Turnover enhancement and tax inference require cogent evidence; isolated stock or petty-cash discrepancies are insufficient without proof of suppression.

Turnover enhancement cannot rest on an isolated stock discrepancy where purchases of mentha oil and raw material were accepted as in order; the Tribunal was required to consider the accepted purchase record before treating the alleged 75 kg discrepancy as proof of suppressed production or taxable turnover. The matter was remanded for fresh consideration on this issue. A petty cash balance of Rs. 5,000, without cogent evidence linking it to unrecorded sales or tax evasion, could not by itself justify an adverse inference of suppression of sales; that inference also required re-examination on remand.

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Issues: (i) Whether the Trade Tax Tribunal was justified in enhancing turnover on the basis of the alleged discrepancy in 75 kg. of mentha oil when the purchases of raw material were found to be in order. (ii) Whether the discovery of Rs. 5,000 as petty cash justified an adverse inference of suppression of sales and escapement of tax.

Issue (i): Whether the Trade Tax Tribunal was justified in enhancing turnover on the basis of the alleged discrepancy in 75 kg. of mentha oil when the purchases of raw material were found to be in order.

Analysis: The assessment records showed that the purchases of mentha oil and raw material were accepted as being in order. The first appellate authority had also accepted the assessee's case. The Tribunal enhanced the turnover without properly taking into account this accepted position and without a sufficient basis for treating the stock discrepancy, by itself, as proof of suppressed production or taxable turnover.

Conclusion: The enhancement on this ground was not sustainable and required reconsideration.

Issue (ii): Whether the discovery of Rs. 5,000 as petty cash justified an adverse inference of suppression of sales and escapement of tax.

Analysis: The amount was explained as petty cash. In the absence of cogent evidence connecting that cash with unrecorded sales or tax evasion, no adverse inference could be drawn merely from the presence of such a small cash balance.

Conclusion: The adverse inference on this ground was not justified and had to be re-examined.

Final Conclusion: The matter was remanded to the Tribunal for fresh consideration of the enhancement issues, and the assessee obtained partial relief.

Ratio Decidendi: Turnover enhancement and adverse tax inference cannot rest on isolated stock or petty-cash discrepancies unless supported by cogent evidence showing suppression of production or sales.

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