Unaccounted sales require prima facie nexus evidence; tax demand and penalty fail where the Revenue cannot link the dealer to transactions.

Where the Revenue alleges unaccounted sales, it must prima facie establish the dealer's nexus with the disputed transactions through material evidence; absent enquiry with vehicle owners, confrontation of incriminating material, or any other supporting proof, tax demand and penalty cannot be sustained. The dealer's undisputed exempt status for the relevant period further weakened the case, and the burden to show that the apparent was not the real remained undischarged by the Revenue, so the demand and penalty were set aside.

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Issues: Whether the demand of tax and penalty on alleged unaccounted sales could be sustained in the absence of material linking the dealer to the disputed transactions and in view of the dealer's exemption status.

Analysis: The liability was sought to be fastened on the basis of alleged export of mustard oil through specified vehicles, but no material showed that any enquiry had been made with the vehicle owners or that any incriminating material had been confronted to the dealer. The Department failed to prima facie establish a nexus between the dealer and the alleged transactions. The dealer's exempted status up to 3 November 1988 was also undisputed. In such circumstances, the burden to show that the apparent was not the real remained undischarged by the Revenue.

Conclusion: The demand and penalty could not be sustained and were rightly set aside in favour of the assessee.

Final Conclusion: The writ petition succeeded and the impugned orders were quashed.

Ratio Decidendi: Where the Revenue alleges unaccounted sales, it must prima facie establish the assessee's nexus with the disputed transactions by material evidence; in the absence of such proof, tax demand and penalty cannot be sustained.

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