Best judgment assessment sustained where turnover estimate had evidentiary basis and assessee failed to prove non-taxable second-dealer sales.

A best judgment assessment is sustainable where the estimating authority has a reasonable evidentiary basis; the turnover disclosed in the monthly returns broadly supported the estimate, so the assessment was not arbitrary. The assessee also bore the burden of proving that any part of the turnover was not taxable, including the claim that substantial sales were second-dealer transactions. As no supporting material was produced before the assessing or appellate authorities, the entire turnover was rightly treated as taxable and the assessment was maintained in full.

---

---

Issues: (i) Whether the best judgment assessment fixing the taxable turnover at Rs. 1,00,000 was arbitrary or unsupported by basis. (ii) Whether the entire turnover could be treated as taxable turnover in the absence of proof that part of it represented non-taxable second-dealer transactions.

Issue (i): Whether the best judgment assessment fixing the taxable turnover at Rs. 1,00,000 was arbitrary or unsupported by basis.

Analysis: A best judgment assessment must have a rational basis and cannot be arbitrary. The turnover disclosed in the assessee's monthly returns indicated figures which, when extrapolated for the assessment period, broadly supported the estimate made by the assessing authority. The assessment was therefore not shown to be unreasonable merely because it did not adopt the previous year's taxable turnover.

Conclusion: The assessment was not arbitrary and is upheld.

Issue (ii): Whether the entire turnover could be treated as taxable turnover in the absence of proof that part of it represented non-taxable second-dealer transactions.

Analysis: The assessee carried the burden of proving that any part of the turnover was not liable to tax. No material was produced before the assessing authority or the appellate authorities to substantiate the plea that the bulk of the turnover related to second-dealer dealings. In the absence of such proof, the entire turnover was rightly brought to tax.

Conclusion: The entire turnover was validly assessed as taxable turnover.

Final Conclusion: The revision failed, and the tax assessment was maintained in full.

Ratio Decidendi: A best judgment assessment is sustainable if it has a reasonable evidentiary basis, and the assessee bears the burden of proving that any part of the turnover is not taxable.

---