Limitation for assessment notice and best judgment turnover estimate upheld where statute imposed no notice deadline and some material supported inference.

A limitation period prescribed for making an assessment order does not, by itself, imply a further limitation on service of the consequential notice of demand; where the statute and rule do not fix a time limit for the notice, it may validly follow the assessment if the assessment itself was made within time. The note also states that a best judgment turnover estimate will be sustained if there is some material rationally supporting the inference drawn by the assessing authority. On the facts described, both points were decided against the assessee and the assessment was upheld.

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Issues: (i) whether a notice of demand issued after the expiry of three years from the end of the assessment year rendered the assessment barred by limitation; (ii) whether the estimate of turnover at Rs. 2,00,000 was supported by the materials on record.

Issue (i): Whether a notice of demand issued after the expiry of three years from the end of the assessment year rendered the assessment barred by limitation.

Analysis: Section 21 fixed a limitation only for making the assessment order. Neither the Act nor rule 45 prescribed any limitation for service of the notice of demand after assessment. Rule 45 required the notice to be sent as soon as the assessment was made, and there was no material to show that this requirement was violated. Since the assessment order itself could be made within the statutory period, the notice following it could also be issued after that period unless a statute expressly provided otherwise.

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

Issue (ii): Whether the estimate of turnover at Rs. 2,00,000 was supported by the materials on record.

Analysis: The assessee had sold goods of substantial value in June 1949, had denied carrying on the business in later years, and had given a false explanation that the later business was new. These circumstances supplied material from which the assessing authority could infer a higher turnover. In a best judgment assessment, the estimate must stand if there is some material to justify the inference.

Conclusion: The estimate of turnover at Rs. 2,00,000 was upheld and the question was answered in the affirmative, against the assessee.

Final Conclusion: Both referred questions were decided in favour of the revenue, and the best judgment assessment was sustained.

Ratio Decidendi: Where the statute prescribes limitation only for making the assessment order and not for issuing the consequential notice of demand, no implied limitation for the notice can be inferred; and a best judgment assessment will be sustained if supported by some material rationally justifying the inference drawn.

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