Documentary evidence must be verified before penalty for excess stock can be sustained under sales tax law.

Penalty under the Rajasthan Sales Tax Act could not be sustained merely on presumption where the assessee had produced books of account and purchase bills to explain alleged excess stock. Once documentary evidence was filed, the assessing authority was required to inquire into its genuineness, verify transactions with suppliers, and examine surrounding circumstances before treating the documents as fabricated. Penalty could not rest on suspicion alone; the authority had to place material on record proving falsity of the documents or establishing the stock discrepancy through proper investigation. The rejection of evidence without such inquiry was held to be perverse, and fresh inquiry was required.

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Issues: Whether penalty under section 22(6) of the Rajasthan Sales Tax Act, 1954 could be sustained without inquiry into the genuineness of the bills and books of account produced by the assessee.

Analysis: The assessee produced books of account and purchase bills to explain the alleged excess stock. Once such documentary evidence was placed before the assessing authority, it was necessary to make an inquiry into its genuineness and to verify the transactions from the suppliers and other surrounding circumstances before treating the documents as fabricated. Penalty could not rest merely on presumption or suspicion, and the authority was required to bring material on record to prove that the documents were false or that the alleged stock discrepancy was established after proper investigation. The Tribunal's rejection of the evidence without such inquiry rendered its finding perverse.

Conclusion: The penalty could not be upheld on the existing material, and the matter required fresh inquiry by the assessing authority.

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