on the basis of probable suppressions for the subsequent period. Since the appellate finding was that inspections during the assessment year revealed no irregularities after 1 May 1979, there was no basis to extend the suppression estimate beyond the amount actually found at the inspection. The revisional interference restoring the full assessment was therefore not justified to that extent.

Conclusion: The addition of Rs. 54,930 was upheld, but the addition of Rs. 1,09,860 was deleted. The assessee succeeded in part.

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