JUDGMENT 1. This revision petition is directed against the order of the Tax Board dated 16.1.2005 whereby the Tax Board allowed the appeal of the Revenue and restored the penalty of Rs. 1,03,245/- under Section 77(8) of the Rajasthan Sales Tax Act, 1994 (for short 'the Act') for alleged excess stock found at the time of survey on the business place of the petitioner-assessee on 3.4.2002. 2. Aggrieved by the said order of the Tax Board, the assessee has preferred this revision petition under Section 86 of the Act. 3. Mr. Reashm Bhargava, learned counsel for the petitioner-assessee, submitted that the Tax Board has erred in restoring the penalty under Section 77(8) of the Act, which was set aside by the learned Deputy Commissioner (Appeals) allowing the appeal of the assessee by a detailed and well reasoned order on the ground that during the course of survey neither any physical inventory of stock was made by the authority concerned, nor the statement recorded of the Manager of the petitioner-assessee Firm, Shri Maganmal Bothra, was signed by him. He further stated that at the time of survey, no two independent witnesses were summoned by the authority concerned, which was mandatory as per the Rule 50 of the Rajasthan Sales Tax Rules, 1955 (for short 'the Rules'). He submitted that merely because the assessee filed the application before the assessing authority that his case may be decided on the same day, the assessing authority treated the same as admission of the guilt on the part of the petitioner-assessee and imposed the penalty. He submitted that the Tax Board itself in another matter of (1) M/s. Ideal Oil & Chemical Mills Ltds., Jaipur v. Assistant Commissioner, Special Circle-III, Jaipur (2005) 12 Tax Up-Date 71 has held that where survey of the dealer was conducted in the absence of two independent witnesses, and there were no signatures of such witnesses on the physical verification report prepared at the time of survey, no penalty under Section 77(8) of the Act could be imposed on the basis of the alleged excess stock found during the course of survey. He further relied upon a decision of this Court in (2) A.C.T.O. v. Kishori Shyam Brijesh Kumar (1994) 93 STC 213 (Raj.) wherein this Court held that once there was an admission on the part of the dealer of the guilt, though further enquiry would not be necessary, there might be an instance where the admission has been made in ignorance of the fact and law and in such a case, it would not be binding. In that case, the Court found that the statement made by the dealer could not be considered to be an admission at all since the basic requirement of law has not been complied with. He further submitted that nerely because the Manager of the Firm had signed the stock register with which the stock found on physical verification was compared, but no signature of such Manager was obtained on the physical verification report prepared at the time of survey, the learned assessing authority could not treat it as admission on the -part of assessee about the alleged excess stock. He, therefore, urged that the reliance placed by the Tax Board on the decision of this Court in (3) M/s. Raja Glass House, Jaipur (5 RTJS 60) and (4) M/s. Dhanraj Ghewarchand Kushalpura, Pali (15 RTJS 24) was misplaced and no penalty could be imposed in the facts and circumstances of the case. 4. As against this Mr. Amit Ratnawat appearing for Mr. R.B. Mathur, learned counsel for the respondent-Revenue urged that firstly, there was no requirement of keeping two witnesses present at the time of survey and such requirement was only in case of search and seizure made under Section 77 of the Act. Secondly, he urged that in view of the admission of the assessee that there was an excess stock found at the time of survey, the Tax Board was justified in imposing the penalty on the assessee. He further relied upon the decision of the Hon'ble Supreme Court in (5) Commissioner, Sales Tax, U.P. v. Mohan Brickfield, Agra (2006) 6 Vat Reporter 229 in which case the Hon'ble Supreme Court found that the books of accounts were not produced at the date of survey conducted by the authority concerned and, therefore, on account of non-production of the books of accounts, the adverse inference could be drawn against the assessee. 5. 5. Section 77 of the Act and Rule 50 of the Rules are relevant for the present case, therefore, both are reproduced hereunder for ready reference:- "Section 77 : Power of entry, inspection and seizure of accounts and goods:- (1) An assessing authority or any officer not below the rank of Inspector, Commercial Tax Department authorised by the Commissioner in this behalf with such conditions and restrictions as may be specified by such Commissioner shall have the power : (a) to inspect or survey the place of business of a dealer or any other place where it is believed by such authority or officer that business is being done or accounts are being kept by such dealer; (b) to direct such dealer to produce accounts,registeres and documents relating to his business activities for examinations; (c) to inspect the goods in the possession of the dealer or in the possession of anybody else on behalf of such dealer, wherever such goods are placed; (d) to make search of such place including the search of the person found there, where concealment of facts relating to business is suspected; (e) to break open the door of any premises or to break open any alimirah, box, receptacle in which any goods, accounts, registers or documents of the dealer are suspected to be concealed, where access to such premises, almirah, box or receptacle is denied; (f) to record the statement of the dealer or his manager, agent or servant or to take extracts from any record and to put identification marks on accounts, registers or documents and on any door, almirah, box or receptacle. Explanation : There shall be a presumption in respect of goods, accounts, registers or documents, which are found at any place of business of a dealer during any inspection or search that they relate to his business unless the contrary is proved by him. (2) The power under clauses (d) and (e) of sub-section (1) shall be exercised by the Inspector in the presence of an authority not below the rank of Assistant Commercial Taxes Officer. (2) The power under clauses (d) and (e) of sub-section (1) shall be exercised by the Inspector in the presence of an authority not below the rank of Assistant Commercial Taxes Officer. (3) Where any accounts, registers or documents are produced before any assessing authority or any officer not below the rank of Assistant Commercial Taxes Officer in any proceeding under the Act, such authority or officer may, for reasons to be recorded in writing, impound and retain them in its custody for a period not exceeding six months, and shall give the dealer or any other person who has produced such accounts, registers or documents, a receipt of the same, and the dealer may obtain copy of such accounts, registers or docainents on payment of copying fee as may be prescribed. (4) Where at the time of inspection, the assessing authority or any officer not below the rank of Assistant Commercial Taxes Officer authorised by the Commissioner in this behalf has reason to suspect that the dealer is attempting to avoid or evade tax or is concealing his tax liability in any manner, it may, for reasons to be recorded in writing, seize such accounts, registers or documents of the dealer as it may consider necessary and shall give the dealer or any other person from whose custody such accounts, registers or documents are seized, a receipt for the same, and may retain the same in its custody for examination, inquiry, prosecution or other legal action for a period not exceeding six months, and the dealer may obtain copy of such accounts, registers or documents on payment of copying fee as may be prescribed. (5) The accounts, registers or documents impounded under sub-section (2) or seized under sub-section (3) could be retained even beyond a period of six months and upto a maximum period of two years from the date of impounding or seizure, as the case may be, by such authority or officer after having obtained permission in writing of the Commissioner or the Deputy Commissioner (Administration) authorised by the Commissioner. (6) The assessing authority or any other officer not below the rank of Assistant Commercial Taxes Officer authorised by the Commissioner under sub-section (3) may seize any goods liable to tax, which are found in the possession of a dealer or in the possession of anybody else on behalf of such dealer and which are not accounted for in his accounts, registers or documents maintianea in the course of his business; and a list of goods so seized shall be prepared by such authority or officer and a copy thereof shall be given to the dealer or any other person from whose custody such goods are seized. (7) Where it is not feasible to seize the accounts, registers or documents under sub-section (4) or the goods under sub-section (6), the assessing authority or the officer concerned may serve on the owner or the person who is in immediate possession or control thereof an order that he shall not remove, part with or otherwise deal with them except with the previous permission of such authority or officer, which may, after serving such order, take such steps as may be deemed necessary under the circumstances. (8) The assessing authority or the officer referred to in sub-section (5) may, after having given the dealer an opportunity of being heard and after having held such further inquiry as it may consider it, impose on him, for the possession of goods not accounted for, whether seized or not under sub-section (6), a penalty, equal to the amount of five times of the tax leviable on such goods or thirty percent of the value of such goods, whichever is less; and such authority or officer may release the goods, if seized on payment of the penalty imposed or on furnishing such security for the payment thereof as it may consider necessary. (9) The assessing authority or other officer as referred to in sub-section (6), may require any person (a) who transport or holds in custody any goods of a dealer, to give any information in his possession in respect of such goods or to allow inspection thereof, as the case may be; and (b) who maintains or has in his possession and accounts, registers or documents relating to the business of a dealer, to produce such accounts, registers or documents for inspection. Rule - 50 : Procedure for search and seizure under Section 77 (1) The officer who carries out a search under Section 77 of the Act, shall adopt the following procedures:- (a) The officer should record reasons as to why under the facts and circumstances of the case, search is necessary. (b) Before making a search, such officer shall call upon two witnesses to attend and witness the search and may issue an order in writing to them to do so. (c) The dealer or the person in-charge of the business place, building or other premises searched, shall be permitted to witness the search. (d) if any building or place is an apartment in the actual occupancy of a woman, who according to custom does not appear in public, the officer shall afford her every reasonable facility to withdraw. (e) Search of person may be made, but in case of woman, it shall be carried out by a woman. (f) A list of goods, articles and documents seized in the course of the search and of the places in which they were found shall be prepared by such officer and shall be signed by the witnesses. A copy of such list shall be tendered to the dealer or the person concerned and a copy thereof shall be forwarded to the Commissioner within twenty four hours after the completion of such search (2) The accounts, registers and documents may be examined without calling witnesses by the officer empowered under Section 77, but in the case of seizure thereof, the following procedure shall be adopted : (a) Seizure of accounts, registers and documents shall be made in the presence of two witnesses. (b) While making seizure of accounts, registers and documents, a seizure-memo shall be prepared by such officer and reasons for seizure shall be recorded therein. (c) The seizure-memo shall also contain the list of the accounts, registers and the documents seized. (d) Th e seizure-memo shall be signed by the officer who effect seizure, by the dealer or the person concerned and by the witnesses. (e) One copy of the seizure-memo shall be tendered by the officer making seizure to the dealer or the person concerned as a token of receipt and one copy thereof shall be forwarded by him to the Commissioner within twenty four hours after such seizure is made." 6. (e) One copy of the seizure-memo shall be tendered by the officer making seizure to the dealer or the person concerned as a token of receipt and one copy thereof shall be forwarded by him to the Commissioner within twenty four hours after such seizure is made." 6. A bare perusal of the Section 77 progressing from Clause (a) to (f) of sub-section (1) of Section 77 of the Act indicates that the authority concerned not below the rank of Inspector of the Commercial Taxes Department authorised by the Commissioner in this behalf has the power to inspect or survey the place of business, to direct such dealer to produce accounts etc., to inspect goods in possession of the dealer, to make search of the place including search of the person, to break open the door of any premises and to record the statement of dealer or his manager etc. All these powers in a sequence have been given to the authority concerned to prevent evasion of tax. There is no water tight compartment between the different powers of inspection, survey, search and seizure in the said provision. Since such powers of inspection, survey, search and seizure necessarily encroach upon the freedom of the dealer to carry out his business, the Legislature has provided safeguards in the form of further provision made in sub-section (2) of Section 77 of the Act, which stipulates that for exercise of power under clause (d) and (e) relating to search an breaking open the door, such power will be carried out only in the presence of an authority not below the rank of Assistant Commercial Taxes Officer. Rule 50 of the Rules framed for laying down the procedure for search and seizure under Section 77 of the Act providing for presence of two witnesses etc., is also with a view to introduce transparency and a sense of responsibility and fairness and to avoid any arbitrariness on the part of the authorities concerned, has provided for presence of two witnesses at the time of search and seizure. Though the words in heading of Rule 50 of the Rules are 'procedure for search and seizure' under Section 77 and sub-rule (1) also uses the word 'search', there is no requirement to restrict such safeguard measures to apply only in cases o search and seizure. Though the words in heading of Rule 50 of the Rules are 'procedure for search and seizure' under Section 77 and sub-rule (1) also uses the word 'search', there is no requirement to restrict such safeguard measures to apply only in cases o search and seizure. Even during the cases of inspection and survey where stocks taking, verification etc. is done, statements of proprietor or manager of the Firm are recorded, the presence of two independent witnesses would introduce authenticity, transparency, fairness and non-arbitrariness on the part of the dealer as well as authorities concerned. That will also give more authenticity to the statement recorded and physical verification of stocks done etc. Further since there is no separate rule made for inspection and survey activity under Section 77 of the Act, nor any other safeguards has been provided for these functions under Section 77 of the Act and also for clause (f) which empowers the authority to record the statement of dealer or his manager or servant and to take extract from the record etc., and such activities or functions should also bear the stamp of transparency and fairness, therefore, the safeguards of Rule 50 of the Rules, namely, presence of two witnesses etc. should be provided to the assessee dealer even during the course of inspection and survey and recording of statements. Whatever statements are recorded, are not only to be required to be signed by the authority conducting the survey, but the same should also be countersigned by the dealer or his authorised representative and such two independent witnesses, so their authenticity may not be questioned later on. There are cases coming to this Court off and on, where the alleged admission of guilt like stated in the present case also by the Revenue, various penalties are imposed, but the assessee may retract from such admission at a later stage before the authority concerned. If such statements are recorded under duress and unnecessary threats, the assessee may retract and retrace from that, giving rise to multiplicity of proceedings and loss of revenue, therefore, applying the measures of Rule 50 to even inspection and survey carried out by the authorities of the Commercial Taxes Department would not only prevent such loss and leakages of revenue, but would also introduce transparency and fairness on the part of the authority as indicated above. Therefore, the contention of learned counsel for the Revenue that Rule 50 does not apply in the case of inspection and survey but the same applied only in the cases of search and seizure under the provisions of Section 77 of the Act is not acceptable Rule 50(2) of the Rules further states that though the accounts, registers and documents may be examined without calling witnesses by the assessing authority empowered under Section 77 of the Act, but in the case of seizure thereof the following procedure shall be adopted, namely, seizure shall be made in the presence of two witnesses. Thus, the action of the revenue authorities under Section 77 of the Act can, therefore, progress from step to step in the same stretch on that very day of survey. This further supports the view taken above that safeguards of measures provided in Rule 50 of the Rules be taken from the very beginning of the action under Section 77 of the Act. Therefore, the decision of the Tax Board on this issue that Rule 50(1) of the Rules would apply only in case of search and seizure and not in the case of inspection and survey is not correct. 7. That as far as question of imposition of penalty under Section 77(8) of the Act is concerned, learned counsel for the assessee has produced before this Court the survey report made by the assessing authority on 3.4.2002 along with list of goods found at the time of survey. The same is not signed by the assessee or his manager, Maganmal Bothra. Admittedly, there were no independent witnesses available or kept available by the assessing authority at the time of survey. There is no clear admission of guilt of the excess stock on the part of the dealer. Merely because the dealer prays or applies to the authority concerned to conclude the proceedings in his case on the same day. it does not amount to admission of guilt of keeping the alleged unaccounted stock. Unless all stocks are physically counted, weighed and verified with the books of accounts, purchase bills, sales bills etc., it cannot be said that excess stock were found during the course of survey. No such detailed exercise appears to have done by the assessing authority at the time of survey in the present case. Unless all stocks are physically counted, weighed and verified with the books of accounts, purchase bills, sales bills etc., it cannot be said that excess stock were found during the course of survey. No such detailed exercise appears to have done by the assessing authority at the time of survey in the present case. The assessee deals with pipes and, therefore, they were even countable goods. It is not even stated in the assessment order that such physical counting or weighing of the books was done at the time of survey. How the exact physical verification was carried out, is not stated in the assessment order. On the contrary the assessee contended before the assessing authority that no actual stock taking was done, nor any inventory was prepared, nor verification with the books of accounts was done at the time of survey. These contentions have not been met by the assessing authority at all in the assessment order and it appears that the assessing authority proceeded to estimate the alleged excess stock and imposed the penalty under Section 77(8) of the Act in a hot haste. The penalty order dated 3.4.2002 is passed on the same day of survey and, therefore, it is clear that the assessee was not given any opportunity to rebut the case of alleged excess stock made out against him. The application filed by the Manager of the Firm that their case may be disposed of on the same day as he was not in a position to produce any document about the alleged excess stock is of no avail to the Revenue because if in fact there was no excess stock, there was no question of producing any document in support of that. The moot question is whether in fact any excess stock was found or not. The moot question is whether in fact any excess stock was found or not. In the absence of any details of the manner of the physical verification of stock carried out, that too, in the absence of safety measures of Rule 50 of the Rules, namely, availability of two independent witnesses and in the circumstances that the statement of the Manager was not even signed by him much less the owner of the Firm being called upon to explain any such discrepancy, if any, and in the circumstances in which the Manager of the Firm made such a statement, which the Revenue sought to utilise for the purpose of imposing the penalty in question on the Firm, it appears to be a fit case to this Court to set aside the impugned penalty. 8. Accordingly the present revision petition is allowed and the impugned order of the Tax Board dated 15.1.2005 is set aside and that of the Deputy Commissioner (Appeals) dated 26.3.2004 is restored. No order as to costs.Petition allowed. *******