Best judgment assessment needs factual nexus; tribunal must meet reasons before restoring a higher estimate.

A best judgment assessment must rest on relevant material and a reasonable nexus with the facts on record; a stock difference noticed on one day in one shop could not justify applying the same percentage to the entire year and all shops without further evidence, so the estimate was held unsustainable. An appellate tribunal reversing a reasoned reduction by the first appellate authority must specifically address the reasons given for reducing the addition; a bare disagreement is insufficient, so the tribunal's order was set aside and the matter remitted for fresh consideration.

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Issues: (i) whether the best judgment assessment based on a single-day stock variation and applied across the whole year and all shops was sustainable; (ii) whether the appellate tribunal was justified in restoring the assessing authority's estimate without adequately meeting the reasons given by the first appellate authority.

Issue (i): Whether the best judgment assessment based on a single-day stock variation and applied across the whole year and all shops was sustainable

Analysis: The accounts were rightly rejected and a best judgment assessment was warranted. However, even in best judgment assessment, the estimate must rest on material and have a reasonable nexus with the facts on record. A stock difference noticed on one day in one shop could support an estimate for that shop, but it could not, without further material, justify applying the same percentage for the entire year and for all shops. Such an approach amounts to a mechanical estimate and is arbitrary and unreasonable.

Conclusion: The estimate sustained by the tribunal was unsustainable in law and liable to be interfered with.

Issue (ii): Whether the appellate tribunal was justified in restoring the assessing authority's estimate without adequately meeting the reasons given by the first appellate authority

Analysis: The first appellate authority had reduced the addition on stated grounds and had explained why the original estimate was excessive. Before reversing that view, the tribunal was bound to meet those reasons and indicate why the first appellate authority was in error. A bare disagreement, without cogent reasons showing why the appellate reduction was wrong, is insufficient for appellate reversal.

Conclusion: The tribunal's order was infirm and liable to be set aside.

Final Conclusion: The common order of the tribunal was set aside and the matter was remitted for fresh consideration in accordance with law, resulting in relief to the assessee at this stage.

Ratio Decidendi: A best judgment assessment must be grounded in relevant material and reasonable nexus, and an appellate authority reversing a reasoned reduction in estimate must specifically meet the lower appellate authority's reasons before restoring the higher estimate.

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