Input tax credit mismatch findings set aside for non-application of mind; assessment remanded for fresh scrutiny.

Reversal of input tax credit, levy on discount turnover and penalty were quashed where the assessment order was based on factually incorrect assumptions and failed to consider the documents and corrected dealer particulars produced by the taxpayer. The Court held that the order reflected total non-application of mind because it wrongly proceeded as if no original invoices or documentary evidence had been filed, while itself recording the corrected details furnished by the taxpayer. As the mismatch verification and consequential penalty were unsupported by proper scrutiny on the recorded facts, the matter was remanded for fresh consideration after giving adequate opportunity, including personal hearing.

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Issues: Whether the assessment order reversing input tax credit, levying tax on discount turnover, and imposing penalty was vitiated by non-application of mind and liable to be quashed with a remand for fresh consideration.

Analysis: The petitioner had filed returns and produced the profit and loss account and original tax invoices, while also explaining the alleged mismatch and the corrected TIN particulars of the other end sellers. The assessment order proceeded on the footing that no documentary evidence or original invoices had been produced and treated the purchases as having been made from cancelled dealers, though the order itself recorded the corrected details furnished by the petitioner. The Court found these findings to be factually incorrect and based on total non-application of mind. It also held that the reversal of input tax credit on mismatch and the consequential penalty were unsustainable on the reasoning adopted in the assessment order. The judgments cited on input tax credit, mismatch verification, and the need for proper scrutiny were held to apply to the facts.

Conclusion: The assessment order was quashed and the matter was remanded to the respondent for fresh consideration after giving adequate opportunity, including personal hearing, to the petitioner.

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