Reassessment on fresh survey material and penalty limits in scrutinised assessments: tax liability sustained, penalty deleted.

Reassessment based on fresh survey material was treated as valid where new facts showed a discrepancy in the sales treatment, so it was not a mere change of opinion. The disputed turnover was sustained as inter-State sale taxable at the prescribed rate because the assessee failed to produce acceptable evidence that the goods were sales-tax-paid goods sold otherwise. Penalty in reassessment was deleted, as the original assessment had already scrutinised the books and the dispute arose only from disallowance of the assessee's claim without independent concealment.

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Issues: (i) whether reassessment could be reopened on the basis of survey material and fresh facts, (ii) whether the turnover was liable to be taxed as inter-State sale and at the prescribed rate, and (iii) whether penalty was sustainable in reassessment proceedings.

Issue (i): whether reassessment could be reopened on the basis of survey material and fresh facts.

Analysis: The original assessment had been completed after examination of the books of account, but the survey yielded new material showing a discrepancy in the treatment of the sales. On that basis, the reopening was not a mere change of opinion.

Conclusion: Reopening of the assessment was upheld.

Issue (ii): whether the turnover was liable to be taxed as inter-State sale and at the prescribed rate.

Analysis: The assessee was required to establish by acceptable evidence that the goods were not inter-State sales and had been sold as sales-tax-paid goods. The Court accepted the finding that the assessee failed to discharge that burden. The prescribed rate notified for such turnover was also taken into account.

Conclusion: The levy of tax on the disputed turnover was sustained.

Issue (iii): whether penalty was sustainable in reassessment proceedings.

Analysis: The original assessment had been made after scrutiny of the books and material, and the reassessment proceeded on the same recorded transactions. In that situation, the mere disallowance of the assessee's claim did not justify penalty.

Conclusion: The penalty was deleted.

Final Conclusion: The assessment and tax liability were maintained, but the penalty component was set aside, leaving the petitions partly allowed.

Ratio Decidendi: Reassessment based on fresh material found in survey is not barred as a change of opinion, but penalty cannot be sustained where the dispute turns on a disallowed claim made in a scrutinised assessment and no independent concealment is established.

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