Best judgment assessment upheld where unreliable books justified rejection of accounts and estimation from available material.

Where a dealer's books of account are found unreliable, the taxing authority may reject them and make a best judgment assessment on available material. The assessment is lawful if the authority has jurisdiction to treat the returns or accounts as unacceptable and proceeds on a bona fide estimate. The sufficiency of the material supporting the estimate, including the conclusion on average daily sales, is treated as a question of fact rather than a question of law. The assessment was sustained because the accounts were held to be not genuine and the estimate was based on enquiry, shop observation, stock position, and prior assessment material.

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Issues: (i) Whether the Sales Tax Officer was entitled to make a best judgment assessment on the footing that the assessee's books of account were not genuine. (ii) Whether there was legal material to support the finding that the assessee's average sales were Rs. 8,000 per day.

Issue (i): Whether the Sales Tax Officer was entitled to make a best judgment assessment on the footing that the assessee's books of account were not genuine.

Analysis: The assessment was made under the provisions enabling assessment to the best of judgment where the dealer's returns or accounts are not accepted. The finding that the assessee had withheld genuine books and that the accounts produced were unreliable was affirmed by the appellate and revisional authorities. In such circumstances, the officer had jurisdiction to reject the accounts and proceed on an estimate. The adequacy of the reasons for rejection could not be re-examined in the reference on the limited question of law.

Conclusion: The question was answered in the affirmative and against the assessee.

Issue (ii): Whether there was legal material to support the finding that the assessee's average sales were Rs. 8,000 per day.

Analysis: The estimate was based on enquiry, observation of the shop, the volume of customer traffic, the stock position, and the earlier estimate made by the Assistant Commissioner. An assessment made to the best of judgment necessarily involves estimation on incomplete material, and if made bona fide it does not become unlawful merely because the evidence is not precise or because a different estimate might also have been possible. The sufficiency of material for the estimate was treated as a matter of fact rather than a question of law.

Conclusion: The question was answered in the affirmative and against the assessee.

Final Conclusion: The reference was disposed of by sustaining the assessment and holding that the taxing authority had lawfully made a best judgment estimate on the materials available.

Ratio Decidendi: Where the dealer's accounts are found unreliable, the taxing authority may lawfully assess turnover to the best of its judgment on the basis of available material, and the sufficiency of such estimate is ordinarily not a question of law if the assessment is bona fide.

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