Stock valuation difference cannot sustain assessment when the taxpayer's explanation is not properly examined; matter remitted for fresh consideration.

A best judgment assessment under the Kerala Value Added Tax regime was based on a difference between closing stock reflected in Form No. 53 and the audited books, treated as suppression and used to add turnover after applying gross profit. The Court noted that the assessee had specifically explained the variation as arising from valuation and accounting treatment, and had also contended that the stock quantity had not changed and that the closing stock was carried forward to the next year. As that explanation was not meaningfully examined, the assessment and the Tribunal's order could not stand. The matter was remitted for fresh consideration in accordance with law.

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Issues: Whether the assessment and the Tribunal's order sustaining the addition based on the difference in closing stock valuation should be set aside and the matter remanded for fresh consideration.

Analysis: The dispute concerned best judgment assessment made under the Kerala Value Added Tax regime, where the authorities treated the difference between the closing stock shown in Form No. 53 and the audited books as suppression and added turnover after applying gross profit. The record showed that the assessee had raised a specific explanation that the variation arose from valuation and accounting treatment, but the Tribunal did not meaningfully address the entire contention, including the plea that the quantity of stock had not differed and that the closing stock was carried forward in the subsequent year. In these circumstances, the existing orders could not be sustained without a fresh examination of the assessee's explanation and supporting material.

Conclusion: The orders of the authorities below were set aside and the matter was remitted to the Assessing Authority for fresh consideration in accordance with law, with the questions of law answered in favour of the petitioner for statistical purposes.

Ratio Decidendi: Where the explanation regarding stock valuation and alleged suppression is not properly examined, an assessment based on such difference cannot be sustained and the matter may be remitted for fresh adjudication.

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