Input tax credit requires a reasoned finding on transaction genuineness before denial; matter remanded for fresh appellate consideration.

Input tax credit can be denied only after a reasoned finding on the genuineness of the underlying transactions; the dealer bears the burden to prove the claim, but mere non-filing of returns or non-payment of tax by selling dealers is not enough unless the transactions are found fictitious or bogus. Where the record suggests that selling dealers may be non-existent, deregistered, or otherwise suspect, those facts must be specifically examined and recorded before credit is allowed or refused. As the orders below lacked such examination and additional material had been produced, the matter was remanded to the first appellate authority for fresh consideration after hearing the assessee, with all contentions left open.

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Issues: Whether the denial of input tax credit and the revisional order restoring the reassessment could be sustained without a clear finding on the genuineness of the underlying transactions, and whether the matter required reconsideration by the first appellate authority.

Analysis: The burden to establish the correctness of a claim for input tax credit lies on the dealer. Mere non-filing of returns or non-payment of tax by the selling dealers, by itself, is not enough to deny input tax credit unless the transactions are found to be fictitious or bogus. At the same time, where the material shows that the selling dealers may be non-existent, deregistered, or otherwise suspect, those aspects must be specifically examined and recorded before granting or refusing the benefit. Since the orders below did not contain such a reasoned examination and additional material was placed before the Court, the matter warranted fresh consideration by the first appellate authority after hearing the assessee.

Conclusion: The matter was remanded to the first appellate authority for reconsideration in accordance with law, with all contentions left open.

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