Non-accounted purchases and penalty for suppression remitted for fresh consideration after records were not previously produced.

A dealer who admitted non-accounting of purchases but claimed they were reflected in closing stock sought reconsideration on the basis of stock records and balance-sheet materials not earlier produced. The Court held that the burden remained on the dealer to establish absence of suppression, but found it appropriate to set aside the assessment and appellate orders and remand the matter for fresh consideration with an opportunity to produce the records. On penalty under Section 27(3), the Court left open whether the omission showed wilful or deliberate evasion, leaving that issue to be decided afresh on remand.

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Issues: (i) Whether the assessment and appellate orders required interference and remand when the dealer admitted non-accounting of purchases but claimed that the purchases were reflected in closing stock and supported by records not produced earlier; (ii) Whether levy of penalty under Section 27(3) required examination of wilful or deliberate evasion on the facts of the case.

Issue (i): Whether the assessment and appellate orders required interference and remand when the dealer admitted non-accounting of purchases but claimed that the purchases were reflected in closing stock and supported by records not produced earlier.

Analysis: The dealer accepted that purchases were not accounted for in the relevant year, but asserted that the omission was a clerical mistake and that the purchases had been carried forward as closing stock. The relevant purchase ledger, stock register and balance sheet were not produced before the assessing authority or the appellate authority. The Court noted that the burden was on the dealer to establish absence of suppression, while also observing that no input tax credit had been availed on the disputed purchases. In these circumstances, the Court found it appropriate to give one further opportunity and remit the matter for reconsideration with production of records and additional grounds.

Conclusion: The impugned orders were set aside and the matter was remanded to the appellate authority for fresh consideration.

Issue (ii): Whether levy of penalty under Section 27(3) required examination of wilful or deliberate evasion on the facts of the case.

Analysis: The challenge to penalty turned on whether the omission in accounts amounted to a deliberate attempt to evade tax or merely a mistake capable of explanation by the stock records. The Court held that this question had to be examined on the basis of the records to be produced and that the legal issue could be considered by the appellate authority while deciding the appeal afresh.

Conclusion: The question of penalty was left open for decision by the appellate authority on remand.

Final Conclusion: The writ petition succeeded to the extent of obtaining a remand, with the appellate authority directed to reconsider the assessment and penalty issues after giving an opportunity to produce records and hear the petitioner.

Ratio Decidendi: Where a dealer admits non-reporting of purchases but seeks to rely on stock records not previously produced, the authority may be directed to reconsider the matter afresh, and penalty for suppression must be tested on the basis of wilful or deliberate evasion established from the material on record.

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