Unaccounted purchases must be proved by cogent evidence; incomplete accounts alone cannot justify an addition.

An addition for alleged unaccounted purchases could not be sustained where the purchases were from Government distilleries and the revenue produced no cogent evidence of suppressed purchases. Incomplete posting of accounts at the time of inspection, or a mere shortage reflected in the books, was held insufficient by itself to infer undisclosed procurement. As the burden lay on the revenue to establish the source and existence of the alleged purchases, the assessment addition was deleted.

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Issues: Whether the addition sustained on the basis of alleged unaccounted purchases of arrack could be upheld when the purchases were from Government distilleries and there was no cogent evidence to show any suppressed purchases.

Analysis: The material discrepancy noticed in the books was only that they were not fully posted at the time of inspection. The turnover in question related to arrack purchased from Government distilleries, and sales of arrack were taxable only at the point of first sale within the State. Mere shortage or incomplete posting of accounts, without more, was held insufficient to justify an inference that the assessee had made unaccounted purchases. The burden lay on the revenue to establish the source and existence of such purchases, but no cogent evidence was produced to support the addition.

Conclusion: The addition on account of alleged unaccounted purchases was not sustainable and was deleted; the revision petitions were allowed.

Final Conclusion: The assessee succeeded, and the assessment addition based on unaccounted purchases was set aside for want of supporting evidence.

Ratio Decidendi: An addition for alleged unaccounted purchases cannot rest merely on incomplete posting of accounts or stock shortage; it must be supported by cogent evidence establishing the suppressed purchases.

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