Best judgment turnover assessment cannot double-add suppressed purchases and sales; only excess unrecorded sales may be taxed.

In a best judgment assessment of turnover, the revenue cannot make a double addition by taxing both estimated suppressed purchases and suppressed sales without evidentiary basis. Where unrecorded purchases and unrecorded sales are both found, the unrecorded sales are ordinarily presumed to have been met from the suppressed purchases to the extent possible, and only the excess of suppressed sales not covered by those purchases may be separately added. The Tribunal's approach was rejected, and the matter was sent back for re-estimation of turnover on that basis.

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Issues: Whether, in making a best judgment assessment of turnover, the revenue could add both the estimated suppressed purchases and the estimated suppressed sales, or whether only the excess sales not covered by the suppressed purchases could be brought to tax.

Analysis: A reasonable estimate of turnover must rest on some material and cannot proceed on a double addition without basis. Where purchases have been suppressed and sales have also been omitted from the accounts, it is reasonable to assume, to the extent possible, that the unrecorded sales were met out of the unrecorded purchases. Only that part of the suppressed sales which is not covered by the suppressed purchases can be separately added to the turnover.

Conclusion: The Tribunal's view was rejected. The addition could not be made on both suppressed purchases and suppressed sales in full, and only the excess sales not covered by the purchases were liable to be added. The petitions were allowed and the matters were sent back for re-estimation of turnover accordingly.

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