Unrecorded stock penalty upheld where contemporaneous admissions outweighed later documents and an unsubstantiated coercion plea.

Penalty for unrecorded stock was sustained where survey materials, the assessee's oath statement, and the contemporaneous reply showed that the goods had no bills or vouchers, were not entered in the books, and were kept with an intention to evade tax. The plea of coercion failed because there was no timely retraction, affidavit, or other acceptable material before the higher authorities. The later-produced documents were treated as additional evidence going to the root of the matter and could not be relied on without giving the Assessing Officer an opportunity to examine them, especially as they were inconsistent with the original statement and surrounding facts. The deletion of penalty was therefore unjustified.

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Issues: Whether the penalty imposed for unrecorded stock of 90 cartons was rightly sustained by the Assessing Officer and the appellate authority, and whether the Tax Board was justified in deleting the penalty on the basis of subsequent documents and alleged retraction.

Analysis: The record showed that the survey was conducted in the presence of two independent witnesses and the assessee. The assessee's statement on oath and the contemporaneous reply accepted that the goods were not supported by bills and vouchers, were not entered in the books, and were kept with the intention of evasion of tax. The Court held that the alleged plea of coercion was unsupported by any timely retraction, affidavit, or other acceptable material placed before the higher authorities. It further held that the documents produced later before the appellate forum amounted to additional evidence going to the root of the matter and ought not to have been accepted without giving the Assessing Officer an opportunity to examine them. The later produced material was also found inconsistent with the contemporaneous statement and surrounding facts.

Conclusion: The deletion of penalty by the Tax Board was unjustified. The penalty was rightly imposed by the Assessing Officer and upheld by the appellate authority.

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