Penalty for unaccounted goods requires proper inquiry and fair hearing when purchase and transit documents support the assessee.

Penalty for allegedly unaccounted goods under the Rajasthan Sales Tax Act cannot be sustained merely on assumption where contemporaneous purchase and transit documents support the assessee's explanation. The authority must conduct a proper inquiry into the genuineness of the purchase bill, declaration form and octroi receipt, and must give a reasonable opportunity of hearing before imposing penalty. On the record described, the absence of fair inquiry and inadequate consideration of the supporting material made restoration of the penalty unsustainable, so the penalty was not justified.

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Issues: Whether penalty for allegedly unaccounted goods under section 77(8) of the Rajasthan Sales Tax Act, 1994 could be sustained when the assessee produced contemporaneous purchase and transit documents and the assessing authority had not made a proper inquiry or given a reasonable opportunity of hearing.

Analysis: The documents on record showed purchase of the goods from a registered dealer on the same date, supported by the purchase bill, declaration form and octroi receipt. Penalty under section 77(8) could not be imposed in a mechanical manner unless the authority undertook a proper inquiry, examined the genuineness of the supporting documents and considered the assessee's explanation. The record also showed absence of fair opportunity and inadequate consideration of the material produced by the assessee. In these circumstances, the finding of the Tax Board restoring the penalty was unsustainable.

Conclusion: The penalty under section 77(8) was not justified and the assessee succeeded.

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