Opportunity to rebut sales suppression allegation required before reassessment is finalised; fresh consideration directed.

Assessment orders based on alleged sales suppression were set aside because the assessee had not been given a proper opportunity to produce records rebutting the allegation. The Court held that the assessing authority must decide the matter independently on the materials before it, and that an explanation could not be rejected merely because higher turnover had been shown for income tax purposes. Fresh consideration was directed after personal hearing and receipt of the documents relied on by the assessee, so that the actual sales position could be examined on record.

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Issues: Whether the assessment orders were liable to be set aside and the matter remitted for fresh consideration on the ground that the assessee should be given an opportunity to produce records to rebut the allegation of sales suppression.

Analysis: The writ petitions arose from reassessment orders passed on the basis that the turnover shown in the income tax returns was inflated and that no documentary evidence had been produced to support the assessee's explanation. The Court held that the assessing authority must decide the matter independently on the basis of materials produced before it and that the assessee's explanation could not be shut out merely because higher turnover had been shown for income tax purposes. In the circumstances, one more opportunity was warranted to enable the assessee to produce relevant records and establish the actual sales position.

Conclusion: The impugned assessment orders were set aside and the matters were remitted to the assessing authority for fresh consideration after affording personal hearing and receiving the documents relied on by the assessee.

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