Best judgment assessment applies when incorrect accounts remain unexplained after notice, allowing reliance on section 12(3).

Best judgment assessment is permissible where returned accounts are incorrect or incomplete and, after notice, the assessee fails to give a satisfactory explanation for the discrepancy. On the facts described, an unexplained account discrepancy and the authorities' finding that the accounts were unreliable justified invocation of section 12(3). The assessing officer was therefore entitled to proceed with best judgment assessment. The note also indicates that whether the irregularity was minor and capable of condonation was left to the assessing authority's discretion, rather than being decided by the Court.

---

---

Issues: Whether the assessing officer was justified in making a best judgment assessment after finding the returns and accounts to be incorrect and incomplete.

Analysis: The statutory power to assess to the best of judgment under section 12(3) arises where the returned accounts are not correct and complete and the assessee, after notice, fails to produce evidence or furnish satisfactory explanation. Here, a discrepancy in the accounts remained unexplained despite being called upon to explain it, and the authorities treated the accounts as unreliable. In those circumstances, the assessing officer was entitled to proceed under section 12(3). The Court did not decide whether the irregularity was minor and capable of condonation, as that was within the assessing authority's discretion.

Conclusion: The assessing officer was justified in making the best judgment assessment, and the issue was answered against the assessee.

Ratio Decidendi: Where returned accounts are found incorrect or incomplete and the assessee fails to satisfactorily explain the discrepancy after notice, the assessing authority may lawfully invoke best judgment assessment under the Act.

---