Third-party book entries cannot sustain VAT penalty without independent verification or material proving concealment.

Assessment and penalty under the Bihar VAT Act cannot be sustained merely on entries found in another dealer's books unless the assessing authority independently verifies those entries and produces material showing concealment by the assessee. Where the impugned action rests only on presumption, surmise and conjecture, the resulting demand is legally unsustainable. The presence of an alternate statutory remedy does not bar writ jurisdiction when the challenged orders are manifestly unsupported by material and are plainly wrong on the face of the record.

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Issues: (i) Whether the assessment and penalty under section 32(1) of the Bihar Value Added Tax Act, 2005 could be sustained on the basis of entries found in another dealer's books without independent verification or material showing concealment by the petitioner. (ii) Whether the petitioner could be relegated to the statutory appellate remedy when the impugned orders were asserted to be unsupported by material and based on surmise.

Issue (i): Whether the assessment and penalty under section 32(1) of the Bihar Value Added Tax Act, 2005 could be sustained on the basis of entries found in another dealer's books without independent verification or material showing concealment by the petitioner.

Analysis: The existence of entries in the books of a third party, by itself, was held insufficient to establish that the petitioner had concealed purchases. The assessing authority was required to verify the entries and gather independent material before drawing an inference of concealment. As no such verification or supporting material was brought on record, the assessment and consequential penalty were found to rest only on presumptions, surmises and conjectures.

Conclusion: The issue was answered in favour of the assessee. The assessment, penalty and consequential demand were held unsustainable.

Issue (ii): Whether the petitioner could be relegated to the statutory appellate remedy when the impugned orders were asserted to be unsupported by material and based on surmise.

Analysis: Although an alternate statutory remedy was available, the Court held that a writ petition was maintainable where the orders under challenge were manifestly wrong and unsupported by any valid material. In such circumstances, insistence on exhaustion of the appellate remedy was held unnecessary.

Conclusion: The issue was answered in favour of the assessee. The writ petition was entertained despite the alternate remedy.

Final Conclusion: The impugned assessment, appellate and revisional orders, together with the consequential demand, were set aside because they were founded on unverified material and could not be sustained in law.

Ratio Decidendi: A tax assessment and penalty founded on unverified third-party entries, without independent material proving concealment, are vitiated as being based on surmise and conjecture, and writ jurisdiction may be invoked despite an alternate remedy where the impugned action is manifestly unsupported by material.

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