Annual accounts and suppression: best judgment assessment may extend across the full accounting period, not one quarter alone.

The expression "period" in the reopening provision was treated as a duration of time and not as a term confined to a quarter or identical with the whole year of account. The court also held that where accounts are maintained annually and suppression in one quarter justifies rejection of the books, best judgment assessment may extend to all quarters covered by those books, not merely the quarter in which the defect was detected. On that basis, the limited interference with the assessments was held unsustainable and the Revenue's position was upheld.

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Issues: (i) Whether the expression "period" in section 12(8) of the Orissa Sales Tax Act is confined to a quarter or extends beyond a quarter up to the year of account; (ii) Whether, on discovery of suppression in one quarter, best judgment assessment could be made only for that quarter or for the other quarters covered by the relevant accounting year.

Issue (i): Whether the expression "period" in section 12(8) of the Orissa Sales Tax Act is confined to a quarter or extends beyond a quarter up to the year of account.

Analysis: Section 12(8) authorises reopening where, for any period, turnover has escaped assessment or been under-assessed. The expression "period" was used advisedly and could not be equated with the defined unit of assessment, namely a quarter. The statute treated "period" and "quarter" as distinct expressions, and the language of limitation also showed that the reference was to the period to which the assessment-related duration relates. The word therefore denoted a duration of time and was not restricted to either a quarter or the whole year.

Conclusion: The expression "period" in section 12(8) is neither confined to a quarter nor synonymous with the whole year of account.

Issue (ii): Whether, on discovery of suppression in one quarter, best judgment assessment could be made only for that quarter or for the other quarters covered by the relevant accounting year.

Analysis: The assessee maintained accounts on an annual basis, and the books were liable to be viewed as a whole. The court followed its earlier binding decisions holding that where annual accounts are maintained and a defect justifies rejection of the books, the entire set of yearly accounts can be rejected. Once the suppression found in one quarter justified rejection of the books, best judgment assessment was available for all the quarters to which those accounts related, and the effect of suppression could not be confined to the single quarter in which it was detected.

Conclusion: Best judgment assessment could validly be completed for all the quarters covered by the books of account, and not only for the quarter in which suppression was detected.

Final Conclusion: The references were answered in favour of the Revenue, and the Tribunal's limited interference with the assessments was held to be unsustainable.

Ratio Decidendi: Where accounts are maintained on an annual basis and a suppression justifies rejection of the books, the assessing authority may make best judgment assessments for the whole accounting period covered by those books, and the statutory expression "period" in the reopening provision is not confined to a quarter.

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