Best judgment excess-collection demand upheld on inspection evidence, while the separate penalty was left set aside.

Inspection material showing unused theatre tickets priced above the approved rates, together with unexplained cash and a mismatch in collectible amounts, was treated as sufficient to sustain the demand for excess collection on a best judgment basis. The appellate court found no reason to disturb that substantive demand. The penalty component was separately set aside by the writ court and was not disturbed on appeal, so it remained unsustained. The appeal was therefore dismissed insofar as it challenged the excess-collection demand, while the setting aside of penalty was left intact.

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Issues: (i) Whether the demand for payment of excess collection found on inspection was sustainable; (ii) Whether the penalty imposed along with the demand was sustainable.

Issue (i): Whether the demand for payment of excess collection found on inspection was sustainable.

Analysis: The inspection revealed unused tickets in the theatre premises showing ticket rates higher than the approved rates. The explanation offered did not satisfactorily account for the cash and the discrepancy between the amount collectible at the approved rates and the amount attributable to the higher-priced tickets found during inspection. The authority and the writ court relied on this material to support the excess-collection demand, and the appellate court found no basis to interfere with that conclusion.

Conclusion: The demand for payment of excess collection was sustained and is against the assessee.

Issue (ii): Whether the penalty imposed along with the demand was sustainable.

Analysis: The writ court had set aside the penalty component. The appellate court did not disturb that part of the order, while affirming the direction to pay the excess collection amount.

Conclusion: The penalty was not sustained and is in favour of the assessee.

Final Conclusion: The appellate court declined to interfere with the substantive demand for excess collection, while leaving undisturbed the setting aside of penalty, and the writ appeal was therefore dismissed.

Ratio Decidendi: Where inspection materials such as unused higher-rate tickets and unexplained cash support a finding of excess collection, the demand can be upheld on best judgment assessment, while penalty may still be severed if separately set aside.

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