Turnover estimation from running stock requires a continuing pattern of suppression, not a solitary stock discrepancy.
A turnover estimate based on four to six times the running stock is justified only where the facts show a continuing pattern of suppression. On the facts recorded, the assessment rested on a solitary inspection and an isolated stock discrepancy, including short stock of old gold ornaments, without proof of wilful or systematic suppression. The Tribunal found that this factual matrix did not support treating the dealer's case as one of ongoing concealment, and the revisional court found no reason to disturb that conclusion. The higher-multiple estimate and lump sum addition were therefore not warranted on these facts, and the assessee's relief remained undisturbed.
Issues: Whether the turnover of a jewellery dealer could be estimated at four to six times the running stock and a lump sum addition sustained on the basis of a solitary inspection and the detected stock variation, in the absence of a continuing pattern of suppression.
Analysis: The assessment was founded on discrepancies noticed during inspection, including stock difference and short stock of old gold ornaments. The appellate authority proceeded on an estimate of four times the average running stock, but the facts disclosed only one inspection and no established pattern of wilful suppression. The Tribunal examined the quantitative stock position and found that the detected variation did not justify treating the case as one of continuous or systematic suppression. An estimate suited to cases showing an ongoing pattern of suppression was held inapplicable to the factual matrix here. The revisional court found no reason to interfere with that factual conclusion.
Conclusion: The estimation method based on four to six times the running stock was not warranted on these facts, and the revision was rejected.
Final Conclusion: The addition sustained by the lower authorities was not interfered with in revision, and the assessee's relief was left undisturbed.
Ratio Decidendi: A turnover estimate predicated on a higher multiple of running stock is justified only where the facts disclose a continuing pattern of suppression; it is not mechanically applicable to a case resting on a solitary inspection and isolated stock discrepancy.
TaxTMI 
AI Drafter ✕
TaxTMI 
