Best judgment assessment must rest on disclosed material and fair hearing, not guesswork or conjectural gross profit estimates.

A best judgment assessment of turnover cannot rest on pure guesswork or a gross profit estimate based on mere surmise and conjecture. The assessing authority must rely on some disclosed material capable of giving a fair basis for the estimate, and if comparable trades or similar businesses are used, the assessee must be informed of that basis and given an opportunity to meet it. Confidentiality of statements or records did not justify withholding the material foundation of the estimate. On the facts, the percentage addition lacked adequate material, so the assessment was set aside and the matter remitted for fresh reassessment after allowing the assessee to adduce evidence.

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Issues: Whether a best judgment assessment of turnover can be sustained when the estimated gross profit is based on mere surmise and conjecture without disclosed material, and whether the assessing authority must afford the assessee an opportunity to meet the basis of the estimate.

Analysis: Rule 8 required the assessing authority, after making such enquiry as it considered necessary, to determine the turnover to the best of its judgment, and Rule 11(3) required the final assessment to be made after following the prescribed procedure. The expression "best of his judgment" did not permit pure guess-work. The estimate had to rest on some material capable of furnishing a fair basis for the assessment. If reliance was placed on comparable trades or similar businesses, fairness required that the assessee be informed of the basis so that it could meet the proposed estimate. Rule 30, which made particulars in statements, returns, accounts and similar records confidential, did not prohibit disclosure of the ultimate assessment order made in another case, and therefore did not justify withholding the material basis of the estimate from the assessee. On the facts, both the assessing authority and the Tribunal adopted a percentage addition without adequate material and the estimate was founded on surmise.

Conclusion: The estimate of gross profit was invalid as it was not made on any proper material and the assessee was entitled to an opportunity to place relevant evidence before the Tribunal.

Final Conclusion: The revision succeeded, the Tribunal's order was set aside, and the matter was sent back for a fresh estimate and reassessment after giving the assessee a full opportunity to adduce material.

Ratio Decidendi: A best judgment assessment must be based on some disclosed and rational material, not on mere guess or conjecture, and the assessee must be given a fair opportunity to meet the basis of the proposed estimate.

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