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Issues: (i) Whether regularly maintained account books must be accepted where no flaw is detected but they are otherwise found unreliable; (ii) Whether, on the facts, the returned turnover should have been accepted; (iii) Whether the assessment made after rejection of the books was a best judgment assessment under the applicable sales tax law; (iv) Whether the direction for fresh assessment according to law was proper.
Issue (i): Whether regularly maintained account books must be accepted where no flaw is detected but they are otherwise found unreliable.
Analysis: The existence of regularly kept books and the absence of a detected flaw do not by themselves compel acceptance of the returned turnover. The assessing authority may reject the books if there are good and sufficient reasons for treating them as unreliable, and such unreliability is a finding of fact. Positive proof of falsity is not necessary in every case.
Conclusion: The answer was against the assessee and in favour of the Revenue.
Issue (ii): Whether, on the facts, the returned turnover should have been accepted.
Analysis: This question turned entirely on the factual appraisal of the accounts, the return, and the surrounding circumstances. The Court treated it as a pure question of fact and did not give a separate legal ruling on the merits of the returned figure.
Conclusion: The issue was answered as a question of fact.
Issue (iii): Whether the assessment made after rejection of the books was a best judgment assessment under the applicable sales tax law.
Analysis: Once the returns were not accepted and the books produced in support of them were found unreliable, the statutory requirement for acceptance of the return was not satisfied. In that situation, the assessing officer was entitled to proceed by estimate and make a best judgment assessment.
Conclusion: The assessment was rightly treated as a best judgment assessment, in favour of the Revenue.
Issue (iv): Whether the direction for fresh assessment according to law was proper.
Analysis: A direction for reconsideration according to law did not fetter the assessing officer. The officer remained bound to make a fair estimate based on relevant material and not on mere suspicion. The direction was only to avoid the arbitrary figure previously adopted.
Conclusion: The direction was upheld and the issue was decided in favour of the Revenue.
Final Conclusion: The reference was answered by upholding the rejection of the books, affirming the permissibility of best judgment assessment, and sustaining the direction for a lawful fresh assessment.
Ratio Decidendi: Regularly maintained books of account may still be rejected if, on the evidence and surrounding circumstances, they are found unreliable; once such rejection occurs, the assessing authority may make a fair best judgment estimate based on relevant material.
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